Less than a year after completing the acquisition of control of the Bitan Wines chain, Electra Consumer Products reported earlier this week that it had signed a memorandum of understanding with Carrefour, to open a supermarket chain in Israel – under the Carrefour brand.
Under the agreement, more than 150 branches of the Bitan Wines chain will be gradually converted to Carrefour branches. The first branches under the Carrefour brand will open before the end of 2022 and branded Carrefour products will begin to be sold at Pavilion Wines branches before the summer.
Carrefour is the largest international retailer to date in Israel, with about 13,900 branches and a sales turnover of 81.2 billion euros. The franchise agreement between the parties is for a period of 20 years, with the possibility of extension for another 20 years. The franchise fee will include an initial payment, plus payments to be paid as a percentage of the income. The parties will work to sign a binding agreement by April 2022.
Competition between giants
Entering the Israeli retail world will lead the local Carrefour to the forefront of the competition between the local retail giants, led by Shufersal. Amit Zeev, CEO of Bitan Wines, will of course serve as CEO of Karpur, but in the ultra-Orthodox and religious sectors, a number of open questions remain. In response to ‘Business’, sources accompanying the opening of the new network were informed that Carrefour will not be open on Saturday. In this respect there is no change and there will be no change. Also, the whole network will be kosher.
Carrefour declined to comment on questions such as what will be the future of the Mehadrin market branches under Pavilion Wines and intended for the ultra-Orthodox audience, whether they will be replaced and rebranded, and if so – how will the new chain be adapted to the move. It can be estimated that this will probably be examined, in the coming months, quite a bit in opinion polls in the ultra-Orthodox society, which can be estimated to prefer to feel part of the change (even if the word ‘mehadrin’ is added to the designated branches).
At the same time, real tectonic changes in the advertising sector are expected. In the general company, it is already clear that advertising budgets estimated at at least NIS 100 million a year will have to migrate between different offices due to conflicts of interest that were hitherto negligible – not mega-budget or pavilion wines as treatment of the new chain’s huge budgets. Chomsky is a partner in several advertising agencies that each manage a different network’s budget.
Is it possible to estimate that as a huge network, the advertising agency that will accompany the move in the sector will also be replaced? It is not known, but the company’s offices are probably already discussing this from now on, since Karpur’s first branches will be launched in 2022, and if there is a change in the Haredi chain’s branding, a mehadrin market as part of the change in Beitan wine branches, then it may also cover advertising campaigns.
Strong entry into the Israeli market
For Carrefour this is an expansion of the company’s international operations. Carrefour Group is the world’s leading food retailer operating about 13,900 stores in more than 40 countries in Europe, the Middle East, North Africa, East Asia and Africa. The company operates in various retail formats: hypermarkets, supermarkets, Cash & Carry, municipal stores and online sales sites, tailored to each country and state. Carrefour’s brands are the largest in Europe. Carrefour carries out more than 2 billion transactions a year and the company’s sales turnover for 2021 amounted to 81.2 billion euros.
Carrefour is a public company whose shares are listed on the Euronext NV stock exchange and the market value of the company is about 14 billion euros.
Electra Consumer Products (hereinafter also: EMC) of the Elco Group is controlled by the Zalkind brothers. In the last two years, the company, led by CEO Zvika Schweimer, has made a number of strategic moves that have positioned it as a leading consumer and retail group in Israel. Its activity currently concentrates on three main areas of activity: In the first, it is an importer and manufacturer of electrical products and air conditioners and is the leading retailer in the field of electricity with the electricity storage chains and Shekem Electric. In the second, it owns the Bitan Wines chain and owns the franchise to open a convenience store chain of the global brand Saban Elban. The third arm of activity is in the field of leisure and the field that AMZ entered into with the acquisition of control of ET Saar Entrepreneurship and Trade, the Colombian franchisee in Israel. About a year ago, Bush Global became a partner of Ametz after acquiring 40% of Electra Industries and joining it in establishing an advanced thermo-technological park in Ashkelon. In addition, AMZ will soon begin construction of a plant for recycling air conditioners and electrical products in Ashkelon, with the goal of recycling 50% of all electrical waste in the State of Israel within a decade.
According to various reports, Amatz is in the process of acquiring Quick shares, as the group’s online arm, which will be set up in a separate company where the controlling shareholders will be Amatz.
Electra Consumer Products is traded at a value of NIS 4.1 billion. In the last three years, the stock has yielded investors a return of over 480%.
Patrick Lasfargues, President of Carrefour International Division: “We are pleased to sign this agreement, which once again proves the solid foundations of Carrefour’s international franchise strategy. Electra Consumer Products is a company with a strong spirit of retail entrepreneurship, which proved itself once again when it purchased Pavilion Wines in 2021. We are confident that Carrefour’s arrival in Israel will significantly improve the local shopping experience and strengthen the purchasing power of consumers who receive better products. ”.
Electra Consumer Products CEO Zvika Schweimer: “Carrefour’s entry into Israel is the largest and most significant move in the history of retail in Israel ever. Carrefour, being a leading global marketing chain and one of the largest food and consumer producers in the world, will enable the IDF to lead the food and consumption market in Israel and enter new areas. The benefits of Carrefour are in line with Amatz’s strategy to bring added value to the customer and lead in every field it enters. ”
Pavilion Wines CEO, Amit Zeev: “Carrefour brings you a real message to the Israeli consumer in the consumption experience, in the variety of products and in the price level. The agreement with Carrefour allows us to skip over many obstacles that characterize the food and consumer market in Israel, and offer consumers solutions that do not exist in Israel today. Carrefour’s entry into Israel will change the rules of the game in the market and give us differentiation and an advantage over the competition. But more importantly, we intend to bring news and change that will be felt in every home and home and offer solutions to the cost of living for the consumer audience in Israel. “
Who is Carrefour?
Carrefour was founded in 1960 in France and is the leading marketing chain in Europe and one of the largest chains in the world.
It has over 13,900 branches worldwide in 47 countries. It operates directly across Europe and also, operates as part of partnerships in other countries in the Middle East, North Africa, East Asia and Africa. In the past year alone, more than 200 Carrefour stores have opened around the world.
The company operates in various retail formats: hypermarkets, supermarkets, Cash & Carry, Urban stores, and online sales sites, tailored to each and every country. The company operates stores in various sizes from 80 square meters to 20,000 square meters.
Carrefour is the pioneer in the field of hypermarkets in the world and its branches in this format are a kind of department store that operates as a ONE STOP SHOP.
In practice Carrefour is one of the largest food and consumer producers in the world. The company manufactures 14,000 food and non-food products in hundreds of factories around the world, under 20 brands it owns. Carrefour brands that offer a wide range of products in different price ranges and of excellent quality, provide a solution to consumer trends and changing consumer preferences such as organic food, gluten-free products and more.
Carrefour produces pasta, chocolates, snacks, cheeses, delicacies, ketchup, sauces, preserves, fresh food, wine, beer, cleaning products, hygiene products, detergents, organic food and more. In fact, Carrefour manufactures products in every category and category of the Food and Consumer Market (FMCG).
Carrefour specializes in French gastronomy and offers a wide and unique range of products that characterize French cuisine with an emphasis on wines, cheeses, pastries and desserts.
Apart from 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 8 rotating collections in these areas. The products are sold both in the chain’s branches and online.