Required Report - public distribution

**Date:** 10/1/2005

**GAIN Report Number:** IS5014

IS5014

**Israel**

**Exporter Guide**

**Annual**

**2005**

**Approved by:**

![](media/image1.wmf)Asif J. Chaudhry

U.S. Embassy, Cairo

**Prepared by:**

Fred Giles and Gilad Shachar

**Report Highlights:**

Israel has a population of approximately 6.9 million with an annual
growth rate of

1.8 percent. In 2004 private annual consumption expenditure per
household totaled \$27,840, of which 16.3 percent (\$4,538) was for
food. Israelis are considered quality-oriented and are willing to pay a
premium for quality food products.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Tel Aviv \[IS1\]

\[IS\]

+------------------------------------------------------------+---------+
| Section I Market Overview                                  | Page 3  |
+------------------------------------------------------------+---------+
| Economic and Demographic Situation                         | Page 3  |
+------------------------------------------------------------+---------+
| Consumer Buying & Eating Habits                            | Page 3  |
+------------------------------------------------------------+---------+
| Table 1 -- Monthly Household Consumption Expenditure, \$   | Page 4  |
+------------------------------------------------------------+---------+
| Table 2 -- Food -- Household Purchase by Outlet Type, %    | Page 5  |
+------------------------------------------------------------+---------+
| Trade and the Market for U.S. Products                     | Page 5  |
+------------------------------------------------------------+---------+
| Table 3- Opportunities and Challenges for U.S. Exporters   | Page 6  |
+------------------------------------------------------------+---------+
| Table 4- Imports by Main Country Groups, Million \$        | Page 6  |
+------------------------------------------------------------+---------+
| Chart 1- Imports by Main Countries                         | #       |
|                                                            |  Page 7 |
+------------------------------------------------------------+---------+
| Chart 2, Import by Main Country Groups                     | Page 7  |
+------------------------------------------------------------+---------+
| Section II- Exporter Business Tips                         | Page 8  |
+------------------------------------------------------------+---------+
| Local Business Customs                                     | Page 8  |
+------------------------------------------------------------+---------+
| Customs Valuation and Taxes                                | Page 8  |
+------------------------------------------------------------+---------+
| Value Added Tax and Purchase Tax                           | Page 8  |
+------------------------------------------------------------+---------+
| Consumer Taste and Perference                              | Page 8  |
+------------------------------------------------------------+---------+
| Food Standards and Regulations                             | Page 8  |
+------------------------------------------------------------+---------+
| Import Procedure for Food Products                         | Page 9  |
+------------------------------------------------------------+---------+
| Import Registration                                        | Page 10 |
+------------------------------------------------------------+---------+
| Regular Product Registration                               | Page 10 |
+------------------------------------------------------------+---------+
| Non-Regular Products                                       | Page 10 |
+------------------------------------------------------------+---------+
| Import Licenses                                            | Page 10 |
+------------------------------------------------------------+---------+
| General Tips for Exporters                                 | Page 10 |
+------------------------------------------------------------+---------+
| Section III- Market Sector Structure and Trends            | Page 11 |
+------------------------------------------------------------+---------+
| Retail Food Sector                                         | Page 11 |
+------------------------------------------------------------+---------+
| Table 5: The 3 Major Chains                                | Page 11 |
+------------------------------------------------------------+---------+
| Table 6: Other Supermarkets                                | Page 11 |
+------------------------------------------------------------+---------+
| HRI Sector                                                 | Page 12 |
+------------------------------------------------------------+---------+
| Section IV- Best High Value Products Prospects             | Page 12 |
+------------------------------------------------------------+---------+
| Section V - Key Contacts and Further Information           | Page 13 |
+------------------------------------------------------------+---------+
| Annex 1 -- Regular Products                                | Page 15 |
+------------------------------------------------------------+---------+
| Annex 2 - Non-Regular Products                             | Page 19 |
+------------------------------------------------------------+---------+
| Annex 3 - Imports of Main Agricultural and Food Products   | Page 20 |
+------------------------------------------------------------+---------+

**Section I: Market Overview**

**Economic and Demographic Situation**

In 2004 Israel's population totaled 6.87 million, of which 19 percent
were Muslims and other minorities. The annual population growth rate was
1.8 percent. In June 2005, unemployment totaled 9 percent and 11 percent
decrease compared to December 2004 (from 10.1 percent to 9 percent). The
Central Bureau of Statistics (CBS) had published a forecast for 2005, in
which an economic growth rate of 4.5 percent was predicted. Per capita
gross domestic product (GDP) is expected to increase by 4.9 percent
above that of 2004 and will total \$17,620.

In Israel, an average household consists of 3.3 persons. Total private
consumption is expected to rise by 4.1 percent. The annual average per
capita income stands at \$19,626. In 2005, the inflation rate is
expected to reach 2.5 percent. All in all, the economic situation in
Israel is improving, boosted by the disengagement plan.

In 1985 Israel signed a Free Trade Area Agreement (FTAA) with the United
States.

Since 1995, nearly all tariffs on trade between the two countries have
been eliminated. Israel also has free trade agreements with Canada,
Bulgaria, EFTA, Jordan, Romania, Turkey, Mexico, and the European Union.
Israel has a customs union with the Palestinian Authority. As a member
of the World Trade Organization (WTO), Israel implemented the WTO
Customs Valuation Agreement that requires legislation to eliminate
non-tariff barriers.

**Consumer Buying and Eating Habits**

In 2004, the average monthly household expenditure totaled \$2,320, of
which \$378 was for food (16.3 percent). Approximately 40 percent of
food purchases occur on Thursdays and Fridays. When buying food,
Israelis are quality oriented and are ready to pay a premium for quality
food products. The Israeli consumer is acquainted with American products
and wishes to have more of them available. During the last decade an
increased share of consumers prefers to buy their products through
supermarket chains, instead of the traditional channels of open markets
and small grocery stores (see table 2).

**Table 1: Monthly Household Consumption Expenditure, \$, CY 2003**

  --------------------------------- -------------- ----------------------
                                    **Value**      **Percent**

  Consumption Expenditure - total   \$2,253        

  Bread, Cereals and Pastry         \$56           14
  Products                                         

  Vegetable Oils and Products       \$7            2

  Meat and Poultry                  \$58           16

  Seafood                           \$13           3

  Milk, Milk Products and Eggs      \$55           15

  Sugar and Products                \$13           3

  Soft Drinks                       \$18           5

  Alcoholic Beverages               \$6            2

  Miscellaneous Food Products       \$31           8

  Fresh Vegetables & Fruits         \$54           14

  Frozen & Pickled Vegetables       \$14           4

  Dried Fruit                       \$7            2

  Fruit Juices, natural             \$2            1

  Meals away from home              \$43           11

  **Food - total**                  **\$377**      **100**
  --------------------------------- -------------- ----------------------

#  Source: Household Expenditure Survey, 2003, CBS.

**Table 2: Food- Household Purchase by Outlet Type - % of Total
Expenditure**

**(Excl. Meals Away From Home), 2004**

  ---------------- ------------- ---------------- --------------- ------------
                   **Grocery     **Open Markets** **Supermarket   **Others**
                   Stores**                       Chains**        

  **Food - Total** **20.7**      **7.2**          **51.7**        **20.4**

  Bread, Cereals   26.0          2.4              53.3            18.3
  and Pastry                                                      
  Products                                                        

  Vegetable Oils   26.7          8.9              54.6            9.8
  and Products                                                    

  Meat and Poultry 8.9           4.9              44.3            41.9

  Fish             10.2          11.9             45.1            32.8

  Milk, Milk       34.3          1.9              59.9            3.9
  Products and                                                    
  Eggs                                                            

  Sugar and        23.7          3.8              58.0            14.5
  Products                                                        

  Soft Drinks and  30.1          2.1              58.6            9.2
  Alcoholic                                                       
  Beverages                                                       

  Fresh Vegetables 8.4           26.3             35.4            29.9

  Fresh Fruits     7.5           26.1             35.4            31.0

  Frozen & Pickled 21.2          3.2              70.2            5.4
  Vegetables                                                      

  Dried Fruit      22.7          17.0             47.8            12.5
  ---------------- ------------- ---------------- --------------- ------------

# Source: Household Expenditure Survey, 2004, CBS.

**Trade and the Market for U.S. Products and Services**

Israel is ranked twenty-first among the largest export markets in the
world for all U.S. products and services. In 2004, approximately \$20.3
billion in two-way trade was recorded, this is a 16 percent increase
compared to the previous year. Although the European Union (EU) is
Israel\'s largest trade partner, the United States is Israel\'s largest
single country trade partner. In 2004, total imports were \$41 billion,
of which \$6.1 billion (14.9 percent) were from the United States and
\$16.8 billion (41 percent) from the EU. According to Israeli
statistics, in 2004 exports totaled \$38.7 billion: \$14.1 billion (36
percent) to the United States and \$10.7 billion to the EU.

In 2004, agricultural imports to Israel totaled \$2.9 billion, 18
percent above previous year levels (see annex 3). Of total agricultural
imports, \$615 million (21 percent) were from the United States and
\$1.04 billion from the EU. Israeli food and agricultural exports in
2004 totaled over \$1.4 billion, of which \$165 million (12 percent)
were to the United States and \$1 billion (mainly vegetables products)
to the EU.

According to data from January - July 2005, U.S. food imports decreased
by 35 percent (from \$165 million to \$107 million) compared to the same
period in the previous year. On the other hand, food imports from the EU
increased by 30 percent (from \$292 million to \$379 million) during the
same period of time. In addition, food imports from Turkey have
increased by 20 percent for the same period of time.

In 1996, Israel and the United States signed a five-year Agreement on
Trade in Agricultural Products (ATAP), in which Israel was allowed to
protect a number of sensitive crops and livestock products with a
combination of tariff-rate quotas and relatively high duties.

###### Table 3: Opportunities and Challenges for U.S. Exporters to Israel

  ----------------------------------- -----------------------------------
  **Opportunities**                   **Challenges**

  With the euro getting stronger, it  Due to the long distance between
  is likely that the demand for U.S.  the U.S. and Israel, the shipping
  products may increase               costs are high.

  There is a tremendous growth in the The intensive competition from
  number of food stores               Eastern Europe, Turkey, Former
  (supermarkets, grocery stores,      Soviet Union, South America and the
  24-hour convenience stores), and    Far East. Products from those areas
  restaurants.                        are cheaper then products from the
                                      U.S. and EU.

  The Israeli consumer is acquainted  U.S. suppliers' interest in the
  with American products and wishes   Israeli market is still low.
  to have more of them here.          

  Israel has the potential to be a    Israeli buyers lack familiarity
  "bridge" to the Palestinian         with U.S. sources.
  Authority with its rapidly growing  
  population and in the future an     
  increased standard of living.       

  New and improved agricultural trade U.S. exporters lack knowledge of
  agreement between the U.S. and      the Israeli market and are unaware
  Israel.                             of new opportunities.
  ----------------------------------- -----------------------------------

**Table 4: Imports, by Regions**[^1]**, \$ Million**

+---------+---------+---------+---------+---------+---------+---------+
| **CY**  | **M     | **      | **EU**  | **USA** | *       | **      |
|         | onths** | Total** |         |         | *Asia** | Other** |
+---------+---------+---------+---------+---------+---------+---------+
| 2004    | 1-7     | 1       | 7,052.2 | 3,151.0 | 2,893.7 | 4,493.2 |
|         |         | 7,590.1 |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| 2005    | 1-7     | 2       | 7,619.2 | 3,219.1 | 3,506.1 | 6,044.3 |
|         |         | 0,388.7 |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+
| #       |         | **+1    | **+     | **+     | **+2    | **+3    |
| Percent |         | 5.91%** | 8.04%** | 2.16%** | 1.16%** | 4.52%** |
|  Change |         |         |         |         |         |         |
+---------+---------+---------+---------+---------+---------+---------+

Source: Central Bureau of Statistics

**Chart 1: Imports, by Major Countries, CY 2004**

![](media/image2.wmf) Source: CBS, Foreign Trade Statistics, Different
Years.

**Chart 2: Imports by Regions, CY 2003-2004**

![](media/image3.wmf) Source: CBS, Foreign Trade Statistics, Different
Years.

**Section II: Exporter Business Tips**

**[Local Business Customs:]{.underline}**

[1. Customs Valuation and Taxes]{.underline}

Israel has implemented the WTO Customs Valuation Agreement, effectively
eliminating most non-tariff barriers. Under WTO regulations, the basis
for valuation is the transaction value, in most cases the CIF price.

######## 2. Value Added Tax and Purchase Tax

Recently Israel lowered the VAT to 16.5 percent on virtually all
services and products sold in Israel (except fresh fruits and
vegetables), including imports. The VAT on imports is levied on the CIF
landed cost plus purchase tax. VAT is recovered by the importer upon
resale of the goods and is ultimately paid by the consumer. Israel
levies purchase taxes on many consumer goods. The GOI reduced or
eliminated the tax on more than 600 items in 2000, including
televisions, washing machines, electrical appliances and cosmetics.
Rates that had ranged from 25-85 percent were reduced to 5-45 percent.
Purchase taxes of up to 90 percent on motor vehicles, fuel, tobacco and
liquor were left unchanged.

###### Consumer Taste and Preference

The food service industry is expanding and consumers' habits are
changing. Over the last few years, Israelis have begun to dine out more
frequently and choose premium food when doing so. Approximately 20
percent of Israel\'s 6.8 million people are concentrated in the Tel Aviv
district, Israel\'s commercial and financial center. Other major
concentrations of the population are the Haifa area (15 percent), a
major port city and center for the petrochemical industry, and Jerusalem
(12 percent). While most companies are headquartered in the Tel Aviv or
Haifa metropolitan areas, a growing number of firms maintain branches,
showrooms, or service facilities in Jerusalem and Beer Sheva.

Consumer malls and shopping centers are popular in Israel. Over 200
malls exist and others are planned. Many American specialty shops, chain
stores, and franchises have their outlets in malls and shopping centers.
The key to success is offering an increasing variety of new products and
services to the consumer.

The institutional services, including the army, hospitals, hotels,
restaurants, banquet halls and places of employment, account for 30
percent of the total market share (households and institutional). Over
50 percent of the total food supply directed at non-institutional
consumers is sold through supermarkets and retail chains. Three major
supermarket chains with hundreds of outlets throughout the country
dominate the retail food market. The average floor size of a supermarket
is 600 square meters. Some of the larger stores have areas of 1,000 -
2,000 square meters. Typical Middle Eastern-style open-air markets and
small groceries serve the remainder of the food market. In recent years,
specialty food stores have developed in all of the main metropolitan
centers.

####### Food Standards and Regulations

See Gain Report IS5009
(<http://www.fas.usda.gov/gainfiles/200508/146130535.pdf> ).

The Standards Institution of Israel (SII) is the agency responsible for
the development of most product standards, compliance testing, and
certification of products and industry quality assurance systems. For
further information, interested firms should contact: The Standards
Institution of Israel, 42 Levanon Street, Tel Aviv 69977; Tel:
972-3-6465154;

Fax: 972-3-6419683; E-mail: <vered@sii.org.il>.

It is the declared policy of the Government of Israel to adopt
international standards wherever possible, and to implement mandatory
standards related only to safety, health, and the environment. In
practice, however, many products are still subject to mandatory
standards some of which were designed to favor domestic producers over
importers. As in the case of plywood, these local standards often
specify terms of design rather than performance.

The Israel plywood standard effectively excludes most U.S. plywood from
the market. Israel has not officially adopted ISO-9000 standards,
although there is a growing preference for ISO-9000 standards among
Israeli importers. This is especially important in the case of
ingredients and raw materials destined for the production of export
products.

The Government of Israel requires that food and health products be
registered with the Ministry of Health before they can be sold in the
country. FDA approval for food and health care products is not
mandatory, but Israeli importers prefer it as it accelerates the product
registration process and import license approval. Product registration
normally takes from

4-6 weeks if all documentation is in order.

Another subject to be considered is the issue of kosher food. Kosher
certification is not a legal requirement for importing food into Israel.
However, non-kosher products have a much smaller market as the large
supermarket chains and hotels refuse to carry them. Manufacturers who
produce kosher products must be able to satisfy Israeli rabbinical
supervisors that all ingredients and processes are kosher. According to
the Law for Prevention of Fraud in Kashrut, only the Chief Rabbinate of
Israel is authorized to determine and approve a product as kosher for
consumption in Israel; the Chief Rabbinate may authorize another
supervisory body to act in its name. Here too, U.S. products have an
advantage as Israel's Chief Rabbinate recognizes the kashrut
certification issued by many American rabbis. It is, however, quite
simple for Israeli importers to send an Israeli rabbi to any supply
source, thereby reducing the American advantage. In recent years,
opportunity for non-kosher foods has been increasing as immigrants from
the Former Soviet Union (FSU) make up a significant share of purchasing
power (15 percent).

The Israeli food committee will publish the procedures for modified food
registration in the immediate future, however labeling of modified food
products is not yet required. Registration will be required for food
products containing GMO ingredients derived from soybean, corn, canola
and chicory (See Gain Report IS5008 -
<http://www.fas.usda.gov/gainfiles/200507/146130334.pdf> )

**Import Procedure for Food Products**

Recently, imported food products were divided into two groups - regular
and non-regular products. The procedures for the two groups are as
follows:

[Importer Registration:]{.underline}

1\. A qualified importer must complete an application stating that he or
his representative has a storage facility. This procedure is used for
the two types of products.

2\. An importer of regular products has to complete an "Importer
Statement".

3\. Upon submission he will receive an official importer certificate
from the Israeli Food & Nutrition Services.

[Regular Products Registration:]{.underline}

1\. Requires submitting a preliminary application for the authorization
to import regular food products.

[Non-Regular Products:]{.underline}

Importation requires the following procedures:

1\. See section 1- importer registration

2\. A preliminary application for authorization to import food products,
and a border station

release application. The following certificates are required for the
purpose of releasing the

food products from the border station:

> a\. Original/copy official importer certificate
>
> b\. Original/copy food certificate
>
> c\. Shipping invoice
>
> d\. Gate pass certificate
>
> e\. Copy of the bill of lading and packing list
>
> f\. Copy of the import tax notification

**Import Licenses**

All import licensing requirements for U.S. made consumer and industrial
goods have been eliminated under the United States - Israel Free Trade
Area Agreement (FTAA) of 1985 and World Trade Organization (WTO)
agreements. Imported food items require the approval of the Ministry of
Health's Food Control Administration, which is also responsible for
approval of labeling and packaging. All plant material (including dried
fruits and nuts) require import approval from the Plant Protection and
Inspection Service. Unprocessed and unpackaged imported meat must be
licensed by the Israel Veterinary Services (IVS) and originate in a
plant which has been certified as approved by the IVS. Packed meat and
poultry for retail sale are subject to licensing by the Food Control
Administration of the Ministry of Health. Israel law requires that all
meat and poultry imports be certified kosher by the Rabbinical Council
of the Chief Rabbinate or a body authorized by the Council. As an
exception, it is possible to import non-kosher beef offal. Israel's
veterinary authorities ban imports of bone-in beef from countries where
there is a danger of transmitting Foot and Mouth Disease (FMD) or Bovine
Spongiform Encephaly (BSE), also known as the Mad Cow Disease.

## General Tips for Exporters

-   Consider participating in FAS Tel Aviv organized or sponsored
    events.

FAS Tel Aviv normally participates in ISRAFOOD - An International Food &
Beverages

Exhibition in Tel Aviv for professionals of the catering and food
wholesale, retail,

restaurants, hotels, institutional and food shops. During the same time
the

HOTEX exhibition takes place -- presenting food display and restaurant
equipment.

It is the largest trade exhibition of its kind in Israel. Israfood
represents an

excellent opportunity to present products to key food importers,
distributors,

retailers, wholesaler and processors. The trade show takes place during
the month of

November.

-   Communicate with potential importers of your product. Contact FAS
    Tel Aviv to

obtain a list of local importers; Tel: 972-3-519-7588/7324/7686;

Fax: 972-3-510-2565; E-mail: <gilad.shachar@usda.gov>;
<Yossi.barak@usda.gov>;

**Section III: Market Sector Structure and Trends**

**1. Retail Food Sector**

In 2004, the retail food market was valued at \$7.7 billion, of which 43
percent (\$3.3 billion) belonged to the three major retail
food-marketing chains. The traditional open markets capture only 9.5
percent (\$738 million) of the food market. The private supermarkets
(the "fourth chain") held 14 percent of market share, while grocery
stores and minimarkets held 24 percent (\$1.89 billion). Approximately
5,500 grocery stores and 1,700 minimarkets exist in Israel. Due to the
intensive competition in the Israeli food sector, the grocery stores and
minimarkets are operating at very small profit margins. More than 100
convenience stores, which are open 24 hours, were established in recent
years. The food sector's growth in

CY 2004 totaled 2 percent.

###### Table 5: The Three Major Chains, CY 2004

+----------------+----------------+-----------------+----------------+
| **Chain**      | **No. of       | **Commercial    | **Turnover**   |
|                | Stores**       | Area**          |                |
+----------------+----------------+-----------------+----------------+
| Super Sol      | 156            | 3.6 million     | \$1.38 billion |
|                |                | sq.ft.          |                |
+----------------+----------------+-----------------+----------------+
| Blue Square    | 165            | 3.0 million     | \$1.29 billion |
| Coop           |                | sq.ft           |                |
+----------------+----------------+-----------------+----------------+
| ClubMarket[^2] | 110            | 2.1 million     | \$0.67 billion |
|                |                | sq.ft           |                |
+----------------+----------------+-----------------+----------------+
| # Group Total  | **431**        | **8.7 million   | **\$3.34       |
|                |                | sq.ft**         | billion**      |
+----------------+----------------+-----------------+----------------+

###### Table 6: Other Supermarkets

+-------------+---------------+---------------------+------------------+
| **Store**   | **No. of      | **Type of Store**   | **Turnover in    |
|             | Stores in     |                     | 2004**           |
|             | 2004**        |                     |                  |
+-------------+---------------+---------------------+------------------+
| ####        | 15            | Non-K               | \$289 million    |
| ## Tiv Taam |               | osher/International |                  |
+-------------+---------------+---------------------+------------------+
| Hatzi Hinam | 4             | Discount/Kosher     | \$244 million    |
+-------------+---------------+---------------------+------------------+
| COOP        | 26            | Kosher              | \$167 million    |
| Jerusalem   |               |                     |                  |
+-------------+---------------+---------------------+------------------+
| Rami Levi   | 7             | Discount/Kosher     | \$89 million     |
+-------------+---------------+---------------------+------------------+
| Birchat     | 17            | Kosher              | \$89 million     |
| Haaretz     |               |                     |                  |
+-------------+---------------+---------------------+------------------+
| Yad Yizchak | 3             | Discount/Kosher     | \$67 million     |
+-------------+---------------+---------------------+------------------+
| Victory     | 7             | Discount/Kosher     | \$56 million     |
+-------------+---------------+---------------------+------------------+
| Haviv       | 1             | Discount/Kosher     | \$49 million     |
+-------------+---------------+---------------------+------------------+
| Madanei     | 4             | Discount            | \$34 million     |
| Manya       |               |                     |                  |
+-------------+---------------+---------------------+------------------+
| #           | **64**        |                     | **\$1.08         |
| Grand Total |               |                     | billion**        |
+-------------+---------------+---------------------+------------------+

**2. HRI Sector**

The Israeli HRI market is very complex and diverse. Food service is
divided into two categories: commercial and institutional. The
commercial sector is divided into subsectors: hotels and restaurants.
The commercial sector comprises an estimated 650 hotels and hostels,
2,300 restaurants, more than 700 banquet halls, over 420 coffee shops
and cafeterias, and about 900 pubs and bars. In 2004, the market value
of the restaurants, coffee shops, pubs and bars was estimated at \$2
billion. Approximately 45 and 23 percent of the bars and pubs
respectively, are located in central Israel and northern Israel. In
Israel there are about 2,300 kiosks, with a market value of \$1 billion
annually. Fifty percent of the kiosks are located in central Israel. In
Tel Aviv, approximately 1,550 restaurants, clubs, pubs and bars exist.

The institutional food service companies include approximately 4,000
kitchens. The Israeli Defense Forces (IDF) is the largest institutional
food consumer. It is estimated that the IDF alone consumes about 4
percent of all Israeli food through its purchasing channels. Currently
the IDF is in the process of privatizing its food supply chain (150,000
meals/day). The Israeli police force will join the IDF as a consumer in
the project adding an additional 20,000 meals/day. Total revenue of the
Israeli food trade is estimated at \$7.07 billion, and the HRI market is
valued at \$4.42 billion.

In 2004, 1.5 million people visited Israel, bringing tourism to its
highest levels since 2001; entries into the country rose by 42 percent
compared to the previous year.

In 2004, income from tourism totaled \$2.4 billion, a 15.6 percent
increase compared to the previous year.

# Section IV: Best High Value Products Prospects

Wine and beer

Energy drinks

Coffee and Tea

Ice cream

Soy food products

Frozen pizza

Morning cereals

Fish and seafood products

Baby food

Crackers

Frozen vegetables

Pet food

Vinegar and Olive oil

Dried fruits & Nuts

Intermediate products for further processing (whip toppings, corn and
potato starch, milk powder, products for the baking industry)

In addition, recently the social economic cabinet of Israel approved a
plan to allow organized gambling on horse racing in Israel. The number
of race horses is expected to increase from 250 to 1,200 (380 percent),
in addition to the development of many supporting services. Two new
hippodromes will be constructed, and it is estimated that horseracing
gambling will begin in 2007. The future presents good opportunities for
U.S. suppliers (See Gain report IS5001 -
<http://www.fas.usda.gov/gainfiles/200506/146129922.pdf>)

# Section V: Key Contacts and Further Information

**[U.S. Mailing Address]{.underline}**: AGRICULTURE UNIT 7228 BOX 3 APO
AE 09830

Packages can weigh no more than 70 pounds and must not be larger than
108 inch. Anything larger will be subject to a tariff.

**[Local Mailing address]{.underline}**: Contact the Office of
Agricultural Affairs in the U.S. Embassy in Tel Aviv. Contact: Tel:
972-3-5197588, Fax: 972-3-5102565, E-mail: <us_emb@netvision.net.il>

Web Site:
[www.usembassy-israel.org.il/fas/](http://www.usembassy-israel.org.il/fas/)

####### Yossi Barak, Agricultural Specialist

Office of Agricultural Affairs, U.S. Embassy

71 Hayarkon St. Tel Aviv 63903, Israel

Tel: 972-3-519-7686 Fax: 972-3-510-2565

E-mail: <yossi.barak@usda.gov>

####### Gilad Shachar, Agricultural Specialist

Office of Agricultural Affairs, U.S. Embassy,

71 Hayarkon St. Tel Aviv 63903, Israel

Tel: 972-3-519-7324 Fax: 972-3-510-2565

E-mail: <gilad.shachar@usda.gov>

**[Food Control Service]{.underline}**

**[Ministry of Health]{.underline}**

12 Ha'arba'a St.

64739, Tel Aviv

Israel

Web site: <http://www.health.gov.il/english/>

Tel: 972-3-6270100

Fax: 972-3-5619549

Contact: Ms. Ruthy Shinberg: Tel: 972-3-6270107

Milk Products Import Specialist: Contact: Mr. Eli Gordon: Tel:
972-3-6270136

**[Israeli Veterinary Services.]{.underline}**

Web Site: <http://agri3.huji.ac.il/~yakobson/vetserv/index.html>

Ministry of Agriculture

P.O. Box 12

50250, Bet Dagan

Israel

Contact: Dr. Moshe Chaimovich, Director. E-mail: <cvo_vsah@moag.gov.il>,

<mosheh@moag.gov.il>

Tel : 972-3-9681614, 972-3-9690871

Fax: 972-3-9681641, 972-3-9681746

**[Import & Export Veterinary Division]{.underline}**

Chief Import & Export Veterinary Officer Dr. Med. Vet. Roni Ozari

Tel: 972-3-9681649, Fax: 972-3-9605194. E-mail: <ronio@moag.gov.il>

**[Plant Protection & Inspection Service]{.underline}**

P.O. Box 78

50250, Bet Dagan

Israel

Contact: Ms. Miriam Freund, Deputy Director

Tel : 972-3-9681561

Fax: 972-3-9681582

E-mail: <miriamf@moag.gov.il>

Web Site:
[www.ppis.moag.gov.il/PPIS/SiteEnglish/SiteinEnglish/](http://www.ppis.moag.gov.il/PPIS/SiteEnglish/SiteinEnglish/)

**[Standards Institution of Israel]{.underline}**

42 H. Levanon St

69977, Tel Aviv

Israel

Web Site: [www.sii.org.il](http://www.sii.org.il/)

General Information: E-mail: <vered@sii.org.il>

Tel : 972-3-6465154

Fax: 972-3-6419683

**[Major Newspapers and Business Journals]{.underline}**

\- English Language:

Ha'aretz (daily English version)
[http://www.haaretz.com](http://www.haaretz.com/)

The Jerusalem Post (daily newspaper)
[http://www.jpost.com](http://www.jpost.com/)

Globes <http://www.globes.co.il/serveen/>

The Marker [http://www.themarker.co.il/eng
/](http://www.themarker.co.il/eng /)

####### More Useful Web Sites

Bank of Israel - <http://www.bankisrael.gov.il/firsteng.htm>

Central Bureau of Statistics - <http://www.cbs.gov.il/engindex.htm>

The Agricultural Research Center of Israel - <http://www.agri.gov.il/>

Ministry of Agricultural and Rural Development -
<http://www.moag.gov.il/english/>

Faculty of Agricultural, Food and Environmental Quality Sciences
<http://www.agri.huji.ac.il/index-eng.html>

[Annex 1: Regular Products (may change in the future)]{.underline}

+-------------+---------------+------------+--------------------------+
| **Group**   | **            | **Group**  | **Description**          |
|             | Description** |            |                          |
+-------------+---------------+------------+--------------------------+
| **1.        | 1.1 White     | **6.       | 6.1 Pressed              |
| White**     | chocolate     | Candies**  |                          |
|             | with          |            | candies.                 |
| **          | additives     |            |                          |
| Chocolate** | (almond,      |            |                          |
|             | raisin,       |            |                          |
|             | etc.).        |            |                          |
+-------------+---------------+------------+--------------------------+
|             | 1.2 White     |            | 6.2 Hard candies with    |
|             | chocolate     |            | flavors.                 |
|             | with cream.   |            |                          |
+-------------+---------------+------------+--------------------------+
|             | 1.3 White     |            | 6.3 Hard candies filled  |
|             | chocolate     |            | with flavors.            |
|             | snack, with   |            |                          |
|             | cream.        |            |                          |
+-------------+---------------+------------+--------------------------+
|             | White         |            | 6.4 Hard candies filled  |
|             | chocolate     |            | with chewing gum.        |
|             | candy, with   |            |                          |
|             | cream.        |            |                          |
+-------------+---------------+------------+--------------------------+
| **2. Milk** | 2.1 Milk      |            | 6.5 Toffee with flavors. |
|             | chocolate.    |            |                          |
| **          |               |            |                          |
| Chocolate** |               |            |                          |
+-------------+---------------+------------+--------------------------+
|             | 2.2 Milk      |            | 6.6 Toffee filled with   |
|             | chocolate     |            | flavors.                 |
|             | with          |            |                          |
|             | additives     |            |                          |
|             | (almond,      |            |                          |
|             | raisins,      |            |                          |
|             | etc.).        |            |                          |
+-------------+---------------+------------+--------------------------+
|             | 2.3 Milk      | **7.**     | Other confectionery      |
|             | chocolate     |            |                          |
|             | snack, with   |            |                          |
|             | cream.        |            |                          |
+-------------+---------------+------------+--------------------------+
|             | 2.4 Milk      | **8.**     | Beverage flavors         |
|             | chocolate     |            |                          |
|             | candy, with   |            |                          |
|             | cream.        |            |                          |
+-------------+---------------+------------+--------------------------+
|             | 2.5 Milk      | **9.**     | Brown flavors            |
|             | chocolate     |            |                          |
|             | with cream.   |            |                          |
+-------------+---------------+------------+--------------------------+
| **3. Acrid  | 3.1 Acrid     | **10.**    | Dairy flavors            |
| Chocolate** | chocolate     |            |                          |
+-------------+---------------+------------+--------------------------+
|             | 3.2 Acrid     | **11.**    | Fruit flavors            |
|             | chocolate     |            |                          |
|             | with          |            |                          |
|             | additives     |            |                          |
|             | (almond,      |            |                          |
|             | raisins,      |            |                          |
|             | etc.)         |            |                          |
+-------------+---------------+------------+--------------------------+
|             | 3.3 Acrid     | **12.**    | Meat flavors             |
|             | chocolate     |            |                          |
|             | snack, with   |            |                          |
|             | cream.        |            |                          |
+-------------+---------------+------------+--------------------------+
|             | 3.4 Acrid     | **13.**    | Mint flavors             |
|             | chocolate     |            |                          |
|             | candy, with   |            |                          |
|             | cream.        |            |                          |
+-------------+---------------+------------+--------------------------+
|             | 3.5 Acrid     | **14.**    | Nuts flavors             |
|             | chocolate     |            |                          |
|             | with cream.   |            |                          |
+-------------+---------------+------------+--------------------------+
| **4.        | 4.1 Chewing   | **15.**    | Tobacco flavors          |
| Chewing**   | gum with      |            |                          |
|             | flavors       |            |                          |
| **Gum**     |               |            |                          |
+-------------+---------------+------------+--------------------------+
|             | 4.2 Chewing   | **16.**    | Vanilla flavors          |
|             | gum filled in |            |                          |
|             | flavors       |            |                          |
+-------------+---------------+------------+--------------------------+
| **5.        | Starched      | **17.**    | Vegetables spices and    |
| Conf        | candies       |            | herbs                    |
| ectionery** |               |            |                          |
+-------------+---------------+------------+--------------------------+

  ----------------- ----------------- ----------------- -----------------
  **Group**         **Description**   **Group**         **Description**

  **18. Sugar**     18.1 White sugar  **31. Wafers**    31.1 Regular
                                                        wafers

                    18.2 Brown sugar                    31.2 Coated
                                                        wafers

                    18.3 Burnt sugar                    31.3 Filled
                                                        wafers

  **19.**           Cocoa powder                        31.4 Filled and
                                                        coated wafers

  **20.**           Mix for Ice cream **32.**           Crackers
                    (parve)                             

  **21.**           Sweet spreads     **33. Biscuits**  33.1 Regular
                    (like Nutella)                      biscuits

  **22. Chocolate   22.1 Regular                        31.2 Coated
  for cooking**     Chocolate for                       biscuits
                    cooking                             

                    22.2 Chocolate                      31.3 Filled
                    for cooking with                    biscuits
                    additions                           

                    22.3 Chocolate                      31.4 Filled and
                    for cooking with                    coated biscuits
                    cream                               

                    22.4 Candy        **34. Pasta       34.1 Dried pasta,
                    chocolate for     products**        based on durum
                    cooking                             

                    22.5 Snack                          34.2 Dried pasta,
                    chocolate for                       based on wheat,
                    cooking                             without durum

  **23. Milk        23.1 Milk         **35. Starch**    35.1 Wheat starch
  Chocolate for     Chocolate for                       
  cooking**         cooking                             

                    23.2 Milk                           35.2 Corn starch
                    chocolate for                       
                    cooking with                        
                    additives                           

                    23.3 Milk                           35.3 Potato
                    Chocolate for                       starch
                    cooking with                        
                    cream                               

                    23.4 Candy milk   **36. Wheat and   Wheat, Wheat
                    chocolate for     products**        flour, Matzot
                    cooking                             flour, Matzot,
                                                        Wheat products

                    23.5 Snack milk   **37. Bread and   37.1 White bread
                    chocolate for     products**        
                    cooking                             

  **24.**           Sweetening (like                    37.2 Black bread
                    sorbitol)                           

  **25.**           Sweetening (like                    37.2 Special
                    Aspartame)                          bread

  **26.**           Emulsifiers                         37.3 Sabbath
                                                        loaf, standard
                                                        and sweet

  **27.**           Emulsifying salts                   37.4 Rolls and
                                                        Bagels

  **28.**           Firming agents                      37.5 Muffins

  **29.**           Flavor enhancers                    37.6 Toasts

  **30.**           Glazing agents                      37.7 Croutons

                                                        37.8 Pastry
                                                        flakes

                                                        37.9 Pitta
                                                        (oriental bread)
  ----------------- ----------------- ----------------- -----------------

  ----------------- ----------------- ----------------- ----------------------
  **Group**         **Description**   **Group**         **Description**

  **38. Halvah**    38.1 Sesame       **52. Desserts    52.1 Pudding mix,
                    halvah            and powder for    without gelatin
                                      desserts**        

                    38.2 Sesame                         52.2 Gels and powders
                    halvah with                         
                    additives                           

                    38.3 Other halvah **53. Processed   53.1 Dried fruits
                                      fruit and         
                                      vegetables**      

                    38.4 Other coated                   53.2 Sweated fruits
                    halvah                              

  **39. Cookies**   39.1 Regular                        53.3 Dried vegetables
                    cookies                             

                    39.2 Filled                         53.4 Sweated
                    cookies                             vegetables

                    39.3 Coated       **54.**           54.1 Canned fruits in
                    cookies                             syrup

                    39.4 Pizza        **55. Oiled/      55.1 Canned fruit and
                                      salted/vinegary   vegetables in vinegar
                                      vegetables and    
                                      fruits**          

                    39.5 Filled and                     Canned fruit and
                    coated cookies                      vegetables in salt

                    39.6 Cakes                          Canned fruit and
                                                        vegetables in oil

  **40. Yeasts**    40.1 Instant      **56. Jams**      56.1 All kind of jams
                    dried yeasts for                    
                    baking                              

                    40.2 Other yeasts                   56.2 Confiture

  **41.**           Colors                              56.3 Fruit dainty

  **42.**           Flour treatment   **57. Sauces**    57.1 Vinegar
                    agents                              

  **43.**           Gelling agents                      57.2 Vinegary sauces

  **44.**           Modified starches **58.**           Mustard

  **45.**           Raising agents    **59.**           Fillings and coating
                                                        for cakes

  **46.**           Stabilizers       **60.**           Acidity regulators

  **47.**           Enzymes           **61.**           Anti foaming agents

  **48. Non         48.1 soft drinks, **62.**           Preservatives
  alcoholic         carbonated                          
  beverages**                                           

                    48.2 Soft drinks, **63.**           Propellants
                    non carbonated                      

  **49.**           Beer, till 0.5%   **64. Snacks**    64.1 Snacks with
                    alcohol                             potatoes

  **50. Syrup**     50.1 Syrup with                     64.2 Snacks with
                    flavors                             cereals

                    50.2 Fruit syrup                    64.3 Snacks with rise

                    50.3 Industrial                     64.4 Snacks with dried
                    syrup                               fruits

                    50.4 Syrup for                      64.5 Snacks with nuts
                    Ice cream,                          
                    drinks.                             
  ----------------- ----------------- ----------------- ----------------------

+----------------+----------------+-------------+---------------------+
| **Group**      | *              | **Group**   | **Description**     |
|                | *Description** |             |                     |
+----------------+----------------+-------------+---------------------+
| **51.**        | Powders for    |             | 64.6 Snack with soy |
|                | making drinks  |             | protein             |
|                |                |             |                     |
|                |                |             | 64.7 Granola Snacks |
+----------------+----------------+-------------+---------------------+
|                |                |             | 64.8 Snacks with    |
|                |                |             | corn                |
+----------------+----------------+-------------+---------------------+
| **65.**        | Rice products  | **84.**     | Antioxidants        |
+----------------+----------------+-------------+---------------------+
| **66.**        | Flavor and     | **85.**     | Acids               |
|                | smell          |             |                     |
|                | materials      |             |                     |
+----------------+----------------+-------------+---------------------+
| **67. Coffee** | Instant        | **86.**     | Bulking agents      |
|                | coffee, ground |             |                     |
|                | coffee         |             |                     |
+----------------+----------------+-------------+---------------------+
| **68.**        | Tea            | **87.**     | Foaming agents      |
+----------------+----------------+-------------+---------------------+
| **69.**        | Beans: Cocoa,  | **88.**     | Thickeners          |
|                | soy, coffee    |             |                     |
+----------------+----------------+-------------+---------------------+
| **70.**        | Cereals flour, | **90.       | 90.1 Juices         |
|                | without wheat  | Juices and  |                     |
|                |                | nectars**   |                     |
+----------------+----------------+-------------+---------------------+
| **71.**        | Dried soy      | **91.       | 90.2 Nectars        |
|                | products       | Con         |                     |
|                |                | centrates** |                     |
+----------------+----------------+-------------+---------------------+
| **72.**        | Corn and       |             | From fruits         |
|                | products       |             |                     |
+----------------+----------------+-------------+---------------------+
| **73. Spices** | 73.1 Mixed     |             |                     |
|                | spices         |             |                     |
+----------------+----------------+-------------+---------------------+
| **74. Fresh    | 74.1 Fresh     |             |                     |
| vegetables and | fruits         |             |                     |
| fruits**       |                |             |                     |
+----------------+----------------+-------------+---------------------+
|                | 74.2 Fresh     |             |                     |
|                | vegetables     |             |                     |
+----------------+----------------+-------------+---------------------+
| **75. Dried    | 75.1 Dried     |             |                     |
| soups**        | soups with     |             |                     |
|                | noodles        |             |                     |
+----------------+----------------+-------------+---------------------+
|                | 75.2 Fried     |             |                     |
|                | soups with     |             |                     |
|                | rice.          |             |                     |
+----------------+----------------+-------------+---------------------+
|                | 75.3 Dried     |             |                     |
|                | soups with     |             |                     |
|                | vegetables     |             |                     |
+----------------+----------------+-------------+---------------------+
| **76. Paste**  | Sesame oil     |             |                     |
|                | (tahina), nut  |             |                     |
|                | paste          |             |                     |
+----------------+----------------+-------------+---------------------+
| **77. Dishes** | 77.1 Instant   |             |                     |
|                | Noodles dish   |             |                     |
+----------------+----------------+-------------+---------------------+
|                | 77.2 Instant   |             |                     |
|                | Rice dish      |             |                     |
+----------------+----------------+-------------+---------------------+
|                | 77.3 Instant   |             |                     |
|                | cereals dish   |             |                     |
+----------------+----------------+-------------+---------------------+
| **78. Potato   | Instant potato |             |                     |
| products**     | powder         |             |                     |
+----------------+----------------+-------------+---------------------+
| **79. Oils**   | Vegetables     |             |                     |
|                | oils           |             |                     |
+----------------+----------------+-------------+---------------------+
| **80.**        | Attar Oils     |             |                     |
+----------------+----------------+-------------+---------------------+
| **81.**        | Morning        |             |                     |
|                | cereals        |             |                     |
+----------------+----------------+-------------+---------------------+
| **82. Nuts and | 82.1 All kinds |             |                     |
| Seeds**        | of nuts        |             |                     |
+----------------+----------------+-------------+---------------------+
|                | 82.2 All kinds |             |                     |
|                | of seeds       |             |                     |
+----------------+----------------+-------------+---------------------+
| **83.**        | Anti caking    |             |                     |
|                | agents         |             |                     |
+----------------+----------------+-------------+---------------------+

**[Annex 2: Non-Regular Products (may change in the
future)]{.underline}**

+-----------------------------------------------------------------------+
| ###### Group                                                          |
+-----------------------------------------------------------------------+
| 1\. Milk products, and milk products substitutes (crops)              |
+-----------------------------------------------------------------------+
| 2\. Meat and poultry products, and their substitutes (crops)          |
+-----------------------------------------------------------------------+
| 3\. Fish products, and their substitutes (crops)                      |
+-----------------------------------------------------------------------+
| 4 Food supplements: vitamins, minerals and herbs                      |
+-----------------------------------------------------------------------+
| 5\. Baby food                                                         |
+-----------------------------------------------------------------------+
| 6\. Eggs products                                                     |
+-----------------------------------------------------------------------+
| 7\. Canned food (under pH 4.5)                                        |
+-----------------------------------------------------------------------+
| 8\. Gelatin products, including products that contain gelatin         |
+-----------------------------------------------------------------------+
| 9\. Honey products                                                    |
+-----------------------------------------------------------------------+
| 10\. Other food products that have to be stored in low temperature    |
+-----------------------------------------------------------------------+
| 11\. Mineral water                                                    |
+-----------------------------------------------------------------------+
| 12\. Mushroom products                                                |
+-----------------------------------------------------------------------+
| 13\. Food that was exported, but was returned to Israel.              |
+-----------------------------------------------------------------------+
| 14\. The food and nutrition services have the final decision if they  |
| think                                                                 |
|                                                                       |
| that other products are also sensitive                                |
+-----------------------------------------------------------------------+

# Annex 3: Imports of Main Agricultural and Food Products

  ----------------------------- ----------- ------------- ----------- -------------
  Product Category              **2003**                  **2004**    

                                **Million   **Percent**   **Million   **Percent**
                                \$**                      \$**        

  Live animals                  22.593      0.92          21.621      0.74

  Meat & edible meat offal      118.271     4.83          156.779     5.39

  Fish, crustaceans and         102.860     4.20          103.198     3.55
  mollusca                                                            

  Dairy produce; eggs, natural  25.295      1.03          31.669      1.09
  honey; edible products of                                           
  animal origin                                                       

  Products of animal origin     2.151       0.09          2.919       0.10
  n.e.c                                                               

  Live trees and other plants,  8.405       0.34          9.995       0.34
  bulbs, roots and other garden                                       
  plants                                                              

  Edible vegetables, roots and  44.125      1.80          42.638      1.46
  tubers                                                              

  Edible fruits and nuts; peel  82.271      3.36          92.719      3.19
  of melons and other citrus                                          
  fruit                                                               

  Coffee, tea, mate and spices  44.193      1.80          49.810      1.71

  Cereals                       419.225     17.11         566.095     19.45

  Products of milling industry; 50.247      2.05          41.641      1.43
  malt and starches; wheat                                            
  gluten                                                              

  Oil seeds, grains, fruits,    222.230     9.07          280.737     9.65
  industrial and medical                                              
  plants. Straw and feed                                              

  Tree gum; resins, other       17.107      0.70          18.307      0.63
  vegetable saps and extracts                                         

  Vegetable plaiting materials; 4.323       0.18          7.830       0.27
  vegetable products n.e.c                                            

  Animal or vegetable fats and  71.125      2.90          64.620      2.22
  oils; animal or vegetable                                           
  waxes                                                               

  Preparation of meat, fish, or 32.872      1.34          38.839      1.33
  of other aquatic                                                    
  invertebrates                                                       

  Sugar and sugar confectionery 158.689     6.48          163.823     5.63

  Cocoa and cocoa preparations  71.983      2.94          77.240      2.65

  Preparations of cereals,      84.927      3.47          94.457      3.25
  flour starch or milk; pastry                                        
  products                                                            

  Preparations of vegetable,    105.922     4.32          135.029     4.64
  fruits, nuts and other plants                                       

  Miscellaneous edible          174.274     7.11          202.469     6.96
  preparations                                                        

  Alcoholic beverages and       78.885      3.22          96.426      3.31
  vinegar                                                             

  Residues and waste from the   72.429      2.96          127.895     4.39
  food industries; prepared                                           
  animal feed                                                         

  Wood and articles of wood     293.560     11.98         327.358     11.25

  Cotton                        141.518     5.78          156.511     5.38

  **Grand total**               **2,449**   **100**       **2,910**   **100**
  ----------------------------- ----------- ------------- ----------- -------------

Source: CBS, Foreign Trade Statistics, Different Years.

[^1]: Excl. diamonds

[^2]: ClumMarket was sold to the Super-sol in August 2005.