Willi-Food prepares kosher deals

The announcements by the company highlight the growing market for higher value and specialist dairy goods in markets like Europe and the US. Dairy processors are increasing being forced to improve margins in the face of increasing commodity prices. The company said today it had signed a binding term sheet with an unnamed Danish manufacturer and distributor of kosher dairy products and its Gold Frost subsidiary. The news came just twenty-four hours after the company said it had made a similar agreement between itself and a leading Russian cheese importer. Willi-Food is Israel's largest food importer, with a range of about 400 private label products produced by supplier manufacturers. Despite establishing a number of terms for the deal, the agreements remain dependent on further due diligence, and may not even go ahead, Willi-Food added. While both ventures are designed to strengthen the Willi-Food's presence in the European dairy market, group president Zwi Williger said the strategy was a vital step in its long term goal of becoming a global leader in kosher foods, food allowed in a Jewish diet. "These combined transactions strengthen our ability to source unique kosher foods and dairy products and broaden the distribution platform for our premium brand of products worldwide,"​ he stated. "In addition the transaction would secure for Gold Frost a US import license, a vital component for the launch of a future​ US​ dairy strategy." ​ Both through its own operations and those of Gold Frost, Willi-Food will hold a 51 per cent stake in both ventures, with each minority partner transferring their entire operations to the respective new venture. Through the agreement with its Danish partner, the joint venture will gain exclusive rights to its partner's kosher brands, though the distributor will still retain the use of its non-kosher goods. The partner though unnamed, is a major producer of both kosher and non-kosher cheese varieties including blue cheese, edam, gouda, havarti and feta cheeses packaged for industrial, wholesale and retail distribution, according to Willi-Food. In funding the stake, Gold Frost will pay an initial $400,000 to the distributor. Following the publication of the joint venture's 2008 financial audit, Gold Frost will then also pay three times the new entity's net profit for the first fiscal year, Under the separate agreement with its Russian partner, Willi Foods hopes to benefit from increasing consumer-spending power within the Burgeoning Russian dairy market, particularly for imported cheeses. According to Willi Food's Russian distributor, it will sell 36,000 tonnes of cheese in 2007 to a customer base of 1,000, accounting for $120m in sales. Though Willi Foods was unable to reveal the name of the joint venture partner, according to local appraisal company HLB Prime Advice, the company is the number one supplier of hard cheese like gouda and edam in the country. As well as continuing to supply these products, the new joint venture will also be responsible for importing Willi Food's healthy living and kosher products into the country. The chief executive officer of the minority partner will remain in his role in the joint venture for at least five years, though Willi Foods would be in charge of appointing a chairman, under the terms of the deal. The stake will also be purchased under the same terms as with the group's Danish joint venture, the company added.