December 20, 2010

Israeli Food Companies Feel Wanted in Russia

New York…Israel’s largest food companies have been on the hunt for at least the last five years for new potential markets. With hopes for major penetration in Middle Eastern countries still on ice, the companies have turned to the US and Europe, but increasingly to Russia and other FSU countries. At least one large retailer has already announced plans to open a number of supermarkets in Russia. The Strauss Group is buying the LeCafe brand sold in Russia and former Soviet Union countries for $37 million. LeCafe had sales of $23 million in 2009 and $16 million in the first nine months of 2010. Mei Eden, an Israeli bottled water company, holds 16% of the bottled water market in Western Europe and 8% of the bottled water market in eastern Europe. Mei Eden's third-quarter revenue for 2010 stood at €69 million, a 7% increase over the same period last
year.

Israeli food industry officials say that Russia has become a preferred market because of its relative close proximity to Israel (as compared to the US and the Far East), the many Russian émigrés who live in Israel who can help negotiate the Russian bureaucracy and cultural nuances, and the interest shown by the Russians in Israeli technology as it applies to foods. One Israeli official said: “These companies are already at capacity with the Israeli market and have money to invest in expanding their business elsewhere.” The food sources believe that the Israeli-Russian connection will only increase in the coming years. Some of the companies say that they are also benefiting from their kosher certification which is desired by kosher consumers in Russia and the other countries in the FSU.