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Interview with Ron Michael, CEO of Ahava: We Have Unique Stories

Editor’s Note:

 

Ron is a handsome man with blond hair and blue eyes. Perhaps it is because he uses a facial mask of Dead Sea mud from the Mediterranean, but his skin is so smooth that I felt a bit embarrassed. He is friendly with a warm smile, and after asking me where I was from he quickly complimented my English, saying it was equal to that of a native speaker. Ron was gracious enough to take my interview on the sidelines of Fosun global annual conference, and even recorded a Happy New Year video in Chinese. First, we discussed China’s growth momentum and the brand heritage of Ahava, and then shared observations from different industries and the Ahava “love story.” We committed to build Ahava into a fast-growing consumer brand and create a legend by combining China’s momentum with the help of Fosun. All that is needed to make this happen is passion, love, agility and skill.

 

 

  • Fosun's strategy calls for "combining China's growth momentum with global resources." After acquisition by Fosun, what major progress has Ahava made in the Chinese market?

 

We have made our first steps in the Chinese market, opening up our first AHAVA experience store in Shanghai. We've done the important work of ensuring our products meet CFDA regulations, allowing us to offer a large range of AHAVA products to Chinese consumers in the future. We've started looking to the future, assessing the merits of various strategies for rapid and successful growth. We are early in the process, but we believe that we have a strong team in place to allow the AHAVA brand to flourish in China.

 

  • In China, consumers purchase cosmetics online, disrupting the previous BA model in shopping malls. Is this trend apparent in Ahava's other major markets?

This is certainly a trend and we see it growing in the next five years. As our consumer's lifestyles are getting busier and busier, convenience is becoming the new luxury. Consumers are spending increasingly less in department stores.  They are looking for options that provide the convenience of more information, more choice, and seamless payment options. Of course, being able to purchase online, which offers all these things -- with the added benefits of not having to disrupt your day to leave your home or office -- is the ultimate convenience. With the technology advancements that enable consumers to find the right product for them, I see no reason that the trend you see in China wouldn't extend fully to our other major markets that already are experiencing it to different degrees.

 

  • Tell me about Ahava's market breakdown and strategies in different markets in 2016. Also, your viewpoints of GloCal (global+local) while managing a global company, and thoughts on your 2017Plan.

 

Ecommerce has quickly risen year-over-year to become our fastest-growing channel. Israel currently represents about half of our total sales, mainly driven by tourists from around the world who come to discover the majestic Dead Sea.  The US represents approximately 30% of sales. We do believe in “Glocalization” as a strategy.  We tell the story of our brand and our distinct Dead Sea identity in a unique way, allowing local markets to have some flexibility to connect with the local nuances and needs of consumers. The best brands worldwide (consider Cola Cola) tend to have this philosophy.

 

  • P&G has been spinning off unprofitable brands. What is your Perspective on industrial consolidation?

 

 

The beauty industry has seen heightened activity in this area, with players such as Coty and Unilever acquiring many of the up-and-coming niche beauty brands to expand their strength and portfolio. Still, there are so many ‘indie’ beauty brands out there, and we at AHAVA have a unique story.  Our story focuses on origin, with the most mineral-rich waters on Earth.  We can grow from a medium-sized brand to a large one by telling this story, and recruiting new users in the process.

 

 

  • After joining the Fosun family, what are the synergies you have been working on with other companies? What should we expect in 2017?

 

We are proud to be a part of the Fosun family, and we see the synergies with other Fosun family brands as an amazing opportunity.  We have already kicked off talks with Club Med to explore the possibility of AHAVA products in their spas, and possibly as in-room amenities. We see many other opportunities and we will seek to advance these win-win discussion in 2017.

 

 

  • Ahava means Love in Hebrew -- can you share a love story with us?

 

Actually, the story of the people who live and work in the Dead Sea region, the story that led to the creation of AHAVA, is a beautiful love story that is still going strong today.  The brand was established 29 years ago by the residents of 5 kibbutzim on the shores of the Dead Sea, who have been sustained by the natural elements of the region for generations. Their relationship with the desert environment -- the sea, the plants, the earth -- is very intimate, because in order to survive and thrive there, they have had to be very in tune with the changes in the seasons and climate. They began to create AHAVA products out of a strong desire to share the best of the Dead Sea's benefits with others. Their intimate knowledge of each the elements that have sustained them for their whole lives enabled them to extract and mix the very best minerals and botanic ingredients from the environment around them, and to develop such highly effective skincare products that are as powerful as they are natural.

 

  • Would you please share with us your reflections on our annual conference held in Shanghai?

 

It was very exciting to attend the Annual Conference for the second time and to be welcomed as part of the Fosun family. I enjoyed participating in the "Happiness" panel and sharing insights with the respective panel members. I loved meeting the various attendees and telling them about AHAVA while examining potential avenues of cooperation. Finally, I am always overwhelmed to learn how strong and large the Fosun family is worldwide and especially in China. While still young, it is a huge, diversified organization.