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Israel Food and Drink Report 2008Published by: Business Monitor International Published: Mar. 3, 2008 - 53 Pages Table of Contents
AbstractIn 2007 Israel’s food and drink sector continued to develop with expansions and mergers and acquisitions, asdiscussed in BMI’s recently published Israel Food & Drink Report for 2008, reflecting the maturity of themarket. Starting with one of the more recent developments, in late November, Investment bank UBSacquired 1.1m shares in the Israeli food company Strauss Group from the company's controllingshareholder, worth a total of ILS60mn (US$15.5mn). UBS had previously sought to acquire shares in StraussGroup, formerly known Strauss-Elite, but had failed. However, Strauss Group, which is Israel’s secondlargest food and drinks group, was now more receptive to the shares purchase, for the sale of these shareswill raise the proportion of the company's stock held publicly to over 25%, allowing the company to remainin the blue-chip Tel Aviv 25 (TA25) index, under new rules and regulations placed by the Tel Aviv StockExchange. Apart from Strauss Group’s Israeli operations, it also has a leading position in the roast andground coffee markets in central and eastern Europe and is the second largest coffee company in Brazil. InSeptember the company had announced that it invested around EUR10mn in opening a coffee factory inSerbia, with an annual capacity of 30,000 tonnes.Looking abroad for growth opportunities is nothing new for Israel’s food and drinks producers. The smallsize 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 theboycotts 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-FoodInternational, Israel's largest food importer and supplier of kosher foods. In H207 the company embarked ona series of major expansions. First the company signed an agreement with a Russian dairy distributor to forma joint venture that will be called NewCo and will take over all of the present activities of the unnamedRussian distributor. The Russian joint venture partner has been described as a leading distributor of all cheesetypes in Russia, and the number one supplier of hard cheese, selling approximately 36,000 tons of cheese ayear, with revenues of US$120mn annually. NewCo will import and distribute both kosher and non-kosherproducts into the Russia market. Meanwhile, the Danish joint venture company will be more focused onkosher foods, as it looks to broaden its penetration into the kosher food markets in Europe andNorth America. Although food consumption in Israel is high, particularly by regional standards, BMI predicts that per-capitafood 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 growingdemand for kosher foods in many European markets as well as in North America, which is why thesecompanies are making the wise move of expanding into these more lucrative markets. Get Full Details About This Report >> |
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