The food market in Israel is facing a shake-up: Carrefour, the largest retail giant in Europe and one of the largest in the world, has signed a girls’ agreement with Electra Consumer Products and will make an aliyah to Israel. In this way, Electra Consumption will part with the Mega and Pavilion wines brands, and the chain’s branches will be converted to the French chain. The final agreement between the parties is expected to be signed next month, after which Electra Consumer will become a franchisee of Carrefour in Israel.
The good news that should bother the market, and make the Israeli consumer happy Interpretation
● The private label and prices: 5 things you should know about the European food chain Carrefour on its way to Israel
The first branches of the new brand are expected to open by the end of the current year. According to sources in France, the chain will not be content with pavilion wine branches and will open new stores. In addition, the introduction of the brand will be done gradually, and its products will be sold in the first phase in the existing branches of Mega and Pavilion Wines even before they are converted.
Under the forthcoming agreement, about 150 branches of the Bitan wine chain will be gradually converted to Karpur branches. Electra should pay an amount that has not yet been disclosed for the conversion of the branches and the introduction of the international network, along with royalties for the products. According to various estimates, Electra’s total payment may reach NIS 400 million. Globes has learned that the company expects annual revenues of NIS 6 billion within five years in Israel, and the annual EBITDA forecasts are NIS 300 million within five years.
The importance of private label and import reform
Beyond branding and positioning, the big change that Carrefour may bring is its private label, which is expected to capture a significant share of total sales compared to what is accepted in the Israeli market today. Beyond being a retailer, it is also one of the largest food producers in the world, with 20,000 brands and about 14,000 products. This model allows it to cut production costs sharply.
The chain’s private label accounts for 31% of its total sales, a rate that is considered very high in relation to the Israeli market. For comparison, in the largest retail chain in Israel, Shufersal, the share of the private label stands at 26.5% (according to the company’s latest reports).
And what about prices? Carrefour operates in a number of models, as is customary in the large chains in Israel – from urban stores that are considered relatively expensive, to huge stores on the outskirts of cities, which offer lower prices. However, Electra hopes that the latest import reform last November will make it possible to easily import a variety of products, which will ultimately lower the basket for consumers and change the map of the retail market in Israel.
Recall that so far products coming from other countries have been required to be tested and approved by the Ministry of Health, to the point of demands for change in the production process – a bureaucracy that has deterred players from entering the local market. Carpor can now import food products (frozen, canned, ice cream and any food transported refrigerated), beverages or toiletries and pharm products only on the basis of a declaration that it meets the European standard (ISO), and thus a product sold in Europe will make its way to Israel without barriers and without inspection Special.
In addition, the facilitations will make it possible to increase the parallel imports of leading brands. Thus, the Karpor chain, which has its own warehouses throughout Europe, will be able to import products to Israel that it purchases through its huge purchasing power abroad – without going through an exclusive importer on the way to a shelf in Israel.
Schwimmer: “We will cause a big bang in the market”
Electra’s move comes less than a year after it completed its acquisition of control of the Pavilion Wines chain, and signed a full franchise agreement with international retail chain 7-Eleven, which included Electra’s commitments to the chain, including non-compete in convenience stores and the opening of minimum stores in 2022 -2024.
Carrefour’s operations in Israel are expected to be managed by Amit Zeev, CEO of Bitan Wines.
The company’s global sales amount to 81 billion euros. Shufersal’s sales, which are currently the largest in Israel, stand at about NIS 15 billion, and it operates about 400 branches.
This is not the first attempt at cooperation between a group from Israel and the French giant. In 2009, Koor, part of the Dankner-controlled IDB Group, invested in the French retail giant, and according to various publications, in 2016, Victory maintained immature contacts with the chain. In the previous decade, Carrefour collaborated with Tiv Ta’am, as part of which its products were sold in the chain’s stores in Israel.
Globes has learned that in a conversation Zvika Schwimmer has with analysts, the CEO said that he believes that “Carrefour will cause a big bang in the field of food in Israel. Our goal is to be the most attractive food retailer in the country, and we will do it with two leading brands: Saban Elban, a leading brand in the field of convenience and difference food stores, and Carrefour, which is a world leader with the ability to bypass the current food market in Israel.
“After the Avraham agreements, we meet a strong state (Israel) in good shape, which affects our activities. We did not just have the opportunity to make a deal with Bush, Saban Elban and Karpur.”
Note that in addition to food and consumption, Carrefour is active in a wide range of areas including: toys, costumes, lingerie, fashion, sports, housewares and household products, furniture, tools, office equipment and more. Every year the company launches eight rotating collections in these areas.
The largest international network in the country
Carrefour began its journey over 60 years ago when it was founded by entrepreneur Marcel Fournier. In 1960, Fournier and his partner Dennis Defri opened a supermarket covering an area of 850 square meters. Three years later, the first supermarket, inspired by the American method, was opened, which the founding partners studied in seminars they had previously attended in the United States.
The hypermarket was the first of its kind in France, offering the idea of a department store combined with a supermarket, with a wide range of products at low prices. The store was spread over an area of 2,500 square meters and offered 400 free parking spaces.
Since its inception, Carrefour has been a pioneer in the retail field and the first to take significant steps, which today are an integral part of the shopping experience. In June 1970, Carrefour was listed on the Paris Stock Exchange, becoming the first public offering in the retail sector. About a decade later, the chain launched its customer club card, which is also integrated as a credit card, and within three years registered 200,000 subscribers.
In the early 1990s, with the growing awareness of the importance of maintaining a healthy lifestyle, Carrefour launched a line of organic products, in line with consumer demand. Later, in partnership with food banks, it aimed to assist underprivileged populations and reduce food waste, and to this day the issue is of paramount importance among the group’s decision makers.
Already in the early 2000s, when the online shopping trend was in its infancy, Carrefour launched its website, which today forms a significant part of its operations. The company currently operates a huge network of supermarkets, cash & carry, containers, convenience stores and online sales sites in more than 30 countries, including France, Belgium and Italy, and operates in partnerships in other countries in the Middle East, North Africa, East Asia and Africa.
In the past year, more than 200 Carrefour stores have opened around the world. The company is traded on the Euronext NV stock exchange at a market value of about 14 billion euros, and it employs 320,000 people, of which more than 55% are women. About 1.3 million surfers visit its online sites every day.