Globrands Group, one of Israel’s largest distributors of consumer products and tobacco, suffered a fatal blow to its business operations. The company published an immediate report this morning regarding an unusual event deviating from the corporation's ordinary business, within which it updated that the international tobacco giant JTI decided not to renew its distribution agreement in Israel. Following the dramatic announcement, the company's stock is responding with sharp price drops and plunged today on the stock exchange by 46%.

The current distribution agreement between the company and JT International SA is expected to officially end in February 2027. The report indicates that the background for the decision is a commercial disagreement between the parties. Following the breakdown in negotiations, JTI informed Globrands that another entity has been selected to serve as the new distributor of its products in Israel.

These are highly dominant smoking brands in the local market, including Camel, Winston, L.D, and Natural American Spirit.

This is a financial earthquake for Globrands, as the distribution activity for JTI concentrated a massive portion of its operating turnover. The rate of the company's sales for JTI products constituted approximately 46.2% of the company's total net consolidated sales in 2023, approximately 45.3% in 2024, and approximately 45.1% of total sales in 2025.

In tandem with the collapse of Globrands, the Diplomat company officially reported that it is the one that won the coveted tender and will replace it as the exclusive distributor of JTI brands in Israel starting February 2027. Diplomat, under the management of Yaron Blum, will establish a dedicated array for the purpose of the new activity and estimates that the scope of gross revenues from the contract will stand at an astronomical sum of approximately NIS 2.2 billion per year (of which approximately 80% is purchase tax).

The company intends to connect the mega–brands, including Winston and Camel, to its existing logistical infrastructure which numbers approximately 5,000 points of sale across the country.

The company explicitly admits that the termination of the engagement will have a material adverse effect on its financial results. According to the company management's estimates, which are based on internal data, the loss of the franchise will lead to a decrease of approximately NIS 35 million in the company's net profit, compared to the net profit data recorded at the conclusion of 2025.

Globrands emphasizes that this forecast is forward–looking information that does not take into account potential future changes that may compensate for the damage, such as a change in revenues from other sources, efficiency measures, or changes in the product basket and the economic situation.

In an attempt to reassure investors, the company rushed to clarify in the report signed by CEO Roy Amit and Deputy CEO Amir Doron, that JTI's decision has no connection to the company's second distribution agreement with the tobacco giant BAT, and no affinity or dependency exists between the two.

Concurrently, Globrands is preparing for the day after and notes that it will examine several strategic options in the near future, including engaging with product suppliers from completely different fields, with the aim of utilizing the capabilities of the existing sales and distribution array and reducing costs.