What initially inspired you to serve as CEO of Sugat?
Throughout my career, I have always been most excited by production processes, the tangible creation of products, and consumer brands. Both Salt of the Earth and, later, Sugat had substantial production operations and owned well-loved household brands.
What role does M&A play in the company’s growth strategy? How does Sugat align acquired brands with the group’s standards and culture while preserving their unique identities?
Mergers and acquisitions are a vital component of Sugat Group’s growth strategy. We hold great respect for the brands we acquire and the value they deliver to both our consumers and employees. In most cases, we maintain these brands as distinct entities for consumers while leveraging operational and commercial synergies through a centralized, efficient marketing team and shared service providers.
With regard to our organization and employees, we will typically retain the legacy brand at the site level for internal communications, along with certain cultural elements. At a later stage, we focus on senior management and commercial roles, streamlining processes to align with the group and enhance collaboration across business lines.
Can you describe a major challenge Sugat has faced in recent years and how the company overcame it?
During the early stages of the COVID-19 pandemic, as images of empty retail shelves in Milan and New York City surfaced, Israeli consumers rushed to supermarkets to stock up on essentials, particularly dry goods. Sugat faced a significant surge in demand and was under immense pressure from customers.
In response, we made critical decisions to navigate the following weeks and keep shelves stocked:
- We implemented an 80% reduction in the number of items we pack and deliver, focusing on our top products with available inventory and minimizing unnecessary changeovers.
- We introduced additional shifts, granted under special emergency permission from the Ministry of Economy, thereby extending our weekly working hours.
- We worked closely with the government to prioritize the unloading of ships at the ports.
- We established quotas to prevent customers from overstocking beyond genuine consumer demand.
In your view, how do Sugat Group’s operations impact the Israeli economy, and what role does the company play in the broader industry?
As a leading supplier of essential food commodities found in virtually every household in Israel and a significant provider to other food manufacturers, Sugat plays a vital role in Israel’s food system. Therefore, it is our responsibility to ensure that Israeli consumers have access to high-quality food at reasonable prices. During the early stages of the COVID-19 pandemic and amid recent challenges posed by the war, our primary objective has been to ensure the continuous supply of food across Israel, taking decisive measures to meet this responsibility.
Sugat has made numerous acquisitions. How do you approach integrating these different companies, or do you prefer they operate as independent entities?
While striving to maximize every potential synergy, we also recognize the importance of hands-on management. When acquiring new businesses, we aim to quickly integrate all areas where we identify significant synergies. For instance, in the case of Al Arz Tahini, a fully independent company can be transformed within days into a facility that reports to our operations division, becoming an additional brand with products managed by our centralized marketing and sales teams.
However, in areas where we do not see such synergetic potential, we initially maintain the organization and work processes as they are. Over time, we will begin to streamline additional aspects of the business, particularly in general and administrative functions, to align more closely with the group.
Has the turmoil caused by the Houthis affected the company’s import of raw materials or other products? If so, how are you addressing it?
The Red Sea siege had a dramatic impact on Sugat’s business. A substantial portion of our operations relies on imports from East Asia and East Africa. Initially, we faced challenges related to extended supply times in both our planning operations and financing capabilities, followed by a significant increase in freight costs. Given the relatively low value of the goods we ship in each container, this cost rise is particularly impactful for us.
In addition to monitoring price discrepancies between various carriers, we have also begun to place greater emphasis on material management in relation to freight costs. In some cases, this has led us to switch to slightly more expensive raw materials that come with significantly lower shipping costs and shorter transit times.
What is one piece of advice you would give to emerging entrepreneurs in the food industry who aspire to build long-lasting, trusted brands like Sugat?
The food industry is quite traditional, characterized by established consumer habits. If you wish to develop a new brand or introduce a new category under your existing brand, you must present a value proposition that offers consumers and retailers something they need but currently lack. If you intend to offer something that is already provided by well-known brands, without a distinct advantage in product or price, it would be wise to abandon the initiative altogether.
What keeps you up at night?
A range of concerns, from potential food safety incidents and the risk of one of our trucks being involved in an accident, to the obvious need to meet monthly budget targets.
What excites you the most about Sugat’s future?
Even after the considerable developments Sugat has experienced, with the diverse brands we have brought together under the group, I remain genuinely excited about several significant opportunities that will further transform the company. These opportunities include the establishment of two new operational facilities intended to replace Sugat’s largest plants in Kiryat Gat and Eilat, as well as a number of promising business development initiatives.
What Sugat products can we always find in your kitchen?
Naturally, as in most households in Israel, you’ll find our salt, sugar, oil, rice, and legumes. However, since we never use competitors’ products at home, most of the group’s items are in my kitchen. During my monthly Pereg management meetings in Bat Yam, I take the opportunity to purchase specific herbs and spices that are not always available in mainstream retail stores from our factory outlet.
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