Eyal Ravid, CEO of the Victory chain (photo by Magma Images, PR)
Eyal Ravid is one of the leaders in the world of food retailing in Israel. He has been in this business for 26 years and has seen endless movements in the circular food economy. Ravid says in a candid interview with ice that the sales of and in the Tishrei holidays jumped by 50% when the power of the big brands was preserved, except for Tona Starkist whose sales collapsed. “My war on krambo failed. The customers simply wanted krambo at a high price and bought at the high prices as well.” He says. And why does he see a price war that has not been seen in Israel right after the holidays.
– How were the Tishrei holidays?
“Increased by 50% and all in all the holidays were much better than last year. We are talking in financial terms but the sales volume also increased at a high single digit rate. With such a financial increase the sales volume must also increase.”
– Did people go for the private label or stick to the well-known and expensive brands?
“According to my data, there is no growth in the private label, neither with me nor in the entire industry. People went for the big and well-known brands this year and were willing to pay accordingly.”
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Did you have price increases for the holidays?
“As of today, most of the price increases have not taken effect, so the noise that has been around in the last few months was not true, but the promotions were not as deep as last year. I want you to understand that we had to raise prices and we didn’t do it, and at the same time, we didn’t give last year’s promotions an A at the end of the day The client is in a better place than he should have been.”
– Let’s expand a bit, after all there was no noise without anything behind it. Maybe the intensity was lower, but we are not in a consumer utopia:
“We have not yet seen price increases at the cash register. We have seen price increases in fresh beef and I don’t know how to explain it and we have seen a lot of fresh fruits and vegetables and part of the increase in sales was the tax on soft drinks. The tax represents a 25% price increase and we are seeing an increase. If last year we sold six-packs of soft drinks in -10 shekels, so today at a higher price. But we saw that the sales of the ‘central company’ in sugary drinks did not decrease quantitatively and the price increased at least with the new tax, so there is no overall price decrease in the basket, but an increase.”
-The customers were not calculated anymore? Nothing affected them?
“During the holidays, the customer says he wants to do good for himself and his family. And I’m talking about those who didn’t fly abroad. People host more and eat more at home and we’ve seen it over the years and I’ve been in the industry for many years. If on normal weeks people bought during the sugary drinking of ‘Krystal’ on the holiday, they don’t give up and buy ‘Coca Cola’. Maybe it’s because you’re comforting yourself, maybe because you want to pamper yourself, but at the end of the day, that’s the situation.”
– I want to go back to the private label for a moment, they are constantly talking about moving from the well-known and expensive brands to the cheaper private brands. It did not happen?
“It will happen after the holiday. People will switch to discounted brands, it always happens like that. During the holiday, you don’t see private brands and you don’t buy online. You can’t explain it in rational terms. It’s just a fact.”
“They are planned to enter the market in May 2023, so everyone is wasting energy on them – that is very far away. You don’t organize for a competition six months in advance. I want you to notice, they are currently renovating only the small parking lots of 300 square meters to 500 square meters and have not touched In the big stores. We will look forward to competition in super premium and not in discount. They renovated a store in Dizengoff Square, this is the cream of the crop and this process does not matter to the competition in our segment.”
-The holidays end in exactly three days. What should we expect?
“I want to be clear. There are going to be significant price increases after the holidays. We are going to have a bloodbath with the suppliers. There will be battles between the retailers and the suppliers that have never happened before in Israel. I have already received written messages from 12 suppliers demanding a price increase for November 1st and I have received hints About a few more goiters who are cooking up price increases for December 1. This will not go easily and there will be a war that has never been seen before in Israel between the retailers and the suppliers.”
-You don’t sound optimistic. Why are you the weakest in the war with the suppliers?
“The one who is strong here is neither me nor the supplier, but the consumer. If the consumer continues to buy a six-pack of Coca-Cola at these prices, then I have nothing to say. I want you to understand the numbers and why in the end it is the consumer who decides: ‘Coca-Cola Zero’ Now during the Tishrei holidays, we saw a financial increase In the sales of this product by 55% while the quantitative increase was about 25%. Now you will understand the power of the brand. In Feriga there was a quantitative increase of 50% and 60% in money and in Feriga there were strong promotions.
“Look at the world of Krambo – it’s a luxury product and not a mandatory product. Even Coca-Cola Zero is a treat, you don’t have to drink Zero. Krambo went up by 3 shekels for a pack of 8 and that’s a lot. It cost 40 shekels per Krambo. I thought about not approving the increase and got Demand from consumers so sales and prices increased – 77% monetary and quantity increased by 34% so what do you want from me? The price represents a 25% price increase compared to last year exactly.
“People just wanted more carambo at a higher price and that’s after I didn’t approve the price increase. The customers just demanded it but there was no choice.”
-So what war are we talking about? If everyone buys everything at any price, then what are we even fighting for?
“The war is between me and the supplier because the consumer is locked into the brands. Remember that at the end of the day I serve the public and I don’t set the moods and as such, the public will get what it wants. Look what happened in the worlds of the tuna. You just see the collapse of the leading brand Starkist. The customers are on holidays They bought cheaper competitors. It happened because people found out in the protest that the brand really has no meaning and the differences in taste between Starkist and Wilgar or Piltona don’t really exist and right now I see the sales of the holidays and there is a collapse of Starkist here.”
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