It's back to basics for Soglowek, which spread its focus too widely and wound up losing market share. Now the chastened company is returning to its core activity: meat products.
Soglowek is launching a new branding effort, at no small cost. It's investing NIS 5 million on revamping its packaging and logo, plus advertising. The company's aim is to differentiate its products by separating them into two new product lines, which it calls "Basic" and "Premium."
For all its stumbles, Soglowek was and remains the market leader in the sectors of cold turkey (here called "pastrama"), salami and sausage of various sorts - which is a big market. The combined turnover of the various suppliers is NIS 940 million a year. Soglowek has 42% of that meat pie.
But its ventures into new areas such as "natural" (vegetarian) products and baked goods did not go swimmingly. They caused the company to lose its lead in the packaged frankfurters category, its second largest business with turnover of NIS 300 million annually.
Basic turkey sandwich, or premium?
Tnuva's Tirat Zvi brand now leads the category, with a 33% slice of the business, leaving Soglowek with a market share of just 28.5%, based on figures from the market research company Storenext.
Meat products constitute about 80% of the Soglowek group's revenues, which come to NIS 600 million a year.
The purpose of creating Basic and Premium product lines is to differentiate the products in the market, explains Daniel Shabtai, vice president of marketing for the Soglowek group. Which means, to appeal to different sorts of potential buyers.
The Basic line will be priced similarly to products offered by the competition, compared to its current prices, which until now have been about 10% higher than the competition. The Premium line of products will sell for about 15% more than its competitors.
The product lines will be displayed on separate shelves in order to differentiate between them, although both will be sold in 330-gram packages, Soglowek says. Replacement of the products will continue over a span of about three months. The sales and advertising campaign will be aired in mid-November.
The great love: Smoked chicken
"When I arrived at Soglowek I found a company that had lost its focus," relates Eli Soglowek, chief executive of the Soglowek group. "When a company decides to be the best at everything it cannot be the best in its core business. We invented the processed pastrami from chicken breast, and it is our great love. So when I took the initiative and started researching the market I learned that we needed to refocus, and emphasize our existing values."
The trend in packaged products has been clear, and for the past six to eight years Soglowek has been on the decline in this category, Eli Soglowek says. During the past two years the company has lost the lead to Tirat Zvi.
"When I took on this position I wanted to wanted to move quickly, but in hindsight I'm glad we didn't. We really did have outdated and inferior packaging, and consumers couldn't differentiate between our products," he confesses.
As to the question of whether Soglowek's branding as a meat products company will hurt other categories like vegetarian products competing against Tivall, or bakery products, Soglowek says that the company does not plan to invest marketing efforts in these areas this year. "These categories are important to us and we are major players in their market, but we don't expect to lead the market with them and we're satisfied with simply maintaining them," he says.
He doesn't think this move will hurt the company's market share in these categories.
Soglowek's slice of the market for vegetarian products increased 6.5% this year, and the company will be launching new products in 2010, but the company has not set its sights on the lead position in the market, he says.
What are your plans for Teva Off, which Soglowek recently purchased?
"Teva Off is unquestionably one of the group's growth drivers," Soglowek predicts. The brand Teva Off refers to chickens brought up in a relatively better standard of living than the usual ultra-crowded chicken coop. Also, the birds are not kept on a constant diet of antibiotics to keep them free of infection, which is a norm among regular battery chickens living in conditions of extreme crowding. The Teva Off brand disappeared with the collapse of the Off Haemek slaughterhouse, which had owned 25% of Teva Off M'Ha'Emek.
It is true that Teva Off chickens are a niche brand, Soglowek says: they cost more than battery chickens, to raise and for the consumer, too. They won't achieve market share of 50%, but Teva Off has potential to grow: "We have a lot of plans for it," Soglowek says.
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