Falafel at Tiffany's For the first time, the luxury-goods company is selling its products in Israel. RACHEL NEIMAN SPECIAL TO THE JEWISH NEWS A few questions: Is the open- ing of an Israeli store rep- resenting luxury goods firm Tiffany & Co. anoth- er vote of confidence for region- al stabilization? Does the availability of Tiffany's products to Israeli Hol- ly Golightlys (and to customers with Holly-like desires plus the bucks to back them), put Tel Aviv on the list of world centers of el- egance and affluence? Does this mean Israel rates? The answer is a careful but positive "Yes," according to Tom O'Neill, senior vice-president of the Asia-Pacific division of Tiffany & Co. Mr. O'Neill was in Tel Aviv last month for the opening of Amirel, exclusive distributor of Tiffany products to Israel. "I feel we made the right de- cision at the right time," he says. A cocktail party held at Amirel's flagship store in the Gan Ha'Ir mall — well-attended by Israeli celebrities such as supermodel- for-a-minute Michaela Bercu — "confirmed our instincts about the Israeli market," Mr. O'Neill says. "From the very beginning, our research showed Israelis were value-conscious, design-oriented and fashionable. Put that all to- gether and you see it was just a matter of deciding when to go into the marketplace." So what took Tiffany so long? One reason is that, until 1984, the year O'Neill joined Tiffany & Co., the firm had very limited ex- posure outside the United States. That same year, then-presi- dent of Avon products William Chaney was preparing a lever- aged buyout of Tiffany from Avon (Chaney is today president of Tiffany & Co.). "We were a private company for a few years," relates Mr. O'Neill. `Then we made an IPO (initial public offering) on the New York Stock Exchange in 1987, a few years earlier than ex- pected. We were more successful than we thought we would be." Part of that success was due to international expansion. "When we were a private com- pany between the LBO (lever- aged buyout) and the IPO, we targeted international expansion because the company had excess capital to reinvest. We opened our first store in London in late 1985." In 1990, Mr. O'Neill was made vice president of the internation- al division, where he has been re- sponsible for expansion of retail trade, direct marketing and fra- grance businesses in new global markets. Tiffany today has 82 locations worldwide, most of them outside the United States. However, Mr. O'Neill hurries to point out, only 37 percent of sales are outside the United States. `The largest stores, and 50 per- cent of sales, are within the Unit- ed States," he says. The company operates three share, compared with $22.47 mil- lion, or $1.42 per share (exclud- ing a charge for business realignment in Japan), a year earlier. Revenues in 1993 increased 21 percent to $682.8 million from S566.6 million in 1992. This year, Tiffany opened a store in Abu Dhabi in the United Arab Emirates in January, and one in Jedda, Saudi Arabia, in April. For the Gan Ha'Ir store opening, Mr. O'Neill drove to Tel Aviv from Amman, where the company has a small distributor. Up until now, Mr. O'Neill says, "(Tiffany) has had a small and sporadic business in the Middle East, but we have not been a sig- nificant presence. Tiffany has in- tentionally not been involved (in the Middle East)." Now, he says, "it makes sense, given the peace process and the seeming change in the various economies in the region." Nonetheless, Tiffany's has long had connections in the wholesale diamond sector. The company has been doing business in Israel "for a number of years," although Mr. O'Neill declines to specify how long. Until recently, Israel with its triple-digit inflation, high import duties and anything but luxurious standard of living was not seen as a significant market for Tiffany. The Gan Ha'Irs and Malcha malls of today, or as Mr. O'Neill calls them, "upgraded retail out- distribution channels: U.S. retail, lets," are the result of "increased which includes sales in Tiffany & demand from Israeli consumers Co. stores to specific jewelers and for upscale presentation and di- specialty retailers; direct mar- verse products." keting, which includes business, This demand makes up one of to-business sales and catalog Mr. O'Neill's key principles of ex- sales; and international retail. pansion: "the value behind the The latter department includes product as perceived by the cus- sales through Tiffany & Co. tomer." stores throughout Europe, the So, what do Israelis like? Far East, Canada and the Mid- "We are the first to admit we dle East as well as sales to re- don't know the Israeli market," tailers and distributors in those admits Mr. O'Neill. areas. But research was conducted Tiffany & Co. 1993 net profits were $29.3 million, or $1.85 per FALAFEL page 68 ISRAEL DIGEST' Compiled by Steve Strinfrom Jerusalem Post reports — $1 EQUALS 2.9540 NIS (shekels) - Close Price 4/25/95 — A Stern Warning For Morocco Israel Industry and Trade Min- ister Micha Harish warned Mo- rocco that its refusal to allow seven Israeli industrialists to participate on behalf of the Is- rael Export Institute at the SIPEC packaging exhibition in Casablanca is liable to harm the country's economic stand- ing-. Mr. Harish said Morocco's actions countered the princi- ples of free world trade as en- capsulated in GATT, and he warned that political boycotts of this type will bring sharp re- actions from the United States and Europe. The Israeli industrialists re- turned from Morocco after they were recalled by Mr. Harish fol- lowing the confiscation of their product samples by Moroccan customs authorities. Who Bought Block Of Bezek Stock? Barclays de Zoete Wedd (BZW) has purchased a 4.7 percent block of stock in Bezek, an Is- raeli telecommunications firm. Ifs believed that BZW was act- ing on behalf of Cable & Wire- less, Britain's second-largest telecommunications company. Cable & Wireless is chaired by Lord Young, a former Con- servative cabinet minister and a prominent member of the Jewish community in the Unit- ed Kingdom who has advised the Israeli government on its privatization strategy. Israel-Jordan Projects Presented A rail connection between Other projected projects are Haifa port and the Dead Sea in- a railway and highway from dustries of both Jordan and Is- Haifa to Irbid, via the Jordan rael was presented at an River border crossing, and a Amman conference on Jordan highway between Ashdod and Valley development sponsored Amman, crossing at the Allen- by the U.S. Trade and Devel- by Bridge. opment Administration. Retail Sales Surge 17 Percent Retail sales in Israel shot up 17 percent in real terms in the first quarter of the year as consumer spending took off after moder- ating in the last quarter of 1994, the Central Bureau of Statistics reported. Sales fell 12 percent in the fourth quarter after rising between 8-13 percent in the previous three quarters. The bureau's survey includes marketing networks, chain stores, supermarkets, and re- tail stores selling food, textiles, clothing, shoes, durable goods and other goods -- except cars, car parts and residential heat- ing oil and gas. Prime Lending Rates Fall Slightly Commercial banks in Israel re- duced their prime lending rates by 0.8 percent, to 15.5 percent from 16.3 percent, in response to the Bank of Israel's decision to cut interest rates= by the same amount. Despite strong pressure from the business sector for drastic interest cuts following March's negative consumer price index, Bank of Israel Governor Jacob Frenkel stood his ground and nudged the rate of credit to commercial banks from 14.8 percent down to 14 percent. Mr. Frenkel pointed to lower inflationary expectations in the capital market and slower growth in the money supply to justify the moderate rate cut.