Blue Square-Israel Ltd. (NYSE: BSI) today announced that it has signed an exclusive agreement with a subsidiary of Casino, one of France's largest supermarket chains, to sell "Leader Price" private label products in Israel and the Palestinian Authority territories. This agreement will facilitate a significant expansion of Blue Square's private label program, enabling the Company to increase private label sales from the current level of 3-4% to 10% by the end of 2002.

Casino, the second largest supermarket chain in France, operates in 12 countries, and has annual revenues of $14 billion. Through a subsidiary, Casino markets a wide variety of high-quality goods under the Leader Price brand to supermarkets in 40 countries throughout Europe and South America.

Under the terms of the agreement, Blue Square will import approximately 500 Leader Price products during 2001, ramping up to 2,000 by the end of 2003. The items imported will include a wide variety of high-quality packaged foods, cleaning products, toiletries, and paper goods. In addition, the companies may cooperate in the future in the areas of know-how, logistics, and technology.

Commenting on the news, Yoram Dar, CEO and President of Blue Square, said, "Increasing Private Label sales is one of our top strategic priorities as we work to increase revenues and expand our gross margins. In looking for a Private Label partner, we searched the world for a firm that offered the largest variety of high-quality products at the lowest prices, as well as excellent logistical capabilities. This agreement will dramatically condense the time required to bring our customers thousands of excellent low-priced products. We are confident that consumers will appreciate the value of the Leader Price brand, enabling us to achieve our goal of 10% private label sales by the end of 2002."

Blue Square is a leading retailer in Israel. A pioneer of modern food retailing in the region. Blue Square currently operates 169 supermarkets under different formats, each offering varying levels of services and pricing. For more information, please refer to Blue Square's website at www.coop.co.il.

The statements contained in this release which are not historical facts contain forward-looking information with respect to plans, projections, or future performance of the Company, the occurrence of which involve certain risks and uncertainties, including risk of market acceptance, the effect of economic conditions, the impact of competitive pricing, supply constraints, the effect of the Company's accounting policies, as well as certain other risks and uncertainties which are detailed in the Company's filings with the Security and Exchange Commission, particularly the prospect to its public offering in July, 1996.