The Start-up Nation is often attributed to Israeli entrepreneurship in the sphere of high tech and telecommunications. During the last two decades, the Israeli food and beverage industry has attracted a buzz of interest among global consumer brands. They are witness to a whirlwind of innovative health and wellness solutions, from food brands to ingredients manufacturers, flavour and fragrance providers to state-of-the-art delivery systems for important condition-specific health benefits. Multi-nationals are settling in Israel by merger and acquisition to leverage Israeli culinary and nutritional ingenuity.
Industry Challenges, the Israeli Response
Walking the corridors of Israeli university food science departments one finds a dynamic interaction between academia and industry, creating game-changing opportunities with clear and compelling health benefits, unquestionable food safety, demonstrated efficacy, good value, and superior sensory (organoleptic) characteristics. Multi-national food brands like Nestle, Unilever, Danone and Pepsi, have joined-up with well-known Israeli food companies e.g. Osem and Strauss, not just because of the market size, rather because the Israeli industry serves as a beta-site for new product and health developments, used in their global markets.
As for ingredients, flavours and fragrances, Israeli companies are not only on the cutting edge of new product developments, but also mergers and acquisitions. Global market leaders include Frutarom (having grown from revenues $100 Million in 2001 to $500+ Million in 2010), Lycored (acquired in 2011 together with its parent Mahteshim Agan Industries by ChemChina), Solbar (acquired in 2011 by the American CHS Inc.) and Galam (leading manufacturer of Fructose, Glucose and Starch, which itself has acquired a number of Israeli start-ups during the last few years).
The next generation of Israeli health and nutrition brands, e.g. Algatech, Enzymotec and Lipogen, have set their sights on these success stories, by developing new science, new products and new capacities to meet global market demands.
Some of the ways Israel is leading innovation in the food and health industry are as follows:
- 1. Ingredients: Natural with biologically active properties
Israeli natural ingredients companies are taking advantage of two major resources: Agreeable climate for cultivating in controlled conditions; and research institutes discovering the science found in nature for preventing disease and improving quality of life.
- Israel is a global leader in algal physiology with industrial applications for cultivation and production of microalgae with important health benefits. Researchers from the Weizmann Institute and Ben Gurion University have developed unique technologies, e.g. tubular closed systems located in the Arava desert and energized by the sun, and utilizing flue gas from coal burning power stations for algae cultivation.
- Israel is a market leader in natural lycopene, used as an active ingredient for improved vision, men’s health and skin anti-aging. Lycopene is also a natural pigment, replacing colouring agents which are prohibited in many markets.
- One of the three largest global producers of specialty soy proteins and soy isoflavones established its first facility in Israel in the late 1980s, followed by China and the United States manufacturing sites. Soy proteins are included in a wide range of applications, from calf-milk replacers (Europe and Asia), packaged meat products (ground, pastrami), health bars and beverages, and meal replacement products.
- The Arava desert is also a source of colourless tomatoes which are not genetically modified, providing concentrated active properties for „beauty from within‟ cosmetic and food products. In the Arava, another micro-algae is cultivated in open ponds for anti-oxidant, anti-inflammatory effects. And, a Hoodia cactus is grown in desert greenhouses with important weight management properties.
- 2. Technologies: Delivering health to the right place
Multi-national food brand manufacturers and natural ingredients suppliers are developing new products using a patented Israeli granulate formulation to mask unpleasant flavours, and release the health beneficial ingredients in the lower intestine. Another technology incorporates nutraceuticals in natural nano-capsules to supplement dairy products with minimal effect on functional and sensory properties.
- 3. Consumer goods: Combining pleasure with good health
Children’s health is a primary market segment. Offering dietary supplements to children must be palatable. Gummy bear vitamins, minerals, and ingredients such as Omega-3 and Probiotics are the focus of one nutritional health trademark sold throughout Israel. They are now collaborating with major pharmaceutical companies, developing global brands. A novel product range for adults and children includes beverage syrups with clinically tested active ingredients, in well-designed bottles, to be mixed in water. Many of the active ingredients developed in Israel are used in these liquid formulations, for superior bioavailability (absorption).
Strategic ventures: The best Israel has to offer
As indicated, multi-national food brands are searching out Israeli partners not just for the local market potential. Centres of excellence in new product development, are removing the negative image of processed foods, e.g. high-calorie, high-sodium content, while preserving desirable flavour profiles. Other global supermarket and food manufacturers regularly visit as guests of the Israel Export Institute in search of new food concepts, better health profiles with safe and efficacious technologies.
What are potential customers (and investors) finding in Israeli health & nutrition?
- Innovation: Points of differentiation and potential for category leadership.
- Uniqueness: IP (Intellectual Property) and product ‘protectability’.
- Economic potential: Reasonable cost of goods and profitability.
- Supply: Sustainable production capacity and quality assurance.
- Tangibles: Readily achievable brand, quality, taste, packaging.
- Intangibles: ‘WOW’ factor, e.g. completely natural, good tasting, convenient