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Buying Into Israel as a Product Player

February 15, 2013 By:
Anna Harwood, Tami Benmayer and Maayan Jaffe, Special Sections Feature
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Ahava Men's products have an Israeli complexion.
From tickling your palate by spreading tangy hummus on pita bread to smearing soothing Dead Sea mud on aching parts of your body, Israeli-made products are successfully integrating themselves into the highly competitive American consumer marketplace.

While “loyal” American Jewish kosher consumers and pro-Israel Evangelical Christians provide a built-in marketplace for Made in Israel products, a growing number of Israeli companies have burst onto the mainstream consumer scene by either forging alliances with local manufacturers and distributors or crossing the ocean to open flagship stores in key U.S. cities.

For instance, the joint venture partnership between the Strauss Group, one of Israel’s largest food conglomerates, and New York-based PepsiCo Inc. which was inked in 2007, has, in a short period of time, sparked a culinary revolution in the American consumer marketplace via the introduction of a series of hummus spreads and chilled Mediterranean accented dips under the “Sabra” brand name. Hummus and chilled dips now represent one of the fastest-growing segments in the American food industry.

The United States is a key strategic growth market for many Israeli companies and the desire to enter the U.S. retail arena can be strong. But doing business in America involves a lot of work, say marketing experts.

Take Ahava Dead Sea Laboratories products. It is the only company indigenous to the Dead Sea region. It is known internationally for its ability to recharge the skin’s natural functions by optimizing cell metabolism, protecting from UV damage and increasing moisture levels.

Back in the 1990s, Ahava Cosmetics initially produced a small line of skin care products made from mineral rich Dead Sea muds for the Israeli marketplace. That is until Ahava’s spa technicians discovered that foreign tourists were scooping up the muds and taking them back home. By 2010, Ahava Cosmetics reported sales of over $150 million dollars a year in the United States, with the company’s products being sold in upscale department stores such as Lord & Taylor and Nordstrom.

“We have a dedicated sales and marketing team that allows us to be close to the consumer as well as to our retail partners,” said Elana Drell Szyfer, chief executive officer of Ahava North America. “This helps us better penetrate the market and understand trends.”

Ahava has used several key strategies to gain buyers. First, it has tapped into American tourists by positioning its products in key tourist venues. Americans buy Ahava in Israel and then look for it when they return to the States, said Szyfer.

Second, the company mounted what Szyfer called a “major PR push.” Ahava stays in touch with print and online beauty editors. This helps place the product in the eyes of those who are interested in beauty.

Finally, Ahava has dramatically increased its sampling efforts – in all major retailers and online at www.ahavaus.com.

Ahava’s methodology is very similar to the one that Gidon Katz, vice president of IMP Group in Jerusalem, described. Katz’s company, which launched 30 years ago, represents well-known brands such as Tnuva, Osem and the Golan Heights Winery. Katz said he has seen a shift in the way Israeli products make it to American shelves.

“Thirty years ago, for sure in the Jewish market, people bought Israeli products out of guilt. You could call it ‘wanting to help’ or ‘philanthropic reasons,’ ” he said. “There is almost no such thing anymore. Today, Israel products really need to prove themselves.”

Katz said quality and price are the top priorities for U.S. consumers and supersede the products’ origin.

Just like Ahava, Katz’s clients generally have U.S. representatives to help them place their products and to handle customer service. He said Tnuva, for example, is the biggest kosher food manufacturer in the world, with $2 billion in sales each year. Tnuva’s American subsidiary, Tnuva USA, brings in the company’s products direct from Israel to New York and then distributes them to other states.

Katz said there are four types of U.S. Jewish consumers. First, Israelis living in America. They’ll buy Israeli products because of the nostalgia.

Next, Orthodox Jews who say Israel is a high factor in their purchasing decisions.

Affiliated Jews, explained Katz, say Israel is a factor, “but there we need to compete more on quality and price.”

The final category, unaffiliated Jews: “There is almost no difference.”

With this in mind, Katz said the test of whether or not an Israeli product is thriving in the United States is not by whether or not it is carried by Jewish establishments, but if it makes it to major chains like Costco or Wegmans.

This article appeared originally in "Buy Israel Week," a special section.

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