The Israeli food industry was glad to see an end to 2001. Blasted by recession and terrorism, food manufacturers saw profits and sales plummet. just-food.com’s Aaron Priel takes a look at the situation, and sees some light at the end of the tunnel as he charts the industry’s movements in 2002.
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2001 was the worst year in a decade for Israel’s food industry, and the prospects for 2002 indicate no improvement, according to Gezy Kaplan, chairman of the Manufacturers Association’s Food Division, and chairman of the Tivall Group of Companies, a subsidiary of Osem-Nestlé Israel.
Kaplan, speaking in connection with the Manufacturers Association’s Food Day, explained that during 2001, production of food products in Israel fell by 1% for the first time in a decade, and food sales in the same year dropped by 3% in real terms to a total of NIS36.5bn (US$7.6bn). The export of food products meanwhile also declined in 2001 by 5.9% year on year, to US$417m. Nearly 1,600 employees were fired, and the industry witnessed a decline in investments in machinery and new equipment, which last year totalled US$678m.
Hostilities take their toll
“We see no signs of improvements in 2002. The forecast is that food sales will decline by 3% in real terms, owing to the recession in the economy, the tourism crisis and the significant decline in sales of food items to the Palestinian Authority,” according to Kaplan. He estimated that the export of food products in 2002 would fall by 4%, to US$400m. Regarding the import of food products in 2002, however, Kaplan predicts an increase of 3% compared with 2001, reaching US$896m, “which will cause a larger gap, of US$496m, in the import/export of food items”.
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By GlobalDataCiting a survey conducted by the Food Division, Kaplan revealed that since the start of the hostilities in the region 22 months ago, Israeli food companies lost NIS500m (US$104.1m) due to a 50% decline in sales of food products to the Palestinian Authority. He estimated that this year would witness a further 20% decline in food sales to the Palestinian market, expected to total NIS240m (US$50m).
New product technologies
In total, 45% of the plants that participated in the survey invested up to US$500,000 for developing new products. Of the remainder, around 30% of the plants each invested US$1m for developing new products.
The survey also showed that 45% of the 21 food plants questioned each plan to invest up to US$2m for introducing new production technologies in 2002. Meanwhile, 20% intend to invest between US$2m and US$5m each, and 35% of the plants plan to invest each over US$5m in 2002 to introduce and apply new and modern production technologies.
The chairman of the Food Division commented that in 2001, Israeli food companies continued the process of merging with local companies and the involvement of multinationals food companies with local food manufacturers. He noted in particular the purchase in 2001 of foreign food companies by Israeli concerns, “to the tune of tens of millions of dollars”.
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Another development that gained momentum in the local food industry is the increase in production of functional foods, “namely, producing and marketing recognised food brands with added health components, coinciding with the development of the local food sector and with the world trend for introducing foods containing added health properties”.
Independent food authority
Following the discovery of one isolated case of BSE in Israel, Kaplan urged the government and the Knesset (parliament) in Israel to hasten the process of establishing a single independent food authority, which will have total responsibility for inspecting the production, import and marketing of food products throughout the country.
He claimed that the sum of NIS6m (US$1.25m) is wasted annually due to the fragmented system of inspecting the food manufacturing sector, “which is now divided among 14 different entities acting without coordination”.
By Aaron Priel, just-food.com correspondent
