Hertzano family plays with Hasbro again
Over the years, they shared in the worldwide success of the Rummikub tile game. Now they will start playing Monopoly again, too. Hertzano, the company founded by Rummikub inventor Ephraim Hertzano, announced Tuesday that it has signed a manufacturing and marketing agreement with the American game and toy group, Hasbro. Hertzano will soon resume making Hebrew versions of games such as Monopoly, Clue and Risk.
Hasbro has been marketing Rummikub worldwide for 23 years, and the games are manufactured in the Hertzano factory in Arad, which has 150 employees. Rummikub's success can be seen in the partial figures released by Hertzano yesterday: The company's local sales, which include dozens of boxed games under the Kod Kod label, are about $8.5 million annually (at wholesale prices), and constitute 5-7 percent of the Hertzano's total sales, most of which come from the export of Rummikub. This means that Hertzano's annual revenues are between $121-170 million.
Hertzano is owned jointly by the late Ephraim Hertzano's two children, Mariana and Micha, who have been running the company for the past 15 years. Mariana focuses on the local market and the company's finances, while Micha works with the export department and manages the manufacturing side of the business. Each of them has three children, and one of Micha's sons works for the company.
Eli Degani, the marketing manager at Hertzano, said total annual sales of games in Israel are about $130 million (at consumer prices), and that the boxed games, the branch in which Hertzano is involved, account for 20 percent of games sales. Degani noted that Hertzano controls about 50 percent of the boxed games market in Israel, and that the company managed to maintain its operations in the Israeli market in 2003 despite the recession, the drop in sales in general and the entry of games from the Far East, which brought prices down significantly.
Degani figured the deal with Hasbro will triple Hertzano's activities in the Israeli market. Hertzano now has plans to increase the number of employees at the factory in Arad by 10 percent. Under the agreement between Hertzano and Hasbro, Hertzano will pay Hasbro a franchise fee and for the copyrights to the products. The deal with Hasbro also included the purchase of Hasbro's stock of games in Israel, which are valued at $3 million.
Degani noted this deal "brings Hertzano full circle." Until 10 years ago, Hertzano marketed Hasbro games in Israel, but lost the franchise when Hasbro decided to open a local representation.
Industry sources said Hertzano wanted to be a partner in Hasbro's local representation, but Hasbro set conditions that Hertzano viewed as a "hostile takeover." Even so, the local dispute did not harm their international cooperation; in the past decade, Hasbro has continued to distribute Hertzano games worldwide.
Degani said that, in response to its loss of the franchise for Hasbro's boxed games, Hertzano developed the Kod Kod brand and strengthened its position in the market. Degani noted that 10 years ago Hertzano was active only in the expensive boxed games field, but the loss of the franchise and the manufacturing activities of Hasbro games in Israel led Hertzano to develop new games at various price levels for different age groups. Now Hertzano develops 30-50 new games a year.
"We nurtured the games field for many years, and now we are harvesting the fruits," said Mariana on Tuesday, adding that part of the agreement with Hasbro includes the transfer of the manufacture of Hasbro games from the Far East and Ireland to Israel. Mariana said this will strengthen the operations of the plant in Arad and that she is happy to be able to absorb new workers.
Hertzano was founded in the 1950s. The company's local marketing activities are conducted from offices at Moshav Magshimim, where new games are also developed. The company's founder and the inventor of Rummikub, Ephraim Hertzano, immigrated to Israel from Romania and began marketing his game here. Marketing to the United States began in the 1970s and the game's success in the U.S. aroused interest in Europe, so Hertzano expanded exports. Every year, a world Rummikub tournament is held in memory of Hertzano, with participants from all the countries in which the game is sold.