Osem Investments Ltd. (TASE: OSEM) unit Osem Trade and Landwer Coffee Ltd. have signed a distribution agreement for the retail market. Today’s joint announcement comes after “Globes” reported two weeks ago that the companies were in advanced negotiations.
Osem will become responsible for the marketing and sale of the Landwer Coffee brand at retailers. The agreement is the first step of a strategic move by Osem that could affect the balance of power in the retail coffee market. Since the agreement involves supplementary coffee products, which Osem currently lacks, the company will be able to indirectly expand its coffee business. By marketing Landwer Coffee products, Osem will also be able to offer a wider range of coffee products.
Later, Osem might take over the marketing of the Landwer Coffee brand in the institutional market, including hotels and restaurants. This market is presently dominated by Strauss Group Ltd. (TASE:STEL), and Osem has no presence in it.
According to Storenext, Strauss controlled 82% of the roast coffee sector in January-August 2007, including a 70% market share held by Elite’s Turkish Coffee brand. Strauss also operates in the filter coffee segment with the Mocha 1 and Jacobs brands, while Landwer Coffee had an 8% market share, the same proportion as in 2006.
Published by Globes [online], Israel business news - www.globes.co.il - on October 9, 2007
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