On June 9, 2012, I landed in Tel Aviv, having been invited by the Israel Export & International Cooperation Institute to meet with several Israeli food and nutrition companies looking to do business in the United States and Europe. For a week, I was led around the country to visit about a dozen supplement, functional food and ingredient companies with new products or new processes to show off.
I went in with few expectations and returned pleasantly surprised. Innovation is alive in Israel.
R&D is robust, and marketers are relatively on pace with U.S. trends. The country is fairly Westernized and English is a secondary language for most Israelis, so building relationships is not a challenge.
Ethnic conflict simmers in the background, and could be detrimental to the image of Israeli exports, but for the most part these issues are well outside the realm of business and daily life.
What follows are seven takeaways from my time in Israel, a country with a lot to offer the U.S. nutrition industry:
1. Israel is small, but smart
On Thursday, June 14, I met with Inno-Bev, makers of WakeUp, a functional beverage designed to help office workers skip post-lunch sleepiness without resorting to coffee or energy drinks. The drink is a unique formulation of herbs & botanicals, and has a finished-product clinical trial showing its ability to improve alertness and cognition after lunch better than placebo or coffee. The packaging included a country-of-origin tag that I thought nicely summed up my initial impression of Israel: “Invented in Israel: small but smart.”
At 7.5 million people, Israel’s population is less than that of New York City, and by area the country is smaller than New Jersey. But Israel boasts a robust economy and a GDP per capita that ranks among the top 50 countries in the world. A bastion of bioresearch and the high-tech industry, Israel has long been a scientific haven—along with agricultural products and cut diamonds, high-tech products number among the country’s leading exports.
It was very apparent that this culture of scientific rigor also informs the culture of the country’s nutrition industry. Most of the CEOs and founders I had met were either ex high-tech execs or former researchers from local universities and science institutes, such as Ben-Gurion University, the Weizmann Institute, the Technion-Israel Institute of Technology or Bar-Ilan University.
2. Naïveté can be a good thing
Alon Levy Nahoum, CEO at Rehovot-based HerbaMed, a distributor of specialty supplements and nutrition bars, offered a bald insight into Israel’s competitive advantage.
“One of our greatest strengths,” he said, “is that we’re naïve.” I took it to mean that, while many major U.S. nutrition and food companies are holding tight to their R&D budgets, and while public CPGs shave pennies out of their supply chain costs in the quest for an improved bottom line, many Israeli are ready to take a leap of faith on scientifically-backed, category-creating products.
HerbaMed, for example, sells a plant-sterol-fortified nutrition bar with a finished-product clinical trial showing its ability to reduce cholesterol. That these companies are prepared to invest in science beyond that provided by certain ingredient speaks to a refreshing naïveté in product development that allows for more innovation.
This blog is an excerpt of a larger story that Nutrition Business Journal will publish in its 2012 U.S. Market Overview issue, set to print in July.