Ralko: The Shift from GRUNDIG to CHIQ and the Cost of the Supply Chain

What This Follow-up Is Isolating

The main article argued that Ralko's brands still hold the shelf, but financing has become the active bottleneck. This follow-up isolates the mechanism behind that conclusion: the change in the supplier and brand basket. For Ralko this is not a side issue about marketing. The company itself describes branded import rights, supplier relationships, and financial strength as critical success factors and entry barriers in this market. In 2025 those three layers stopped reinforcing one another cleanly.

The story is not simply that GRUNDIG left and CHIQ entered, so the basket reset itself. The story is that GRUNDIG left, CHIQ has not yet proven to be a clean replacement, BLOMBERG kept flowing but through a more expensive and less convenient route, and SHARP tightened payment timing. That is why the cost of the transition did not show up in one headline event. It showed up through the supply chain, working capital, and hedging.

That chart is a good starting point because it shows what is easy to miss. CHANGHONG is already in the basket, but in 2025 it still accounted for only 3.9% of group purchases. The transition has clearly started, but it still does not look like a full replacement for the brand layer that was removed.

CHIQ Is In, but It Still Does Not Look Like a Clean Replacement

During the reporting period the company and ARCELIK agreed to stop importing GRUNDIG into Israel. At the same time, the company began importing and marketing CHIQ refrigerators and washing machines through CHANGHONG. At first glance that looks like a natural handoff: one brand out, one brand in. The disclosure around CHIQ shows something less settled.

The CHIQ agreement became effective on October 29, 2024. It grants exclusivity in Israel for refrigerators, washing machines, and other products that may be agreed by the parties, for 36 months, with annual purchase targets for each rolling 12 month period. If the company meets its obligations, the agreement renews for additional 36 month periods, and the rights holder may terminate it only if the company fails to meet at least 85% of the annual targets for two consecutive years.

On paper, that is a structured framework for exclusivity and mutual commitment. In practice, the filing already discloses two visible frictions. The company did not meet the agreed purchase targets, and CHANGHONG did not comply with the exclusivity principle, yet the parties continue to cooperate. That matters because it shows the new brand layer exists, but the economics around it are not settled yet. The targets did not work as planned, and exclusivity did not hold fully, so the protective layer that a written agreement was supposed to provide is still incomplete.

The filing does disclose purchases by supplier, but it does not provide a quantitative bridge from that transition to revenue by brand. So it is not possible to measure precisely how much of the hole left by GRUNDIG has already been filled commercially by CHIQ. At the procurement level, CHANGHONG was still very small relative to SHARP and ARCELIK. So the more credible 2025 reading is not a fully executed replacement, but an early build-out. That distinction matters. A company can announce a new brand, but if its share is still small, the targets have already been missed, and exclusivity has not been fully enforced, then the business is still leaning mostly on the old basket.

This is also where the contrast between the old and the new basket becomes sharper. With SHARP and ARCELIK there are no written exclusivity agreements, only long-running commercial relationships and ongoing understandings. With CHIQ there is a more explicit written structure. Yet even that structure already shows slippage. In other words, Ralko did not move from a loose setup to a cleanly locked one. It moved from an old relationship model to a new contractual layer that is still searching for balance.

The Turkey Route Still Works, but on Worse Terms

The weak point in the transition is not only CHIQ. It is also that the brand that remains, BLOMBERG, no longer arrives on the same terms. The company says it continues importing ARCELIK products under the BLOMBERG brand on a regular basis, but not directly from Turkey. That non-direct route materially increases shipping costs and changes payment terms so that the company must pay before production begins. In plain terms, inventory is not only more expensive. It also starts consuming cash earlier.

That is a deeper economic shift than it may sound like. An importer normally works with a time gap between order, production, shipment, sale, and collection. When more of the payment moves to the pre-production stage, the company carries more time risk and more working-capital burden. Even if the product ultimately arrives and the consumer never notices the difference, the importer has financed more of the journey.

The filing adds that in August 2025 it was published that Turkey was tightening its restrictions further, including by stopping Turkish ships from reaching Israel, and the company believes that could lead to additional shipping-cost inflation. The company also says it cannot yet assess the manner or extent of implementation and the future effect. That is another meaningful signal. The route may still be open, but it no longer looks like a stable, cheap, and predictable supply base.

SHARP also became less convenient on timing. Until 2025 payment terms were mainly based on letters of credit opened close to each order. Starting in 2026 the terms were updated so the company pays about two weeks before shipment, subject to receiving approvals satisfactory to it. That does not necessarily make the product itself more expensive, but it does bring forward the cash outflow.

That table captures the core thesis. The shelf may still be full, but the economic terms required to keep it full have become more demanding. That is exactly the point where a brand transition quickly turns into a financing issue.

When Suppliers Carry Less of the Cycle, the Bank Carries More

This is the most important point in the whole story. Ralko is not describing a demand collapse. It is describing a business that continues to sell, but finances more of the operating cycle itself. That shows up both in management's cash-flow explanation and in the year-end balance sheet.

In 2025 receivables rose to NIS 83.95 million from NIS 77.64 million, inventory rose to NIS 66.27 million from NIS 63.55 million, and suppliers fell to NIS 21.82 million from NIS 28.38 million. At the same time, short-term bank credit rose to NIS 28.73 million from NIS 17.97 million, while cash fell to only NIS 282 thousand from NIS 3.81 million.

The message is straightforward. More money is tied up in receivables and inventory, less remains with suppliers, and the bank has to bridge more of the gap. That is how the cost of the supply chain moves into the balance sheet. It does not need to show up as one explicit warning. It is enough for the company to pay earlier, carry inventory longer, and receive less natural operating credit from suppliers.

Management's own explanation of operating cash flow says almost exactly that. Cash from operations rose to NIS 17.28 million, but that performance was held back by a NIS 6.315 million increase in receivables, a NIS 2.726 million increase in inventory, and a NIS 6.558 million decrease in suppliers. So even in a year with positive operating cash flow, a meaningful part of the cash was absorbed inside the operating cycle.

What matters is not only that bank financing came in, but who stepped back. By year-end, supplier credit was lower by about NIS 6.6 million versus the end of 2024, while short-term bank credit was higher by about NIS 10.8 million. Economically, part of the financing burden moved from the supplier layer to the bank layer. That is not the same money, the same flexibility, or the same cost.

That is also why the CHIQ and GRUNDIG discussion cannot stay at the level of brand share or marketing. Once import terms and payment timing change, the real question is no longer only which refrigerator gets sold. It is who finances the time between order and collection.

FX Is Part of the Supply-Chain Cost, Not a Footnote

Note 16 adds an important layer to this story. The group imports from suppliers in Europe and the Far East, is exposed mainly to the U.S. dollar, and uses FX options to reduce that exposure. This is not a technical risk-management footnote. In an import business, FX is part of the cost of the supply chain.

In 2025 the company recorded a NIS 4.273 million loss on hedging transactions against dollar exposure, versus a NIS 625 thousand gain in 2024. That is a sharp swing. At the same time, at the end of 2025 the option position stood at USD 7.35 million on each side, and the derivative liability recorded for those transactions was only NIS 38 thousand. The sensitivity analysis also shows that a 5% move in the dollar would have affected profit before tax by NIS 368 thousand.

That combination says something useful. The year-end balance does not show an unusually large open FX exposure, but the income statement already absorbed a material hedging cost during the year. That suggests the 2025 pain did not come only from end-period exposure. It also came from timing, volatility, and the way the import model had to operate through the year. When import routes change and payments come earlier, the FX layer becomes more expensive to manage even if the balance sheet does not look dramatic on the last day of the year.

In other words, the problem is not only that the product may cost more or that freight may cost more. The problem is that a less convenient import chain also becomes less convenient to hedge.

Bottom Line

Ralko's move from GRUNDIG to CHIQ did not yet produce a new brand basket in 2025 that is clean, settled, and cheap to run. It produced an interim state. CHIQ exists, but it is still small in procurement and already showed slippage on targets and exclusivity. BLOMBERG still arrives, but through a more expensive route and with earlier payment. SHARP remains the core supplier, but even there payment timing has become less favorable.

That is why the real cost of this story sits not only in the brand layer but in the financing structure behind the shelf. If 2026 shows that CHIQ becomes more commercially meaningful without further slippage, that BLOMBERG keeps flowing without adding more weight to working capital, and that bank usage does not keep rising just to support the same level of sales, then 2025 can be read as a transition year. If not, the real problem will turn out not to be the loss of one brand, but a structural increase in the cost of the entire supply chain.