Food and drink firms prosper in the start-up nation

By Noli Dinkovski

- Last updated on GMT

Innovation nation: Israel is known for its entrepreneurial culture
Innovation nation: Israel is known for its entrepreneurial culture

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Israel's reputation for innovation in hi-tech industries can now be extended to food.

Key points

If you ever happen to find yourself driving through the Arabah desert in southern Israel, it’s worth keeping an eye out for the signs to the antelope ranch. For in the ranch, where different species of antelope intermingle with zebras, sits a rather surprising feature – an ark.

Creator of both the ranch and the ark, which serves as a zoo for animals such as macaws, finches, cockatoos, raccoons and tortoises, is farmer-turned food business entrepreneur Yossi Ben.

Ben, whose company produces “a new generation”​ of calcium, epitomises the ‘start small, think big’ business culture that prevails in Israel.

For years, the country has been known for its large number of start-ups in hi-tech industries such as computing, aerospace and biotechnology. But now, innovative companies are also blossoming in the food and farming sectors – and Food Manufacture ​was fortunate enough to meet some of the leading lights.

Amorphous calcium carbonate’s potential (return to top)

The ark2

Amorphical, Ben’s other business interest, operates from a business park close to his ranch.

Its chief product, Density, was conceived after a “chance observation”​ of blue crayfish revealed they could shed and regenerate their exoskeleton in just three days.

Ben’s company isolated the amorphous calcium carbonate (ACC) from the crayfish, and now produces a synthetic version in supplement form.

He claims tests have shown the product not only to be highly effective against osteoporosis, but it can offer prevention benefits against cancer, heart disease and diabetes.

“ACC appears in the form of sub-micron particles, which results in a much higher absorption rate. We believe our product can contribute greatly to the wellbeing of millions of people worldwide,”​ Ben says.

“We are talking with some companies about putting it in medical food. The only barrier at the moment is the price – it is currently 80 times more expensive than normal calcium.”

Making astaxanthin from microalgae (return to top)

A few miles south in the same desert appears a seemingly endless network of pipes – the majority of which are coloured pink.

It turns out that the pipes are sited on a kibbutz, and their pink colour is due to microalgae in the pipes that have been “stressed”​ by sunlight.

The specific strain of microalgae, Haematococcus pluvialis​, is used to make AstaPure, which, according to its maker Algatechnologies, contains astaxanthin – one of the world’s most powerful antioxidants.

“Microlalgae is the primary source of all life on the planet, and we believe it has a lot of potential because we’ve not even begun to understand the many ways it can be applied in food,”​ says Efrat Kat, vice-president of marketing and sales at the company.

Food and drink companies are showing interest in using astaxanthin in their products – and Japanese firm Kirin’s Astalift water is based on the ingredient, says Algatechnologies.

“What we now need is a global manufacturer to create a product with astaxanthin, and take it into the mainstream,”​ adds chief executive Hagai Stadler.

Olive oil producing collective (return to top)

Israel, of course, is far more than dry and arid desert. In the lush and fertile north of the country, close to the Sea of Galilee, is Sindyanna, a non-profit organisation of Arab and Jewish women working together to make olive oil and associated premium products.

The collective supports local growers, enhances Arab-Jewish cooperation, promotes fair-trade and creates economic opportunities for Arab women. It has won numerous awards for its range of extra-virgin olive oils.

“Many people assume olive oil is the same everywhere, but there are more than 300 types of olives in the world, and each variety offers a different flavour,”​ says general manager Hadas Lahav.

Sodium-reducing salt maker (return to top)

Much like olive oil, salt is far more diverse than many often realise. With three production sites and a virtual monopoly of the Israel retail market, Salt of the Earth is by no means a start-up, but its approach to product development keeps the company at the forefront of innovation.

Its Mediterranean Umami product allows food manufacturers to reduce their sodium content by 25–45%, while still offering the same flavour.

Known as the fifth taste, there are three types of molecule that are responsible for umami – glutamates, inosinates and guanylates, says business unit director David Hart.

“There are specific taste receptors that the molecules attach to, and they have an affinity with the taste of sodium. So, by adding ingredients that have umami molecules in them, namely tomato extract, we are able to cut salt while offering the same sensory perception,”​ he explains.

Salt of the Earth is currently in discussions with a large UK bakery.

Hydroponic micro-leaf production (return to top)

Another producer intent on improving health is Teshuva Agricultural Projects, which grows leafy vegetables and micro-leaves on two hydroponic farms.

Senior vice-president Shay Zeltzer says hydroculture, the method of growing plants using minerals in water as opposed to soil, can produce plants with 25 times more nutrients than those grown traditionally.

Through the 2BFresh brand, he is able to grow more than 40 different herbs and micro-leaves, including basil, parsley, pak choi and watercress.

“The advantage of micro-leaves is that we are growing and shipping only the edible part, cutting down on wastage and cost,”​ says Zeltzer.

“We are still working on manipulating the cultivation process, because we want the stems to be as short as possible.”

A flavour and fragrance giant (return to top)

The entrepreneurial spirit doesn’t just apply to up-and-coming firms. Frutarom – which sells 31,000 flavour and fragrance products to 15,500 customers globally – is a big company that thinks small.

President and chief executive Ori Yehudai says Frutarom’s ability to stay close to its customers gives it a point of difference over competitors.

“Investors and analysts complain to me that having 57 production sites is very inefficient. Yes, we pay a price for this inefficiency, but it means we are able to produce 200kg for a customer in four days,”​ he explains.

“Being close to our customers really benefits our innovation potential, without impacting our profitability.”​ And with Frutarom breaking $1bn in revenue for the first time last year, it’s difficult to take issue with Yehudai’s approach.

The rise of mentoring firms

As you would expect from a country with such a high level of innovation, accelerator and incubator companies have become important to Israeli food entrepreneurs.

Omri Boral and Nir Shimony founded Tel Aviv-based TechForGood three years ago when they realised there was “no ecosystem in place”​ to support the country’s business talent.

“The global financial crisis in 2008 was a game-changer for innovation,”​ says Boral. “Millennials started dictating a new world where the purpose of business was to improve society, and companies have had to respond accordingly.”

Another incubator firm, Practical Innovation, develops products for “traditional industries”​.

Chief executive Tal Leizer says her company is only interested in “true innovation”​ – not simply new flavours or packaging – and it will drop an idea if it finds anything similar.

Once the company has gained an understanding of the start-up’s needs and capabilities, it works in isolation on product development for anything up to four months.

“It can be difficult for the start-up, because they don’t know what’s happening,”​ says Leizer.

“However, we are successful because we partner with a circle of experts through every part of the process.”

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