G. Willi Inks Major Deal with Russian Dairy Distributor

| About: G. Willi-Food (WILC)

I was never big on bragging, well maybe I was, and just never had much of a chance to shine. But today’s news that G. Willi Food Intl (NASDAQ:WILC) had signed a binding term sheet with the owners of a Russian dairy distributor was predicted. The distributor is a leading supplier and importer of dairy products in Russia, and together they will form a new joint company. Willi Food would hold a 51% interest in the new company.

Analysts think this distributor will sell roughly 36,000 tons of cheese products to a base of over 1,000 customers in Russia, and generate an estimated $120 million in sales in 2007. According to HLB Prime Advice, a Russian appraisal company, the distributor is a leading distributor of all cheese types in Russia, and the biggest supplier of hard cheeses such as Gouda and Edam to this market. I love my GOUDA cheese! There is nothing like watching football with some Gouda and crackers.

This follows on what I have said in the past: that G. Willi is making a big push into the Russian food market. It’s become clear that with growing wealth and more disposable income, Russian consumers have created a large demand for imported, premium products. G. Willi can help satisfy that demand with its broad selection of healthy dairy products, and other foodstuff.

Mr. Zwi Williger, President and COO of Willi Food commented,

We are very excited about this transaction, which represents a bold step for G. Willi Food as we continue to expand our global footprint. According to market data, over 650,000 tons of cheeses are consumed in Russia each year of which roughly 50% is imported. We believe that NewCo will provide a well-developed distribution platform for Willi Food and its subsidiaries to drive market demand for dairy products in all categories including premium branded products, kosher and healthy living styled dairy products, as well as other categories.

As I wrote this, my local Dolphins fan (ouch), Zack “Facebook“Miller, asked me,” What’s their competitive moat?” First of all, what the heck is a moat? Anyway, the answer lies in Arkadi Gaydamak. He owns the parent company Willi Food Investments, and he is the largest egg distributor in Russia. He himself is a huge distribution channel, and with this new deal, look out. Willi will carve out nice marketshare in the Russian food market.

How is that for some moat!

If you are looking for a small food company that’s about to explode onto the global scene, have a long look at G. Willi. The stock has taken a hit, and looks attractive as a long-term investment.

Disclosure: The author has a position in WILC as of October 22, 2007, but has no holdings in any other stock mentioned.

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