Shaniv-Sasatek strives to avoid price hikes amid challenges

Pesach Berent, CEO of Shaniv-Sasatek, rarely gives interviews. In fact, he prefers not to give interviews at all. However, in the past nine months since the war broke out, the situation has changed. Berent now splits his time between the company’s two factories at opposite ends of the country: Ofakim, which suffered a severe blow at the beginning of the war, and the Dalton Industrial Zone, where rockets frequently fall near the factory.

Berent faces numerous challenges, especially along the volatile northern border, but also with the Houthi crisis and delayed goods shipments, all while striving to maintain green industry practices and combat the high cost of living.

Shaniv-Sasatek, a publicly traded company, produces a wide range of products, including the Touch and TNX brands, along with other locally made products. Pesach, 47, a father of five and grandfather of two, hails from an ultra-Orthodox family traditionally involved in the diamond industry. He spent the first decade of his career in the diamond trade. When the family, which was on the board of directors of the Ofakim paper factory established 30 years ago and had fallen into a severe crisis, decided to take control, Berent found himself, a young businessman just starting out, appointed CEO of a paper manufacturing company in 2008.

However, even 15 years as CEO of a company that was once “on the ropes,” with losses of ten million shekels in 2008 (“Today, a decade and a half later, we have a turnover of 800 million shekels with 800 employees,” he proudly states), did not prepare Berent for this period.

“I don’t remember a time like the last five years we’ve experienced here in Israel,” he begins. “On one hand, the company has grown significantly, and in 2018 we acquired the Sasatek factory in Kibbutz Sasa, which brought us tremendous growth. On the other hand, there was COVID-19, the war, and the challenges that these times bring. Our growth as a business is impressive, but everything is very, very challenging.”

“The difficulties indeed began with COVID-19,” Berent adds. “Then came the global shipping crisis and logistics costs that heavily impacted Israeli manufacturers. Despite being a 100% Israeli production, I still source raw materials globally, and thus the impact of the shipping crisis was dramatic. Later, when that crisis finally subsided and shipping started to normalize, the crisis here with the war and the Houthis began. This affects global shipping, mostly in the East, but it certainly has a noticeable impact here as well.”

How to Cope“To be a player in consumer goods today with such daily or weekly changes requires a lot of flexibility and keeping a finger on the pulse. You need to respond and ensure your supply chain and customers receive goods at the right time, which is very important to us—while continuing to manufacture despite everything. And of course, keeping costs in check.”

Premium for EveryoneNot just in wartime, but even during it, the company’s massive logistics center in Ofakim supplies equipment to retail chains and companies. “We reach over 7,000 sales points across the country weekly, sometimes more than once a week,” he boasts. “This didn’t stop even during the toughest days when the South was at war. We mobilized and continue to support the local community and the military, supplying consumer goods to various bases and units, all while maintaining regular operations as an essential factory.”

After years of primarily selling raw materials to the paper industry, Shaniv-Sasatek decided to enter the consumer market with sub-brands offering finished products to the public and end consumers. “At some point, we decided to become a leading player in the Israeli consumer goods market—to sell our products as finished goods and increase competition. In recent years, we have become one of the top five suppliers in Israel,” explains Berent. In terms of the paper industry, the company has surpassed Sano, which is still larger in the cleaning products sector, but the forward vision is to bring the leading subsidiary companies' toiletries and cleaning products to the forefront, not just among the top five in Israel, but to the top position. “I think the impressive growth we’ve seen in recent years is solely due to the consumer, who appreciates the quality of our products and their pricing. Otherwise, we would have no right to exist.”

Entering a Competitive Market“When we entered the market, it was dominated by two strong players in paper: Kimberly and Sano. Our entry created real competition, leading to lower prices. The result is that today over 50% of the company's sales are from our brands. Touch, for example, is a premium product at a fair price.”

How difficult is it to get Israeli consumers to change their long-standing habits and adopt a new brand?

“The challenge is first to get the Israeli audience to try new things. Once you get them to try it, it works. Once a consumer sees that the target product is sold at a fairer price and offers a product that is just as good—and sometimes even better—it’s possible.” “You’re right, changing Israeli consumption habits takes many years. Brands are not built in a day. Despite the significant establishment of brands like Touch in the last six years, there is always room to grow.”

Sustainability and Shabbat ObservanceBerent also mentions the challenge with retail chains and the struggle for shelf visibility as part of the revolution that could help with the cost of living. “Ultimately, it’s not just about breaking the market in terms of prices but also securing shelf space in retail chains. It takes time to convince them to allocate shelf space to a young brand. But once they do, it adds value to the consumer in the form of good quality products at fair prices. When you get shelf space, you drive sales, and we see that the public votes with their feet.”

One of Berent’s additional agendas as CEO is corporate responsibility, which he diligently implements both in the factories and in production. “We have a power station that operates on natural gas, which we introduced in the last decade. Our boilers and heating system run on natural gas, and we generate electricity for the factory's needs. This is something we are very strict about because if we are already running factories, they should at least not be polluting. Moreover, over 50% of the factory's production in the paper sector is from recycled materials like office paper and magazines that we buy and recycle. Environmental protection is an important agenda for us, no less than quality and prices.”

Berent, as mentioned, comes from an ultra-Orthodox family, and one of his father's conditions from the day the factory was established was to observe Shabbat. However, in an essential factory, it’s not simple to stop the machines for 25 hours each week.

“He said he would only enter as a partner if the factory observed Shabbat,” Berent recounts. “And although in the paper industry, stopping on Shabbat can have a critical economic impact, faith outweighs everything, despite the financial cost. We manage and believe it is part of our success.”

Branding and Celebrity EndorsementPart of your branding also involves using celebrities and influencers, which breaks out of the traditional boundaries and directly appeals to the audience in their language.

“Miran Bouzaglo is the presenter for Touch, and we have a sub-brand collaboration with Miki Buganim. We believe in this and continue to make efforts. Advertising is part of our investment, and we see the results. In the end, there is a brand produced in Israel in the periphery, and this is an integral part of our connection to the audience that we put at the center.”

Current Situation in the Northern Factory“The factory operates continuously. In recent weeks, the tension is even higher. Employees come and go, and the factory continues to work. I personally visit once a week and ensure I’m with the employees all the time. We invest a lot of effort to strengthen the sense of togetherness. In such times, our functioning is not normal: there are evacuees, difficulties, children in the army, some employees deal with damaged homes, and there’s a lot of work around to provide support to our employees, whom we see first and foremost as family.”