Noam Weiman, owner and CEO of Diplomat Distributors Ltd., is one of the most influential people when it comes to the cost of living in Israel. His import empire controls dozens of brands, including ones found in nearly every household in the country, such as Gillette, Head & Shoulders, Pampers, Starkist and Heinz.
Despite this, most Israelis do not know his name, and this isn’t accidental: Weiman avoids exposure. He has never granted an interview, does not attend networking events and does not donate to politicians. Even senior figures in the large retail chains have never met him, and those who have met him do not know him well, forced to be satisfied with the description of “a pleasant but mysterious man.”
This is perhaps the reason why a person who refused to allow his name to be published here, who has tried in recent years to compete with Diplomat through parallel importing of products, was surprised a year ago to see Weiman in a debate held at the Chief Rabbinate. The debate related to reforms that the Chief Rabbinate tried to pass in the area of kashrut, one of the biggest hurdles that parallel importers need to negotiate. Every decision of institutions of the Chief Rabbinate relating to kashrut immediately influences the viability of parallel importers to bring beloved products to Israel, like those that Diplomat sells here for higher prices relative to the rest of the world.
“Weiman sat there and didn’t speak,” says the man. “I am convinced that most of those present didn’t know who he was.”
An appearance like this by Weiman in the corridors of regulation is a surprise. People know the company Diplomat know to say that Weiman takes care to keep his distance from meetings with officials or politicians and does not want any direct connection with them, even if his representatives met with Economy and Industry Minister Eli Cohen in recent years.
“Weiman is a silent genius,” says someone in a senior position in retail. “He built an empire by dint of exclusivity of known brands and belligerence. He has exploited Israel’s disadvantages as a small country, geographically isolated, with a centralized market and additional difficulties, to become a multimillionaire. In recent years, certain importers and people in government are putting up a fight, but it doesn’t really bother him. Even if he makes less now, he already created an enormous fortune.”
From family business to juggernaut
- Chinese Corporation Wants to Regain Control of Israeli Partner Cellular Firm
- Winter Flights From Israel to U.S. Going for Rock-bottom Prices
- Australian Drugstore Mulls Entering Israeli Market
Weiman, 68, grew up in the Zahala neighborhood of Tel Aviv, where he still lives. His father, Yitzhak, owned a razor blade factory. After studying economics at Tel Aviv University, Noam joined the family business.
Weiman is known for avoiding networking at industry events. He never cultivated friendships in the business world, and most of his friends are childhood buddies from the neighborhood. In the 1970s, Diplomat was a tiny company that sold Israeli razor blades under the Bond brand. But Schestowitz, Israel’s second-largest importer at the time, brought in Gillette’s razor blades and eventually killed the market for Bond. The family was forced to give up on manufacturing in favor of trade and distribution.
Not long after Yitzhak Weiman’s death, in the 1980s, his son turned to Procter & Gamble in a bid to become its exclusive Israeli importer. Their contract turned into a gold mine for the Weimans.
Itamar Hatzor, a friend of Weiman’s, says it was businessman Meir Arnon, a neighbor of Weiman’s in Zahala, who introduced Weiman to Procter & Gamble. “Because of Noam and his personality, Procter has worked with him for all these years. He had unique chemistry with the Procter people. They respect him and his leadership ability. He is surely not a man who oozes charisma, but of inner quiet and the unique ability to deal with issues and solve them,” says Hatzor.
Procter & Gamble manufacturers more than 300 products under known brands around the world, like Ariel, Oral B and Tampax. The corporation’s shares are traded on the New York Stock Exchange at a market cap of around $300 billion. Due to the agreement Weiman signed with them, in 2006, the Weiman family closed a circle with Schestowitz, when Procter & Gamble acquired Gillette and decided to transfer exclusivity for importing from Schestowitz to Weiman.
“Noam succeeded in becoming a juggernaut in the field of distribution,” says a veteran supplier of toiletries who asked not to be named. “He knew how to be efficient in the supply chain and to be modern and contemporary, and Procter respect him very much. They even named some models of distribution chain management after him. Weiman, his family and the top people he appoints, manage the business aggressively. He’s a pleasant person, who knows how to read situations and decide things.”
Diplomat has always operated like a family company. Its employees have included Weiman’s wife, sister, nephew and son. Along with the Weiman family, the Jewish-American Mandel family (no connection to Mort Mandel and the Mandel Foundation) holds stock in Diplomat.
‘Procter became a gold mine for them’
The long road that Weiman took with Diplomat gained significant momentum at when at the end of 1993, Channel 2 was established, which began to broadcast commercials. Procter & Gamble, seeking to expand in Israel, began spending lavishly on prime-time ads. That gave a big push to the company’s products here. Procter & Gamble is still responsible for marketing and advertising expenses for its brands sold by Diplomat.
Diplomat grew and at the same time blossomed in Israel’s commodity culture and its population growth. Along with the close work with Procter & Gamble, Diplomat decided to import and distribute brands of other foreign and domestic manufacturers, like Lotus, Pringles, Kikkoman, and the Israel dog-food brand Bonzo. Today, Diplomat also holds 100% of the Starkist Tuna brand, which a year ago it completed for NIS 60 million, and also is the exclusive distributor of the successful brand Beyond Meat, which markets meat alternatives. At the company’s Logistics Center, at the airport complex, Diplomat also supplies distribution services for other brands, such as Estee Lauder and Meir Bagel.
In recent years, Diplomat opened branches abroad. Today, the company distributes products of Procter & Gamble also in Cyprus, Georgia, South Africa and New Zealand. According to estimates, Diplomat has annual sales of 3.5 billion shekels (around $1 billion), mainly from the domestic market. The company’s profits are a closely-kept secret. Sources in retail have estimated that the company’s net profit is around 7%-10% of sales. Diplomat declined to comment on the figure, but others who follow its activities say the real figures are much lower, 2%-3%.
“They seized on Procter and it became a gold mine for them. Even if at the end of the day they only earn in the single percentages, you need to take into account that these are single percentages of an insane return,” says a retailer for a large chain who asked to remain anonymous.
In the meantime, as a privately held company, Diplomat continues to be secretive. In some of the retail chains, they say that according to Diplomat, since Procter opened representation in Israel in 2001, Diplomat is no longer an exclusive importer of their products, but only a “distributor.” Thus, Diplomat tried to create the impression that they are responsible for pricing products and the prices for retailers, but only follow directives from the Americans.
“When I want to hold a sale or put a product of theirs on a display sale, Diplomat tells me they need to get permission from Procter & Gamble and to see if they have a budget for it from Procter & Gamble,” says one senior retailer. According to Ezra Dosh, who a year ago sold a retail chain called Fresh Market, “Diplomat’s people told me that they are only distributors, and that Procter & Gamble are the ones who set the prices. They told me that Procter & Gamble analyzes the consumer’s ability to pay in all countries, and according to this sets the price.”
However, others think that Diplomat is actually responsible for pricing, even if it can do so only within a price range dictated to it up front by Procter & Gamble. According to its investigation, Markerweek discovered that Diplomat is an ordinary trading company in every sense. In other words, it isn’t different from Schestowitz or other importers in its connection with Procter & Gamble. It found that Diplomat is not only a distribution center, “the wheels,” as it is customary to call this in the field, but the exclusive importer of the company in every way: it purchases products from Procter & Gamble at a certain price, and then manages the negotiations with retailers about pricing. In other words, Procter & Gamble doesn’t need to give permission to Diplomat for sale or price reductions, and if someone refuses to permit a sale at a chain the refusal is Diplomat’s.
Nonetheless, as opposed to Schestowitz, known from the wars it wages against the phenomenon of parallel importing, Diplomat does not engage in struggles with parallel importers or retailers. We can assume that Diplomat doesn’t feel threatened by parallel imports, that up until now, it enjoys the thousandth if receives from enormous sales the company oversees.
Another possibility is that similar to purchases from Procter, so with the issue of parallel importing. Diplomat is comfortable hiding behind Procter & Gamble, known for its tough pricing policies. As a senior retailer defined this: “Diplomat is a distribution company of Procter & Gamble, which has a clear policy of conquest of sectors of the market and then price squeezing. Diplomat are Procter & Gamble’s importers and marketers, and therefore they enact the same aggressive policy. In actuality, they translate it.”
Not everyone agrees with the criticism of Diplomat. The company oversees such a wide variety of mass brands, that no retailer can survive without them anyway. Therefore, there are those who argue that Diplomat prefers to overcome the parallel importing phenomenon through compromising from a position of strength.
In the field, it’s know that if you want to get a good price from Diplomat, it’s enough to prove your ability to get their brands from a parallel importer with a lower price. “Diplomat told us that there is no reason to get their products from a parallel importer, because they will give us competitive prices,” says an official from a medium-sized retail chain. “They are one of our biggest suppliers, and one of those that is most comfortable to work with. They give good service and are professional. They don’t operate with the aggressiveness of Schestowitz. If you bring a container of Fairy from a parallel importer, you won’t have three attorneys waiting in your office like happens with Schestowitz, if you order Carefree from a parallel importer.” However, the retail chains and parallel importers sometimes voice criticism about the fact that Diplomat’s operation is meant to expose parallel importers in order to put them out of business, and then Diplomat can go back to raising prices.
“Diplomat’s people offer a lower price, but they don’t ensure a competitive price long-term, but only for three or four months. They are interested in outlasting the parallel importer,” says an official from a well-known retail chain.
Weiman, even though he has reached retirement age, doesn’t seem like someone about to stop or go on a pension anytime soon. As long as he is in close contact with Procter & Gamble, there is no reason Diplomat won’t continue to grow. The population has only grown over the time and competition, despite government attempts, has not.”
The company said in a response: “Diplomat operates according to values of honesty, commitment, professionalism, and uprightness. The company runs with cooperation, respect, and reciprocity with regard to employees, customers, and suppliers from around the world. We choose not to reveal our business and trading plans with our partners on the pages of a newspaper, and certainly our financial data, which you presented, are far from exposing the reality.
“Diplomat initiates around the year hundreds of sales for consumers through private retail and consumer chains, according to marketing policies of different brands it distributes, such that we do not see any validity for the contentions that were raised in this article. ... To be clear, Diplomat takes care to operate according to the letter of the law, and thus respects honest competition for the benefit of the consumer and has never impeded it.”