Four big European grocers set up buying alliance

* Alliance members have 6.7 percent of European market

* Supermarkets squeezing suppliers to push down prices

* Rivals set up AMS Sourcing in 1988

BERLIN, Feb 14 (Reuters) - Four big European supermarket chains, with a combined turnover of about 88 billion euros ($120 billion), have set up a strategic alliance to coordinate purchasing as they seek to drive down prices in a cut-throat retail climate.

The new CORE alliance, to be based in Brussels, brings together privately-owned Rewe, Germany’s second biggest supermarket chain, Belgian discount grocer Colruyt and Italian and Swiss cooperatives Conad and Coop.

“The partners have formed an alliance that gives an answer to the growing challenges of competition in Europe and the increasing internationalisation of food retailing,” Rewe boss Alain Caparros, president of the alliance, said in a statement.

“Through joint purchasing, we want to offer all of our customers even better prices,” he said, adding the alliance also wanted to work closely with the food industry to offer suppliers attractive growth prospects.

The four groups are present in 18 countries in Europe with a combined 20,000 stores and said they together account for 6.7 percent of the total market.

Hurt by the tough economic climate in recent years that has helped fuel the expansion of discounters like Aldi and Lidl across Europe, supermarkets have been squeezing their suppliers ever harder to push down prices.

Many of the competitors of the firms in the new alliance are in another buying partnership, AMS Sourcing, established in 1988, which groups retailers including Delhaize of Belgium, Esselunga of Italy and Migros of Switzerland.

$1 = 0.7317 euros Reporting by Emma Thomasson; Editing by Elaine Hardcastle