The world may be wracked by economic crisis, but cosmetics company Dior has decided this is the time to open a local subsidiary. The company will be marketing Dior wares on an exclusive basis, with five managers and 87 salespeople.
Until now, Dior had been marketed and distributed in Israel by Intercosma.
Dior's decision has raised eyebrows in the cosmetics sector. Creating a subsidiary is costly, and the risk is all the higher considering that it will be handling a single brand.
Just last week, Johnson & Johnson made the opposite decision - to close its Israeli representation altogether and fire all 20 workers, including the local CEO, Sharon Levy. (Its products will continue to be distributed locally, however.) Behind the move lay a decision by the parent company in the United States to streamline operations worldwide and reduce the number of its management hubs.
Why would Dior go the other way? One reason could be the technicality that Intercosma was recently sold to Danshar Marketing, a distribution company that is considered lower-market than the luxury-quality Dior.
"Dior wanted somebody to maintain its brand and prestige, more than [it wanted] a logistics center or the best agents," says Emanuel Pitussi, top executive at Intercosma. "Elsewhere in the world too, Dior works more with subsidiaries [than with agents]. It doesn't pay financially, but that's a cost the company is prepared to pay in order to maintain its brand."
Pitussi is working on building the subsidiary for Dior, with full financing by the global parent. He is currently registered as its owner, but once the process is complete, ownership will pass to Dior. It will focus on marketing and managing its salespeople, while actual distribution will be carried out through Chemipal.
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