Required Report - public distribution

**Date:** 3/5/2004

**GAIN Report Number:** IS4002

IS4002

**Israel**

**HRI Food Service Sector**

**Hotel, Restaurant, Institutional (HRI) Food Service Sector Report**

**2004**

**Approved by:**

![](media/image1.wmf)Asif J. Chaudhry, U.S. Embassy

Cairo

**Prepared by:**

Sigal Nissan

**Report Highlights:**

The best way for a U.S. company interested in exporting products to the
Israeli HRI sector is to find an importer, an agent or a wholesaler who
can advise the exporter on ways of complying with product regulations.
Domestic and EU suppliers are the main competitors for U.S. exporters.
Therefore U.S. exporters need to be competitive in their pricing. Fast
food is the fastest growing industry in the HRI sector, with Middle
Eastern food and hamburgers chains as the leaders in this industry.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Tel Aviv \[IS1\]

\[IS\]

**TABLE OF CONTENTS**

# 

# I. MARKET SUMMARY Page 3

# II. ROAD MAP FOR MARKET ENTRY Page 6

#  A. Entry Strategy Page 6

B. Market Structure Page 6

C. Sub-Sector Profiles Page 9

# III. COMPETITION Page 12

# IV. BEST PRODUCTS PROSPECT Page 13

# V. POST CONTACT AND FURTHER INFORMATION Page 17

#  

# I. MARKET SUMMARY

The Israeli HRI market is very complex and diverse. The food service is
divided into two: commercial and industrial. The commercial sector is
divided into two subs -- sectors: hotels and restaurants. The commercial
sector compromises of estimated 650 hotels and hostels, around 2,300
restaurants, more than 700 celebration halls, over 420 coffee shops and
cafeterias, and 115 pubs and bars. The institutional food service
companies of around 4,000 institutions, such as company cafeterias,
schools, universities, hospitals, prisons and kibbutz kitchens. The
Israeli Defense Force (IDF) is probably the largest institutional food
consumer in Israel and it is estimated that IDF alone consumes about 4
percent of all Israeli food consumption through its purchasing channels.

Annual expenditure on food and beverages in 2002 was NIS9,027 per
capita, compared with NIS8,907 in previous year, a 1.3 percent increase.
The HRI sector absorbs about 18.4 percent of the total food consumed in
Israel.

The Central Bureau of Statistics (CBS) published a research titled
"Dealers and Revenue of Economic Industry According to Value Added Tax
2000". This report estimates the total revenue of Israeli food trade at
NIS31.835 billion, of which the HRI sector's share stands on NIS19.916
(62%).

The growth of the HRI sector is hard to determine because of the
unstable political condition that affects the economic situation,
specifically, tourism, restaurant going, etc.

# Table 1: Type and number of food service establishment in Israel in 2001

+------------------------------------------+---------------------------+
| ###### Type of Establishment             | **Number of               |
|                                          | Establishments**          |
+------------------------------------------+---------------------------+
| **Hotels**                               |                           |
+------------------------------------------+---------------------------+
| Hotels                                   | 423                       |
+------------------------------------------+---------------------------+
| Youth hostels                            | 125                       |
+------------------------------------------+---------------------------+
| Guest Houses                             | 106                       |
+------------------------------------------+---------------------------+
| # Restaurants                            |                           |
+------------------------------------------+---------------------------+
| Restaurants                              | 2,321                     |
+------------------------------------------+---------------------------+
| Celebration Halls                        | 703                       |
+------------------------------------------+---------------------------+
| Coffee Shops                             | 426                       |
+------------------------------------------+---------------------------+
| Kiosks\*                                 | 400                       |
+------------------------------------------+---------------------------+
| Pubs and Bars                            | 115                       |
+------------------------------------------+---------------------------+
| # Institutional Contracts                |                           |
+------------------------------------------+---------------------------+
| Company Cafeterias\*                     | 1,580                     |
+------------------------------------------+---------------------------+
| Schools and Universities\*               | 1,500                     |
+------------------------------------------+---------------------------+
| Kibbutz kitchens, elderly Homes          | 746                       |
+------------------------------------------+---------------------------+
| Hospitals and Prisons                    | 221                       |
+------------------------------------------+---------------------------+

**\***Estimated numbers

Source: CBS, Statistical Abstracts of Israel 2001, Yellow Pages, Food &
Beverage Index, D&B, Ministry OF Tourism, Manufacturers Association.

Israel imports more food and beverages than it exports. In 2002, food
imports totaled U.S.\$889 MILLION. The U.S. is an important supplier to
Israel with a volume of \$245 million. The EU sales to Israel amount to
U.S.\$457 million. Other main suppliers include Turkey, Thailand and
China. South American countries such as Brazil, Argentina and Uruguay
export kosher meat to Israel.

The HRI sector has expanded significantly during the last 20 years. This
growth was more rapid after 1990 as a consequence of an economic
recovery and massive immigration from the Former Soviet Union (FSU), and
the following domestic social changes:

-   Increase in per capita GDP by 36 percent and personal wealth.

-   Decrease in household sizes from 3.66 persons per household in 1980
    to 3.30 persons in 2000.

-   Increase in the number of women in workforce.

-   Increase in leisure time.

-   Increase in the distances from home to the workplace or school.

Another factor that boasted demand in the HRI sector was the growing
number of tourists, both foreign and domestic. In 2000 during the
Millennium celebrations, 2.4 million foreign visitors arrived in Israel,
of which 69 percent were tourists, an increase of 3 percent over 1999.
The following years saw a steep decline in foreign tourism, as a result
of the ongoing political unrest in the region.

The average monthly household consumption of eating out in 2001 was
NIS201.0 of which 65 percent was spent in restaurants, 19 percent in
snack bars and kiosks and 12 percent in cafes and bakeries. The lowest
quintiles spent an average of NIS79.5 per month (4 percent lower than
two years earlier), while the highest quintiles spent NIS405.0 per month
(6.9 percent higher than in 1999). These numbers are extremely low
compared to other western countries, in which eating out compromises 35
to 45 percent of total food consumption, while the figures for Israel
represent as 12 percent of the expenditure for food. An industry
representative claims that 21 percent of the Israeli population eat fast
food and 30 percent eat lunch at work.

Market access is frequently a challenge. As U.S. products have not only
to comply with Israeli regulations but also have to cater to the Middle
Eastern taste. Additionally they have to complete with similar products
from Israel and EU countries, often at lower prices.

# Table 2: Advantages and Challenges Facing U.S. Products in Israel's HRI Sector

+-----------------------------------+-----------------------------------+
| ###### Advantages                 | **Challenges**                    |
+-----------------------------------+-----------------------------------+
| Israel's HRI is in its beginning  | Limited experience and low        |
| stages and the entrance fees to   | awareness in developing a western |
| the market are still low          | style HRI sector                  |
+-----------------------------------+-----------------------------------+
| Fast food chains are boosting     | U.S. products at a price          |
| demand for U.S. products.         | disadvantage compared to local    |
|                                   | market and European products      |
+-----------------------------------+-----------------------------------+
| Ethnic food restaurants are       | U.S. products need to cater to    |
| popular.                          | the Middle Eastern taste.         |
+-----------------------------------+-----------------------------------+
| The tourism industry demands more | Tourism is hurt by the political  |
| international foods.              | situation. Barriers against some  |
|                                   | imported foods, such as labeling  |
|                                   | requirements.                     |
+-----------------------------------+-----------------------------------+
| U.S. culture is very popular      | U.S. exporters are not aware of   |
| among Israelis                    | the potential Israel offers for   |
|                                   | some of their products.           |
+-----------------------------------+-----------------------------------+
| U.S. products offer quality and   | Lack of awareness of the variety  |
| variety for the local food        | and diversity of U.S. products.   |
| service industry.                 |                                   |
+-----------------------------------+-----------------------------------+

A main characteristic of the Israeli food sector, to include all
supermarket chains and almost any public food service, is the kashrut
issue. Public food services will not serve food that is not kosher, all
institutional food suppliers and hotels are strictly kosher. Non --
kosher items can be found only in privately owned restaurants.

Even though only 30 percent of Israelis are considered observant Jews, a
2001 survey prepared by the Manufacturers Association reveals that 63
percent of the Jewish population consumes only kosher food at home.
However, many people who keep a kosher kitchen at home, eat non -- food
when eating out. It is assumed that that a slight change in these
figures will occur in the future as a result of the increased purchasing
power of the FSU immigrants, some of whom eat non -- kosher food.
However, this factor will have only a small impact on the HRI sector,
mainly on the restaurant sub -- sector.

The last few years have been difficult for Israel's economy, and the
tourism industry in particular. The political unrest, acts of terrorism,
and the global economic recession suppressed the tourism and hurt many
other industries. A total of 14.6 million night stays at tourist hotels
were recorded in 2002, a decrease of 3.3 percent compared with 2001
(15.1 million) and a 25 percent decrease from the 2000 record (19.6
million).

**II. ROAD MAP FOR MARKET ENTRY**

# A. ENTRY STRATEGY

The best way for a U.S. company interested in exporting products to the
Israel HRI is to find an importer, an agent or a wholesaler well
experienced with the HRI sector. This entity can facilitate custom
clearance and advise the exporter on ways of complying with product
specific regulations, such as labeling, packaging, import duties, and
sanitary regulations. Most food distributors acquire their imported
products through an importer or an agent, who are often also
distributors with warehouses and transportation means, though there are
occasions in which supermarket chains and large HRI chains import
directly.

**Tips from importers on ways of penetrating the Israeli market:**

-   Most importers seek a brand name that they can develop.

-   All importers want exclusively on a brand name for a few years.

-   Importers believe that promotion is essential for increased sales;
    therefore, they usually ask the exporter for a partial investment in
    a promotion campaign.

**Guidelines for working in the Israeli market:**

-   You can sample the Israeli market taste by sending your product and
    price information to importers. Include labels and harmonized tariff
    numbers with the samples and ask importers for their opinion on the
    marketability of your product. Add a reply fax form to facilitate
    their response.

-   Consider the range of trade shows and exhibit your product in most
    relevant show, such as SIAL in Paris in 2004, ANUGA in Cologne and
    IsraFood every November in Tel Aviv.

-   Innovation can bring more results to a U.S. product. This innovation
    can be exhibited through the product itself, the packaging or
    pricing. Most popular products are new and have a higher than
    average trade margin and a professional support plan.

-   U.S. exporters and suppliers need to focus their efforts on working
    with importers and distributors who serve the HRI sector, since food
    service companies rely on their suppliers for product selection.

# B. MARKET STRUCTURE

The Israeli HRI is widely dispersed. Only large chains such as hotel
chains or large or large caterers have a central purchasing office.
Owners of small bars, cafeterias and restaurants, that account for the
largest number of outlets, purchase fresh products in the local market
or the wholesale market. Most beverages are bought through distributors,
a well-organized sector. According to information gathered from fifteen
HRI establishments, about 42 percent of the perishable products are
obtained from distributors, 22 percent from wholesale markets and 18
percent from the retail sector. Commercial distributors to the HRI are
quite dynamic, capable of supplying most of the needs of the country's
small and diverse food service providers.

Many of Israel's food industries, that operate a distribution network,
have developed departments specializing in supplying the HRI. Sales
departments of leading companies such as Tnuva ( dairy products, meat,
fruit and vegetables), Osem -- Nestle (pasta, dried soups, coffee,
crackers, ice cream, chocolate), Tami -- Best Food (margarine,
mayonnaise, soups and powders, cereals, chocolate), Elite (chocolate,
sweets, coffee, cereals), Meir Ezra (poultry, beef and fish) and many
others, visit thousands of HRI establishments weekly or daily in efforts
to promote their products. In 2001 Tnuva, Osem and Tami-Best Food have
each established a special division that produces and markets to the HRI
market. These divisions are respectively, Tnuva-Chef, Nestle Food
Service and Cater Plan.

The food import business is very dynamic sector in Israel, with over 300
food importers listed by the Tel Aviv-Jaffa Chamber of Commerce. The
nationwide list is available from the Federation of Israeli Chambers of
Commerce, 84 Hahashmonaim St. Tel Aviv 67011, P.O. Box 20027, Tel Aviv
67011, P.O. Box 20027, Tel Aviv 61200, Israel Tel.: 972-3-563-1010, Fax:
972-3-562-3274 e-mail: <Chamber@tlv-chamber.org.il> and on the web at
[http://www.chamber.org.il](http://www.chamber.org.il/).

Importers and distributors are not as active in their marketing efforts.
They wait for orders from their customers and rarely visit their
clientele. Importers range from small two or three person sales
operations that contract out distribution to larger companies who
utilize their own fleet of trucks. All Israeli importers want
exclusivity for newly introduced products because of the small size of
the country.

Recently there has been a trend towards consolidation of larger
importers; importers with an annual turnover of under \$25 million may
find it hard to provide marketing and logistics needed for success.
Likewise, many large Israeli food manufacturers are also large importers
of raw material and consumer products.

### C. SUB-SECTOR PROFILES

**1. Hotels**

Tourism is a very important industry to the Israeli economy. Israel is a
popular tourist destination, offering a wide variety of tourist
accommodations, for luxury hotels in major cities to bed and breakfast
inns in smaller communities. The tourism infrastructure is well
developed throughout the country and is continuously expanding. In 2000
there were total of 2,498 hotels, hostels, campgrounds, and bed and
breakfast accommodations. 2000 was a peak year for the Israeli tourism
industry due to the millennium celebrations and the pilgrims who visited
Israel. Currently the tourism industry is in a crises situation due to
the political unrest adversely affects the arrival of tourists, and the
economic recession caused a decrease in the number of Israelis staying
at hotels in Israel.

About eighty percent of the hotels are in the one to three star range,
and the remaining twenty percent are in the four to five star category.
Prior to the recent political unrest that hurt the tourism industry,
hotel room capacity has grown at an annual rate of about four percent,
while three and four star hotels have experienced the highest growth
rates. About 38 percent of all hotels are less than ten years old.

**Hotels: Income**

  ------------------------------------- ----------- ----------- ----------
                                        1999        2000        2002

  Number of Hotels                      339         340         336

  Income -- total (millions NIS)\*      5,164.8     5,482.5     4,626.7

  Income generated from rooms (millions 2,932.9     3,078.5     NA\*\*
  NIS)\*                                                        

  Income generated from rooms (millions 1,841.6     1.945.6     NA\*\*
  NIS)\*                                                        
  ------------------------------------- ----------- ----------- ----------

Source: CBS, Statistical Abstract of Israel, 2002

\* In 2000 price terms

\*\* Data not available yet

**2. Restaurants**

In 2001 there were 2,321 restaurants in Israel, with fast food being the
fastest growing sub sector. Hamburger chains revenues amounted to NIS
650 million. Pizza chains NIS 400 million, Middle Eastern fast food
(such as falafel) NIS 700 million, 20 million from Thai style noodles,
and 20 million from sandwiches and ice cream. It is predicted that this
market will grow by some 10 percent over the next five years.

Consumption of hamburgers has grown by 600 percent since 1993. In 2002
the sector's sales are estimated at NIS 735 million, two percent lower
than in the previous year. The leaders of fast food in Israel for 2002
were McDonald's that took 45 percent of the market; following were the
local Burger Ranch with 34 percent, and Burger King with 21 percent.
Burger King has closed down recently and its customers are divided
between the first two chains.

The leading Italian food chains are Pizza Hut, Domino's Pizza, Sbarro,
and Pizza Domino, which take 62 percent of all of the sector's sales.
There are also many small pizza outlets that compete in this market.

The Middle Eastern snack food is very popular in Israel, especially
shawarma, falafel, and Hummus, both served as either a Pita sandwich or
in plates in hundreds of small corner shops.

Until the onset of the present economic recession, conditions were
favorable for the restaurant industry. Numerous gourmet and fashionable
restaurants opened, many of them present ethnic cuisines, such as
French, Italian, and Asian. An Average lunch costs NIS 50-80 (\$10-18)
and dinner with wine costs NIS 90-150 per person.

The typical Israeli drinks soft drinks during lunchtime, or beer
occasionally. Consumption of bottled mineral water is on the rise.
Israelis refrain from alcoholic beverages while at work, and many of
them do not consume alcohol at all. Beer and wine are consumed over
dinners usually. Drinking wine at restaurants is increasing despite the
relatively high price charged for wines at restaurants.

**Table 3. Market Share of Different Fast Foods by Type, Israel 2001**

  ------------------------------------------------ ----------------------
  **Type**                                         **Share**

  Middle Eastern                                   35%

  Hamburger                                        30%

  Pizza                                            20%

  Sandwiches                                       10%

  Thai Food                                        5%
  ------------------------------------------------ ----------------------

**Table 4: Prominent Fast Food Chains in Israel 2001**

+-----------------+---------------------------+--------+---------------+
| **Company       | **Outlet's Name, Type &   | **Loca | **Purchasing  |
| Name**          | No. of Outlets**          | tion** | Agent**       |
+-----------------+---------------------------+--------+---------------+
| Apropo          | Apropo, coffee shops and  | Na     | Direct,       |
|                 | dairy restaurants, 40     | tional | Importers     |
+-----------------+---------------------------+--------+---------------+
| Kapulsky        | Kapulsky, coffee shops    | Na     | Tnuva,        |
|                 | and dairy restaurants, 25 | tional | Strauss,      |
|                 |                           |        | Others        |
+-----------------+---------------------------+--------+---------------+
| Morag           | Morag, Coffee shops and   | Na     | Various       |
|                 | restaurants, 40           | tional | Suppliers     |
+-----------------+---------------------------+--------+---------------+
| Rolladin        | Rolladin, pastry shops    | Na     | Shemen        |
|                 | and coffee shops, 7       | tional |               |
+-----------------+---------------------------+--------+---------------+
| Dr. Lek         | Dr. Lek, ice cream shops, | Na     | NA            |
|                 | 19                        | tional |               |
+-----------------+---------------------------+--------+---------------+
| Burger Ranch    | Burger Ranch, hamburgers, | Na     | NA            |
|                 | 92                        | tional |               |
+-----------------+---------------------------+--------+---------------+
| McDonald's      | McDonald's hamburgers, 80 | Na     | Importers,    |
|                 |                           | tional | Off-Tov,      |
|                 |                           |        | others        |
+-----------------+---------------------------+--------+---------------+
| Snack Time      | Snack Time, sandwiches,   | Na     | NA            |
|                 | 24                        | tional |               |
| (previously     |                           |        |               |
| Subway)         |                           |        |               |
+-----------------+---------------------------+--------+---------------+
| Sbarro          | Sbarro, Italian fast      | Na     | Machlavot Gad |
|                 | food, 20                  | tional | -- cheese,    |
|                 |                           |        | Tempo-drinks, |
|                 |                           |        | Sheli-food    |
|                 |                           |        | products      |
+-----------------+---------------------------+--------+---------------+
| Pizza Hut       | Pizza Hut, Italian fast   | Na     | Direct,       |
|                 | food, 43                  | tional | Importers     |
+-----------------+---------------------------+--------+---------------+
| Pizza Domino    | Pizza Domino, Italian     | Na     | Tnuva-cheese, |
|                 | fast food, 60             | tional | Israeli flour |
|                 |                           |        | mills - flour |
+-----------------+---------------------------+--------+---------------+
| Sabres          | Sabres, Kibbutz           | Na     | Tnuva,        |
|                 | restaurants, 13           | tional | various       |
|                 |                           |        | suppliers     |
+-----------------+---------------------------+--------+---------------+

Celebration hall are part of this sub sector. There are approximately
700 halls in which 30,000 weddings are celebrated annually, serving
around 9 million meals. More than 76,000 Bar Mitzvahs and 90,000 Births
(circumcision celebrations) take place, serving 10,8 million meals a
year. Over the past few year celebration halls have suffered from the
economic recession; the number of weddings have not changed, but the
number of other family and business events has decreased significantly.

**3. Institutional**

There are between 450 to 500 companies in the institutional food service
sub-sector, of which eight companies control 50 to 55 percent of the
total market. This sector has a strong price competition and
concentration, with small companies that are often highly specialized in
one market niche.

**Table 5: Leading Companies in the Institutional Sub-Sector**

  ------------ ------------ ------------------------ -------------- -------------
  **Company    **Sales      **Type of Outlets**      **Location**   Purchasing
  Name**       (\$Mil)**                                            Agent

  Shefa                     Food for institutional   National       NA
                            kitchens                                

  Selected                  Catering                 National       NA

  Norkeit                                            National       NA

  Mevushelet                Prepared meals to        National       NA
                            companies                               

  Nir Ezion                 Meals                    National       NA

  Moav         \$27 million Meals to companies such  National       Tnuva-meata
                            as Intel, Tadiran                       and cheese,
                                                                    Osem, Telma

  L. Eshel                                           National       NA

  Nadir                     Meals to Kibbutz         National       NA
                            kitchesn                                
  ------------ ------------ ------------------------ -------------- -------------

It is widely believed that more than one million meals a day are served
in the institutional market; government entities purchase 25-30 percent
of the total meals for the IDF, police, hospitals, and schools, and the
rest is served at civilian work places. The average meal is estimated at
a cost of NIS 12-15. Thus, this market's annual sales are estimated at
US \$720-800 million.

Catering operators buy their raw materials in bulk. When making a
selection on products and suppliers, most important factor is price. The
second most important factor is the contribution of the product and
supplier to the efficiency of the preparation process. Major changes in
the past few years were in the supply of "portion controlled" products,
development of dough products, especially frozen, development of ready
to use and frozen vegetables, fruits, meats, and poultry. Leaders in
this trade complain about lack of sophistication and too few changes.
None of the leading caterers import directly.

**Structure of the Institutional Food Market**

Private industrial 64%

Hi-tech 20%

Government 10%

Private service 6%

Source: POC Consultancy 2001

### III. COMPETITION

Domestic and EU suppliers are the main competition for US exporters. The
US industry's main advantage lies in the normalization and
standardization of regulations for products, reliability in supply, and
product's quality. On the other hand, shipping costs, import duties and
import licensing requirements are the main barriers to entering the
market.

The two main food exporters to Israel are the EU and the U.S. In 2003
Israel imported \$ 2.130 billion worth of agricultural and food
products, of which \$620 million from the US (CIF). Food exports from
the EU amounted to 51% of total exports to Israel, and the US
contributed to 29% of total food exports to Israel.

US exporters need to be competitive in their pricing or present products
of excellent quality. Israel has a large food production industry of its
own. There is also a strong price competition among food importers
seeking to maintain or enlarge their market share. Nearby EU countries
supply sophisticated foods and beverages to the Israeli market, and
operate with relatively low transportation costs. On the other hand, US
products benefit by tariff rate quotes and preferential customs tariffs.
As result of Israel's trade agreements, new low priced supplies are
entering the Israeli market from countries like Turkey, Hungary,
Bulgaria, etc.

The US food industry has a very positive image in Israel from the aspect
of reliability and food safety. At the same time, American foods do not
always have a fine cuisine reputation. Likewise, some Israelis believe
that Israeli made products are of higher quality and meet better the
Israeli taste for food.

**IV. BEST PRODUCTS PROSPECTS**

### Table 6: Products Present in the Market that Have Good Sales Potential

+---------+-------+-------+-----------+--------+----------+----------+
| **      | *     | *     | **5-Yr.   | **     | **Key    | **Market |
| Product | *2002 | *2002 | Avg.      | Import | Con      | Attrac   |
| Cat     | M     | Impo  | Annual    | Tariff | straints | tiveness |
| egory** | arket | rts** | Import    | Rate   | Over     | for      |
|         | S     |       | Growth**  | for    | Market   | USA**    |
|         | ize** |       |           | US**   | Devel    |          |
|         |       |       |           |        | opment** |          |
+---------+-------+-------+-----------+--------+----------+----------+
| #####   | 10    | 55,   | Imports   | 1217   | Israel's | The      |
| ## Froz | 9,000 | 000   | of frozen | tons   | Kosher   | Kosher   |
| en Beef | mt    | mt    | beef have | TRQ.   | Meat and | Import   |
|         |       |       | not grown |        | Poultry  | Law does |
|         |       |       | due to a  | I      | Imports  | not bind |
|         |       |       | shift in  | mports | Law of   | the      |
|         |       |       | the       | above  | 1994     | Pal      |
|         |       |       | market to | quota  | requires | estinian |
|         |       |       | co        | -- 90% | that all | Au       |
|         |       |       | nsumption | of MFN | meat and | thority, |
|         |       |       | of fresh  |        | poultry  | thus     |
|         |       |       | beef.     |        | and      | there is |
|         |       |       |           |        | their    | a fairly |
|         |       |       |           |        | products | good     |
|         |       |       |           |        | be       | market   |
|         |       |       |           |        | acc      | for US   |
|         |       |       |           |        | ompanied | kosher   |
|         |       |       |           |        | by a     | beef     |
|         |       |       |           |        | kosher   | among    |
|         |       |       |           |        | cer      | the 3    |
|         |       |       |           |        | tificate | million  |
|         |       |       |           |        | from the | Pale     |
|         |       |       |           |        | Chief    | stinians |
|         |       |       |           |        | R        | at the   |
|         |       |       |           |        | abbinate | Pal      |
|         |       |       |           |        | of       | estinian |
|         |       |       |           |        | Israel   | Au       |
|         |       |       |           |        | or a     | thority. |
|         |       |       |           |        | body     |          |
|         |       |       |           |        | au       |          |
|         |       |       |           |        | thorized |          |
|         |       |       |           |        | by it    |          |
|         |       |       |           |        | when     |          |
|         |       |       |           |        | imported |          |
|         |       |       |           |        | to       |          |
|         |       |       |           |        | Israel.  |          |
+---------+-------+-------+-----------+--------+----------+----------+
| **Fresh | 34    | 100   |           | 290    | The      | Here too |
| C       | 0,000 | tons  |           | tons   | Kosher   | there    |
| hilled, | mt    |       |           | TRQ.   | Meat and | may be a |
| and     |       |       |           | NIS    | Poultry  | good     |
| Frozen  |       |       |           | 4.5    | Law      | market   |
| Po      |       |       |           | per    | above    | for      |
| ultry** |       |       |           | 1Kg.   | apply    | Halal    |
|         |       |       |           | above  | here     | sla      |
|         |       |       |           | TRQ,   | too. A   | ughtered |
|         |       |       |           | BNM    | small    | frozen   |
|         |       |       |           | 172%   | TRQ of   | poultry  |
|         |       |       |           | of CIF | 290 tons | or       |
|         |       |       |           | price. | would    | p        |
|         |       |       |           |        | not      | rocessed |
|         |       |       |           |        | justify  | poultry  |
|         |       |       |           |        | the cost | products |
|         |       |       |           |        | of       | in the   |
|         |       |       |           |        | specific | Pal      |
|         |       |       |           |        | kosher   | estinian |
|         |       |       |           |        | requ     | Au       |
|         |       |       |           |        | irements | thority. |
|         |       |       |           |        | to serve |          |
|         |       |       |           |        | this     |          |
|         |       |       |           |        | market.  |          |
|         |       |       |           |        | To date  |          |
|         |       |       |           |        | no       |          |
|         |       |       |           |        | kosher   |          |
|         |       |       |           |        | supplier |          |
|         |       |       |           |        | has been |          |
|         |       |       |           |        | able to  |          |
|         |       |       |           |        | conform  |          |
|         |       |       |           |        | to       |          |
|         |       |       |           |        | Israel's |          |
|         |       |       |           |        | requ     |          |
|         |       |       |           |        | irements |          |
|         |       |       |           |        | to       |          |
|         |       |       |           |        | obtain   |          |
|         |       |       |           |        | kosher   |          |
|         |       |       |           |        | approval |          |
|         |       |       |           |        | from the |          |
|         |       |       |           |        | Chief    |          |
|         |       |       |           |        | Ra       |          |
|         |       |       |           |        | bbinate. |          |
|         |       |       |           |        | Retail   |          |
|         |       |       |           |        | prices   |          |
|         |       |       |           |        | for      |          |
|         |       |       |           |        | fresh    |          |
|         |       |       |           |        | kosher   |          |
|         |       |       |           |        | chicken  |          |
|         |       |       |           |        | are      |          |
|         |       |       |           |        | close to |          |
|         |       |       |           |        | US       |          |
|         |       |       |           |        | level:   |          |
|         |       |       |           |        | above    |          |
|         |       |       |           |        | \$2/lb.  |          |
+---------+-------+-------+-----------+--------+----------+----------+
| *       | 8     | \$91  | 4%        | There  | Per      | Israel   |
| *Fresh, | 5,000 | mi    |           | is an  | capita   | imports  |
| Frozen  | mt    | llion |           | annual | fish     | the      |
| and     |       | or    |           | duty   | con      | majority |
| P       |       | 3     |           | free   | sumption | of fish  |
| repared |       | 7.800 |           | quota  | is       | and      |
| Fish**  |       | mt    |           | of     | re       | seafood  |
|         |       |       |           | frozen | latively | it       |
|         |       |       |           | salt   | low      | c        |
|         |       |       |           | -water | compared | onsumes. |
|         |       |       |           | fish   | with     | It is    |
|         |       |       |           | of     | other    | re       |
|         |       |       |           | more   | co       | latively |
|         |       |       |           | than   | untries. | easy to  |
|         |       |       |           | 5000   | Although | obtain   |
|         |       |       |           | mt.    | small    | kosher   |
|         |       |       |           | Frozen | amounts  | certi    |
|         |       |       |           | filets | of       | fication |
|         |       |       |           | of     | s        | for      |
|         |       |       |           | salt   | hellfish | fresh or |
|         |       |       |           | -water | and      | frozen   |
|         |       |       |           | fish   | other    | fish     |
|         |       |       |           | are    | no       | that     |
|         |       |       |           | duty   | n-kosher | have     |
|         |       |       |           | free.  | seafood  | fins and |
|         |       |       |           | US     | are      | scales   |
|         |       |       |           | g      | i        | (the     |
|         |       |       |           | efilte | mported, | latter   |
|         |       |       |           | fish   | the      | mean     |
|         |       |       |           | is     | market   | they are |
|         |       |       |           | im     | is       | kosher). |
|         |       |       |           | ported | limited  |          |
|         |       |       |           | duty   | and the  |          |
|         |       |       |           | free   | R        |          |
|         |       |       |           | under  | abbinate |          |
|         |       |       |           | a 160  | does not |          |
|         |       |       |           | ton    | grant    |          |
|         |       |       |           | TRQ    | kosher   |          |
|         |       |       |           |        | certifi  |          |
|         |       |       |           |        | cations. |          |
|         |       |       |           |        | One      |          |
|         |       |       |           |        | co       |          |
|         |       |       |           |        | nstraint |          |
|         |       |       |           |        | is the   |          |
|         |       |       |           |        | lack of  |          |
|         |       |       |           |        | consumer |          |
|         |       |       |           |        | rec      |          |
|         |       |       |           |        | ognition |          |
|         |       |       |           |        | of the   |          |
|         |       |       |           |        | US as a  |          |
|         |       |       |           |        | source   |          |
|         |       |       |           |        | of       |          |
|         |       |       |           |        | quality  |          |
|         |       |       |           |        | fish,    |          |
|         |       |       |           |        | other    |          |
|         |       |       |           |        | than     |          |
|         |       |       |           |        | tuna.    |          |
+---------+-------+-------+-----------+--------+----------+----------+
| ######  | 6,200 | 6,200 | The       | TRQs   | Past     | Kosher   |
| # Dried | tons  | tons  | market is | of     | trade is | certi    |
|  Fruits |       |       | expected  | 1050   | not the  | fication |
|         |       |       | to grow   | mt for | sole     | for      |
|         |       |       | as demand | r      | c        | dried    |
|         |       |       | for       | aisins | riterion | fruits   |
|         |       |       | imports   | and    | to       | and nuts |
|         |       |       | continues | 1200   | d        | is       |
|         |       |       | to put    | mt for | etermine | easily   |
|         |       |       | pressure  | p      | the size | o        |
|         |       |       | on the    | runes. | of       | btained. |
|         |       |       | TRQ and   | Some   | quotas.  | C        |
|         |       |       | on the    | ex     | It is    | onsumers |
|         |       |       | Israeli   | -quota | d        | dem      |
|         |       |       | aut       | i      | ifficult | onstrate |
|         |       |       | horities. | mports | for      | pr       |
|         |       |       |           | take   | e        | eference |
|         |       |       |           | place, | xporters | for US   |
|         |       |       |           | espe   | to       | Jumbo    |
|         |       |       |           | cially | e        | Golden   |
|         |       |       |           | of     | stablish | Seedless |
|         |       |       |           | p      | on-going | raisins. |
|         |       |       |           | runes. | relat    |          |
|         |       |       |           |        | ionships |          |
|         |       |       |           |        | with     |          |
|         |       |       |           |        | i        |          |
|         |       |       |           |        | mporters |          |
|         |       |       |           |        | to work  |          |
|         |       |       |           |        | on       |          |
|         |       |       |           |        | market   |          |
|         |       |       |           |        | deve     |          |
|         |       |       |           |        | lopment. |          |
+---------+-------+-------+-----------+--------+----------+----------+
| *       | 1     | \$12  |           | There  | There is | With     |
| *Nuts** | 6,100 | mi    |           | is no  | a        | app      |
|         | mt    | llion |           | duty   | sig      | ropriate |
|         |       | or    |           | on     | nificant | market   |
|         |       | 1     |           | nuts   | price    | dev      |
|         |       | 0,200 |           | of US  | gap      | elopment |
|         |       | mt    |           | o      | between  | act      |
|         |       |       |           | rigin, | US and   | ivities, |
|         |       |       |           | with   | Iranian  | US       |
|         |       |       |           | the    | p        | market   |
|         |       |       |           | exc    | roducts, | share    |
|         |       |       |           | eption | and a    | could    |
|         |       |       |           | of     | definite | grow     |
|         |       |       |           | al     | consumer | signif   |
|         |       |       |           | monds. | pr       | icantly. |
|         |       |       |           | The EU | eference |          |
|         |       |       |           | gets a | for the  |          |
|         |       |       |           | 15%    | Iranian  |          |
|         |       |       |           | duty.  | p        |          |
|         |       |       |           |        | roducts. |          |
+---------+-------+-------+-----------+--------+----------+----------+
| *       | \$ 1  | \$81  |           | Most   | Bakery   | Foreign  |
| *Bakery | bi    | mi    |           | U.S.   | items    | baked    |
| Goods** | llion | llion |           | items  | p        | goods    |
|         |       |       |           | have a | erceived | are      |
|         |       |       |           | 10.8%  | as       | accepted |
|         |       |       |           | tariff | foreign, | in       |
|         |       |       |           | rate.  | such as  | Israeli  |
|         |       |       |           |        | cro      | cafes.   |
|         |       |       |           |        | issants, | Frozen   |
|         |       |       |           |        | English  | pizza is |
|         |       |       |           |        | muffins, | a staple |
|         |       |       |           |        | American | in most  |
|         |       |       |           |        | style    | Israeli  |
|         |       |       |           |        | bagels,  | ho       |
|         |       |       |           |        | have not | useholds |
|         |       |       |           |        | fared as | with     |
|         |       |       |           |        | well in  | young    |
|         |       |       |           |        | Israeli  | c        |
|         |       |       |           |        | super    | hildren. |
|         |       |       |           |        | markets. |          |
+---------+-------+-------+-----------+--------+----------+----------+
| **Br    | \     | \     |           | Duty   | Price    |          |
| eakfast | $29.0 | $17.1 |           | free   | com      |          |
| Ce      | mi    | mi    |           |        | petition |          |
| reals** | llion | llion |           |        | with     |          |
|         |       |       |           |        | European |          |
|         |       |       |           |        | s        |          |
|         |       |       |           |        | uppliers |          |
|         |       |       |           |        | makes    |          |
|         |       |       |           |        | this     |          |
|         |       |       |           |        | market   |          |
|         |       |       |           |        | very     |          |
|         |       |       |           |        | s        |          |
|         |       |       |           |        | ensitive |          |
|         |       |       |           |        | to       |          |
|         |       |       |           |        | exchange |          |
|         |       |       |           |        | rates.   |          |
|         |       |       |           |        | The      |          |
|         |       |       |           |        | large    |          |
|         |       |       |           |        | volume   |          |
|         |       |       |           |        | to value |          |
|         |       |       |           |        | ration   |          |
|         |       |       |           |        | makes    |          |
|         |       |       |           |        | the long |          |
|         |       |       |           |        | haul     |          |
|         |       |       |           |        | from the |          |
|         |       |       |           |        | US       |          |
|         |       |       |           |        | re       |          |
|         |       |       |           |        | latively |          |
|         |       |       |           |        | costly   |          |
|         |       |       |           |        | and      |          |
|         |       |       |           |        | reduces  |          |
|         |       |       |           |        | the      |          |
|         |       |       |           |        | competi  |          |
|         |       |       |           |        | tiveness |          |
|         |       |       |           |        | of the   |          |
|         |       |       |           |        | American |          |
|         |       |       |           |        | product. |          |
+---------+-------+-------+-----------+--------+----------+----------+
| *       | \$90  | \     |           | 7.2%   | Imported | There is |
| *Noodle | mi    | $16.3 |           | BNM    | products | almost   |
| Pro     | llion |       |           | NIS    | from     | no       |
| ducts** |       |       |           | 0.34   | Italy    | imported |
|         |       |       |           | per 1  | dominate | presence |
|         |       |       |           | kg.    | the      | in the   |
|         |       |       |           |        | imports  | frozen   |
|         |       |       |           |        | market.  | ready to |
|         |       |       |           |        | The      | eat      |
|         |       |       |           |        | Italian  | pasta    |
|         |       |       |           |        | products | which    |
|         |       |       |           |        | were     | Israeli  |
|         |       |       |           |        | in       | p        |
|         |       |       |           |        | troduced | roducers |
|         |       |       |           |        | before   | d        |
|         |       |       |           |        | the      | ominate. |
|         |       |       |           |        | A        |          |
|         |       |       |           |        | merican, |          |
|         |       |       |           |        | t        |          |
|         |       |       |           |        | herefore |          |
|         |       |       |           |        | the      |          |
|         |       |       |           |        | consumer |          |
|         |       |       |           |        | is       |          |
|         |       |       |           |        | familiar |          |
|         |       |       |           |        | with     |          |
|         |       |       |           |        | them,    |          |
|         |       |       |           |        | and the  |          |
|         |       |       |           |        | Italian  |          |
|         |       |       |           |        | products |          |
|         |       |       |           |        | have a   |          |
|         |       |       |           |        | price    |          |
|         |       |       |           |        | ad       |          |
|         |       |       |           |        | vantage. |          |
|         |       |       |           |        | Kosher   |          |
|         |       |       |           |        | certi    |          |
|         |       |       |           |        | fication |          |
|         |       |       |           |        | may be   |          |
|         |       |       |           |        | more     |          |
|         |       |       |           |        | d        |          |
|         |       |       |           |        | ifficult |          |
|         |       |       |           |        | to       |          |
|         |       |       |           |        | obtain   |          |
|         |       |       |           |        | than     |          |
|         |       |       |           |        | other    |          |
|         |       |       |           |        | baked    |          |
|         |       |       |           |        | goods,   |          |
|         |       |       |           |        | but      |          |
|         |       |       |           |        | there    |          |
|         |       |       |           |        | are      |          |
|         |       |       |           |        | brands   |          |
|         |       |       |           |        | of       |          |
|         |       |       |           |        | noodles  |          |
|         |       |       |           |        | in the   |          |
|         |       |       |           |        | US that  |          |
|         |       |       |           |        | already  |          |
|         |       |       |           |        | have     |          |
|         |       |       |           |        | kosher   |          |
|         |       |       |           |        | certif   |          |
|         |       |       |           |        | ication. |          |
+---------+-------+-------+-----------+--------+----------+----------+
| **Soups | 2,400 | \$5   |           | Most   | Soups    |          |
| and     | tons  | mi    |           | sauces | and      |          |
| S       | or    | llion |           | from   | sauces   |          |
| auces** | \$19  |       |           | the US | that     |          |
|         | mi    |       |           | are    | contain  |          |
|         | llion |       |           | duty   | meat     |          |
|         |       |       |           | free   | /poultry |          |
|         |       |       |           |        | products |          |
|         |       |       |           |        | require  |          |
|         |       |       |           |        | a kosher |          |
|         |       |       |           |        | certi    |          |
|         |       |       |           |        | fication |          |
|         |       |       |           |        | from the |          |
|         |       |       |           |        | Chief    |          |
|         |       |       |           |        | Ra       |          |
|         |       |       |           |        | bbinate. |          |
+---------+-------+-------+-----------+--------+----------+----------+
| **S     | \$100 |       |           | Mic    | Snacks,  | In the   |
| nacks** | mi    |       |           | rowave | part     | last few |
|         | llion |       |           | p      | icularly | years    |
|         |       |       |           | opcorn | savory   | there    |
|         |       |       |           | is     | snacks,  | has been |
|         |       |       |           | duty   | are      | an       |
|         |       |       |           | free   | among    | increase |
|         |       |       |           |        | the most | of       |
|         |       |       |           | Chips  | highly   | 10-15%   |
|         |       |       |           | are at | com      | in       |
|         |       |       |           | 10.2%  | petitive | m        |
|         |       |       |           |        | sectors  | icrowave |
|         |       |       |           |        | in the   | popcorn  |
|         |       |       |           |        | food     | sales.   |
|         |       |       |           |        | market.  | The      |
|         |       |       |           |        | Israelis | ultra-   |
|         |       |       |           |        | do not   | orthodox |
|         |       |       |           |        | like     | f        |
|         |       |       |           |        | cheese   | amilies, |
|         |       |       |           |        | coating  | which    |
|         |       |       |           |        | on their | are      |
|         |       |       |           |        | peanut   | chara    |
|         |       |       |           |        | snacks.  | cterized |
|         |       |       |           |        |          | by large |
|         |       |       |           |        |          | families |
|         |       |       |           |        |          | and low  |
|         |       |       |           |        |          | income   |
|         |       |       |           |        |          | are a    |
|         |       |       |           |        |          | major    |
|         |       |       |           |        |          | source   |
|         |       |       |           |        |          | of       |
|         |       |       |           |        |          | demand   |
|         |       |       |           |        |          | since    |
|         |       |       |           |        |          | popcorn  |
|         |       |       |           |        |          | is low   |
|         |       |       |           |        |          | cost and |
|         |       |       |           |        |          | nu       |
|         |       |       |           |        |          | tritious |
|         |       |       |           |        |          | and fits |
|         |       |       |           |        |          | the      |
|         |       |       |           |        |          | limited  |
|         |       |       |           |        |          | budget   |
|         |       |       |           |        |          | of these |
|         |       |       |           |        |          | large    |
|         |       |       |           |        |          | f        |
|         |       |       |           |        |          | amilies. |
+---------+-------+-------+-----------+--------+----------+----------+
| **Beve  | \$600 | \     | The duty  | St     | Con      | Lately,  |
| rages** | mi    | $74.7 | free      | arting | sumption | imported |
|         | llion | mi    | quota and | J      | of       | high     |
|         |       | llion | the       | anuary | a        | energy   |
|         |       |       | change in | 2004   | lcoholic | drinks   |
|         |       |       | customs   | there  | b        | seem to  |
|         |       |       | tariff    | is a   | everages | be       |
|         |       |       | for wines | 2      | is low;  | catching |
|         |       |       | above the | 00,000 | the per  | on.      |
|         |       |       | quota     | L duty | capita   | Mineral  |
|         |       |       | will      | free   | base is  | water    |
|         |       |       | improve   | quota  | 4-6      | and      |
|         |       |       | the       | for    | liters   | natural  |
|         |       |       | relative  | wine.  | per      | fruit    |
|         |       |       | situation | N      | year.    | juices   |
|         |       |       | of the    | atural | Wine and | are      |
|         |       |       | wines     | fruit  | beer are | popular  |
|         |       |       | from U.S. | juices | not an   | in       |
|         |       |       |           | at     | integral | Israel.  |
|         |       |       |           | large  | part of  | Imm      |
|         |       |       |           | pa     | Israelis | igration |
|         |       |       |           | ckages | daily    | from the |
|         |       |       |           | are at | meals.   | former   |
|         |       |       |           | 10.8%, | Kosher   | USSR     |
|         |       |       |           | for    | requ     | i        |
|         |       |       |           | retail | irements | ncreases |
|         |       |       |           | pa     | for wine | the      |
|         |       |       |           | ckages | are      | demand   |
|         |       |       |           | add    | part     | for      |
|         |       |       |           | NIS    | icularly | a        |
|         |       |       |           | 1.47   | r        | lcoholic |
|         |       |       |           | per 1L | igorous. | be       |
|         |       |       |           | BNM    |          | verages. |
|         |       |       |           | 45%.   |          | There is |
|         |       |       |           | S      |          | room in  |
|         |       |       |           | pirits |          | the      |
|         |       |       |           | are    |          | market   |
|         |       |       |           | duty   |          | for      |
|         |       |       |           | free.  |          | quality  |
|         |       |       |           |        |          | kosher   |
|         |       |       |           |        |          | wine of  |
|         |       |       |           |        |          | US       |
|         |       |       |           |        |          | origin.  |
|         |       |       |           |        |          | The      |
|         |       |       |           |        |          | Muslim   |
|         |       |       |           |        |          | po       |
|         |       |       |           |        |          | pulation |
|         |       |       |           |        |          | in the   |
|         |       |       |           |        |          | Pal      |
|         |       |       |           |        |          | estinian |
|         |       |       |           |        |          | A        |
|         |       |       |           |        |          | uthority |
|         |       |       |           |        |          | and      |
|         |       |       |           |        |          | Israel   |
|         |       |       |           |        |          | co       |
|         |       |       |           |        |          | nstitute |
|         |       |       |           |        |          | an       |
|         |       |       |           |        |          | int      |
|         |       |       |           |        |          | eresting |
|         |       |       |           |        |          | market   |
|         |       |       |           |        |          | for      |
|         |       |       |           |        |          | non-a    |
|         |       |       |           |        |          | lcoholic |
|         |       |       |           |        |          | beer.    |
+---------+-------+-------+-----------+--------+----------+----------+

### V. POST CONTACT AND FURTHER INFORMATION

**FAS Israel Contact Details**

American Embassy Tel Aviv Tel. 972-3-519-7588/324

71 Hayarkon St. Fax. 972-3-510-2565

Tel Aviv 63903 E-mail <AgTelAviv@USDA.gov>

Israel Web Site [www.fas.usda.gov](http://www.fas.usda.gov/)

**Web addresses for further information:**

The Central Bureau of Statistics
[http://www.cbs.gov.il](http://www.cbs.gov.il/)

Ministry of Industry and Trade <http://www.tamas.gov.il/tamas_en.htm>

Ministry of Finance -- Customs Authority
<http://www.mof.gov.il/customs/eng>

Israel Export Institute
[http://www.export.org.il](http://www.export.org.il/)

Ministry of Health <http://www.health.gov.il/english.htm>

Ministry of Agriculture <http://www.moag.gov.il/english/>

Veterinary Services and Animal Health
<http://agri3.huji.ac.il/~yakobson.vetserv/>

Israel Chambers of Commerce <http://www.chamber.org.il/english/>

Israel America Chamber of Commerce
[http://www.amcham.co.il](http://www.amcham.co.il/)

**Additional Market Sector and High-Value Products Reports:**

Israel, The World's Largest Kosher Market, 10/2001, also look for an
updated report on 10/2003.

[www.fas.usda.gov/gainfiles/200110/130682378.pdf](http://www.fas.usda.gov/gainfiles/200110/130682378.pdf)

Production and Marketing of Honey in Israel, 9/02

[www.fas.usda.gov/gainfiles/200209/145783734.pdf](http://www.fas.usda.gov/gainfiles/200209/145783734.pdf)

Israeli Requirements for Recognition of Kosher Slaughter in the US,
7/2001

[www.fas.usda.gov/gainfiles/200107/120681187.pdf](http://www.fas.usda.gov/gainfiles/200107/120681187.pdf)

Country Report on FSIS Import Regulations, 9/2003

Retail Industry Report, 11/2003