Former Tnuva executives Arik Shor and Eyal Arad are forming a new food company that will invest in, acquire, and act as distributor for small and medium-size Israeli chilled and frozen food manufacturers. The new company has entered into partnership with prepared salads company Miki Delicatessen, which will be its initial distribution platform.
Within the next few weeks, the company will start to distribute, besides products of Miki Delicatessen, products of Ramat Hagolan (Golan Heights) Dairy, and later on products of Kfar Tavor Dairy. This will be under long-term distribution agreements, with a view to acquiring these companies in the future.
Shor, who was formerly CEO of Tnuva and of paper and packaging company Hogla-Kimberly Ltd., and Arad, who was VP sales at Tnuva, will attempt to use the connections and know-how they accumulated in working with the retail chains to increase the sales of the smaller food companies.
The chilled and frozen food market has been chosen because it is harder to import competing products in that segment, owing to the short shelf life of the products. The new company aims to leverage its size to promote sales of the small manufacturers, which currently find it difficult to penetrate the major retail chains and to grow their market share.
The new company will offer small and medium-size companies a distribution network, joint sales, and a more efficient supply chain than a small company can achieve by itself. The product range is intended to include milk products, cream, cheeses, yogurts, dairy desserts, salads, fish products, sausages and other processed meats, pasta, and more.
"Globes" recently reported that the Antitrust Authority had opened an inquiry into the distribution arrangements of the major food companies in Israel. The aim is to understand the effect of the distribution arrangements on the consumer. If the Antitrust Authority comes to the conclusion that some of the agreements harm competition, it is likely to tighten its enforcement policies and even take steps against the companies.
According to market research company Nielsen, Miki Delicatessen had a sales turnover of NIS 71 million in 2016, 19% less than in the previous year. The company is the fourth largest in Israel in the packaged salads segment, after Osem, Strauss, and Shamir Salads, but its market share is less than 6%, whereas Osem and Strauss have nearly 35% of the market each. Miki Delicatessen currently has 70 distribution lines reaching about 400 points.
Talking to "Globes", Shor said that he and Arad had joined forces to work on the venture in the past eighteen months, and that as far as they were concerned it was a long-term move to make the smaller companies' products available to more sales points around Israel. He said that the new company might also import products in order to broaden its portfolio.
Shor is reportedly likely to be a candidate for president of the Israel manufacturers Association, if incumbent president Shraga Brosh does not continued in the post. Shor was dismissed from Tnuva in 2016 by the representatives of Chinese company Bright Food, which bought control of Tnuva in 2015 for NIS 8.5 billion. For the past year he has been chairman of flexible packaging and labels company Tadbik.
Published by Globes [online], Israel business news - www.globes-online.com - on November 20, 2017
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