This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 7/20/2018

Overview

Israel is a technologically advanced, market-oriented economy. Consumers are sophisticated and enjoy cosmopolitan food tastes. Currently, 16.7 percent of household expenditures are dedicated to food products. Producers, food processors, wholesalers, retailers, food service operators, and food importers are all part of a well-developed agribusiness sector, contributing to a domestic scenario that is competitive and dynamic.  Israel is not self-sufficient in agriculture and is dependent on imports. In 2017, imports of agricultural products [1] reached US$6.1 billion, out of which eight percent were from the U.S.
Israel’s limited land and water resources preclude a high level of agricultural self-sufficiency; this affects local production costs and consumer prices. The country posts sizeable trade deficits in food and agricultural products, importing large volumes of feed grains and sizable volumes of consumer oriented agriculture. [2]
As stated above, Israel is reliant on food importation; the diagram below presents Israel’s Import Dependency Ratio (IDR) [3]. The IDR provides information on the extent to which Israel is dependent on import of foods.


[1] Harmonized Tariff Schedule Chapters 1-24
[2] Consumer Oriented Agriculture - BICO-HS6
[3] Consumer Oriented Agriculture - BICO-HS6

 

Figure 1: Import Dependency Ratio of Israel, by Main Products 2016

Ag Chart
 Source: Israeli Central Bureau of Statistics
 

Table 1: Israel’s Agricultural* Trade in USD millions
 2014201520162017
Total Exports$2,459$2,137$2,076$2,199
Total Imports$5,692$5,323$5,625$6,104
Imports from the U.S.$668$504$486$473
U.S. market share12%9%9%8%
* HS 1-24
Source: Israeli Central Bureau of Statistics


With over 1,800 facilities, the Israeli food processing sector is an important player in the domestic economy. The Israeli food processing industry is innovative, marketing approximately 5,000 new products per year. Multi-national food manufacturers like Nestlé, Unilever, Danone, and Pepsi partner with well-known Israeli food companies such as Osem, Strauss and Frutarom. The local food processing industry is dominated by four groups (Tnuva, Osem-Nestlé, Unilever, and Straus).

In 2016, Israeli food processors’ annual revenue stood at $15.9 billion while the beverage and tobacco industry’s annual revenue was $2.1 billion. The sector currently represents over 18 percent of Israel’s total manufacturing industry’s revenue. With limited land and resources, as well as a growing population, the ingredients demanded by the Israeli food processing sector represent an excellent opportunity for U.S. exporters of food ingredients. In 2016, Israel imported US $2.3 billion in raw food products for the food processing industry.

Israeli FMCG (fast moving consumer goods), sales reached US$11.89 billion in 2017. Of which, US$8.9 billion were from food products. Over 60 percent of the sales of the total retail food market are from supermarket chains. The food retail market is made up of supermarket chains, as well as urban convenience stores and gas stations, neighborhood grocery stores; and markets. Large supermarket facilities are located in the outskirts of the large cities near major roads and tend to offer parking. Smaller neighborhood supermarkets are conveniently located, but tend to be more expensive.
 
 
Figure 2: Quick Facts CY 2017
 
Quick Facts CY 2017
Imports of Consumer-Oriented Agriculture1 (US $million)
$2,971 (2016 data)
List of Top Growth Products
 1) Premium coffee      2) Premium popsicles and ice cream  
 3) Specialty cheeses    4) Premium dark chocolate 70% cocoa
 5) Milk alternatives  6) Products with higher levels of protein
Top Trends:
Organic, Vegan, Gluten-free, Online Food Shopping, Home Delivery and Private Label
Food Industry Overview (U.S. billion) 2017
Food Processing Industry Revenue$15.9 (2016 data)
Food and Agricultural Products2 Exports $2.2
Food and Agricultural Products2 Imports$6.1
Private Food Consumption Expenditure (not including drinks)$27.63(2016 data)
Bar-coded Retail Food Market$8.9
Bar-coded Retail Drinks Market$1.25
Consumer Foodservice $5.9
1 Consumer Oriented Agriculture - BICO-HS6
2Harmonized Tariff Schedule Chapters 1-24
Quick Facts CY 2017
Imports of Consumer-Oriented Agriculture1 (US $million)
$2,971 (2016 data)
List of Top Growth Products
 1) Premium coffee      2) Premium popsicles and ice cream  
 3) Specialty cheeses    4) Premium dark chocolate 70% cocoa
 5) Milk alternatives  6) Products with higher levels of protein
Top Trends:
Organic, Vegan, Gluten-free, Online Food Shopping, Home Delivery and Private Label
Food Industry Overview (U.S. billion) 2017
Food Processing Industry Revenue$15.9 (2016 data)
Food and Agricultural Products2 Exports $2.2
Food and Agricultural Products2 Imports$6.1
Private Food Consumption Expenditure (not including drinks)$27.63(2016 data)
Bar-coded Retail Food Market$8.9
Bar-coded Retail Drinks Market$1.25
Consumer Foodservice $5.9
1 Consumer Oriented Agriculture - BICO-HS6
2Harmonized Tariff Schedule Chapters 1-24
Text Box: Quick Facts CY 2017 Imports of Consumer-Oriented Agriculture1 (US $million)  $2,971 (2016 data) List of Top Growth Products   1) Premium coffee      2) Premium popsicles and ice cream    3) Specialty cheeses    4) Premium dark chocolate 70% cocoa  5) Milk alternatives  6) Products with higher levels of protein  Top Trends: Organic, Vegan, Gluten-free, Online Food Shopping, Home Delivery and Private Label Food Industry Overview (U.S. billion) 2017 Food Processing Industry Revenue $15.9 (2016 data) Food and Agricultural Products2 Exports  $2.2 Food and Agricultural Products2 Imports $6.1 Private Food Consumption Expenditure (not including drinks) $27.63(2016 data) Bar-coded Retail Food Market $8.9 Bar-coded Retail Drinks Market $1.25 Consumer Foodservice  $5.9 1 Consumer Oriented Agriculture - BICO-HS6 2Harmonized Tariff Schedule Chapters 1-24

Israeli importers face two main considerations when selecting a particular product - quality and price. In terms of price, U.S. products are not always competitive due to relatively higher production and freight costs. Products from Europe and the Mediterranean Basin and the Black Sea Basin tend to be advantaged by proximity and, in some cases, lower production costs. Transportation costs are less crucial when dealing with higher-end products that tend to have very high value-to-volume ratios, such as spices, essences, flavorings, and concentrates. Similarly, products eligible for tariff preferences under the Israel-U.S. FTA are at a natural advantage, making transportation costs less of a factor. Under the U.S.-Israel FTA, U.S. goods enjoy a tariff advantage over European and other most-favored nation status (MFN) suppliers on a broad range of agricultural produce as well as processed and intermediate foodstuffs.

Due to European Union being the biggest market for Israeli agricultural and food exports, the Israeli food and food supplement legislation and standardization system is increasingly harmonized to European standards. In many cases European standards may differ from those in the United States, resulting in non-tariff trade barriers and a challenging import licensing process.

Kashrut
Exporters need to consider the issue of kashrut or kosher certification. Kosher certification is not a legal requirement for importing food into Israel, except for beef, poultry, and other meat and products. However, non-kosher products have a much smaller market share, as most supermarkets and hotels refuse to carry them. In recent years there has been an increase in demand for non-kosher foods, especially from immigrants from the former Soviet Union.

Manufacturers who produce kosher products must be able to satisfy Israeli rabbinical supervisors’ demands that all ingredients and processes meet kosher standards. According to the Law for Prevention of Fraud in Kashrut, only the Chief Rabbinate of Israel can approve a product as kosher for consumption in Israel. The Chief Rabbinate may also authorize another supervisory body to act on his behalf. Here United States’ products have an advantage, as the kashrut certification issued by many U.S. rabbis is recognized by Israel’s Chief Rabbinate. It is, however, quite simple for Israeli importers to send an Israeli rabbi to any supply source to certify the products, thereby reducing the U.S. advantage.

Prohibited Imports
Israel, a signatory to the World Trade Organization (WTO), maintains relatively few prohibitions on agricultural imports. However, Israeli authorities prohibit the import of non-kosher meat and meat products (includes beef, poultry, and mutton) under the Law for Prevention of Fraud in Kashrut. As stated earlier, the products must be certified as kosher by the Chief Rabbinate of Israel. The only other product prohibitions are targeted against internationally controlled substances or are designed to protect public morals, human, animal or plant health, or national security.
The U.S.-Israel FTA allows both countries the use of non-tariff restrictions or prohibitions on products from those agricultural sub-sectors that are sensitive to agricultural policy shifts. Israel has removed some administrative barriers to United States imports, but retains high levies on products and commodities which are competing with the local industry, e.g. dairy, apples, wine, eggs etc.

Opportunities

Newly Permitted Imports
For more than two decades U.S. beef was banned for import due to veterinary restrictions and kosher requirements. In early 2016, the Israeli Ministry of Agriculture’s Veterinary Services waved the ban on imports of U.S. beef. Following the initial approval, an agreement with Israel’s Chief Rabbinate was reached allowing the Israeli market to reopen to U.S. exports.

Post Contact and Additional Information:
USDA-FAS, Office of Agricultural Affairs, U.S. Embassy Jerusalem, Branch Office Tel Aviv
Tel: +972-3-519-8667
E-mail: agtelaviv@fas.usda.gov

Web Resources

 

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Israel Agribusiness Trade Development and Promotion