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Food Manufacturers in Israel Exploit Growing Demand for Kosher Foods in European and North American Markets

Posted on: Thursday, 13 March 2008, 03:00 CDT

Research and Markets (http://www.researchandmarkets.com/reports/c85738) has announced the addition of Israel Food & Drink Report 2008 to their offering.

BMI's Israel Food Drink Report provides independent forecasts and competitive intelligence on Israel's food and drink industry.

In 2007 Israel's food and drink sector continued to develop with expansions and mergers and acquisitions, as discussed in BMI's recently published Israel Food & Drink Report for 2008, reflecting the maturity of the market. Starting with one of the more recent developments, in late November, Investment bank UBS acquired 1.1m shares in the Israeli food company Strauss Group from the company's controlling shareholder, worth a total of ILS60mn (US$15.5mn). UBS had previously sought to acquire shares in Strauss Group, formerly known Strauss-Elite, but had failed. However, Strauss Group, which is Israel's second largest food and drinks group, was now more receptive to the shares purchase, for the sale of these shares will raise the proportion of the company's stock held publicly to over 25%, allowing the company to remain in the blue-chip Tel Aviv 25 (TA25) index, under new rules and regulations placed by the Tel Aviv Stock Exchange. Apart from Strauss Group's Israeli operations, it also has a leading position in the roast and ground coffee markets in central and eastern Europe and is the second largest coffee company in Brazil. In September the company had announced that it invested around EUR10mn in opening a coffee factory in Serbia, with an annual capacity of 30,000 tonnes.

Looking abroad for growth opportunities is nothing new for Israel's food and drinks producers. The small size of their domestic market means that they must look abroad if they are to achieve major growth.

However, expanding into neighbouring Middle Eastern markets is generally not a viable options due to the boycotts on Israeli products, therefore, these companies must look further afield for growth opportunities. Another example of this can be seen in the expansion activities can be seen with G. Willi-Food International, Israel's largest food importer and supplier of kosher foods. In H207 the company embarked on a series of major expansions. First the company signed an agreement with a Russian dairy distributor to form a joint venture that will be called NewCo and will take over all of the present activities of the unnamed Russian distributor. The Russian joint venture partner has been described as a leading distributor of all cheese types in Russia, and the number one supplier of hard cheese, selling approximately 36,000 tons of cheese a year, with revenues of US$120mn annually. NewCo will import and distribute both kosher and non-kosher products into the Russia market. Meanwhile, the Danish joint venture company will be more focused on kosher foods, as it looks to broaden its penetration into the kosher food markets in Europe and North America.

Although food consumption in Israel is high, particularly by regional standards, BMI predicts that per-capita food consumption is due to decrease in coming years. A main reason for this is that mass grocery retail - traditionally a driver of increased food consumption levels - is already widespread and consumers are not, therefore, expected to significantly increase their food spending in such outlets. However, there is a growing demand for kosher foods in many European markets as well as in North America, which is why these companies are making the wise move of expanding into these more lucrative markets.

Companies Mentioned:

Osem

Blue Square

G. Willi-Food International

Super-Sol

Blue Square

For more information visit http://www.researchandmarkets.com/reports/c85738

Source: Business Monitor International

Source: Business Wire

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