Despite featuring in the media on an almost daily basis for its political and religious news, Israel now has an extremely healthy economy that has resisted the global recession much better than some other countries. According to the Central Bureau of Statistics of Israel, in 2008 the gross domestic product of the country grew by 4% on the previous year while manufacturing, commerce, tourism and technology all developed in turn.
Tourism, a good indicator of Israel’s economic situation, also fuelled the country’s growth and saw over three million visitors in 2008, which was more than in previous years. In line with the rest of its economy, as well as with the impressive performance of the C&T industry in the Middle East region over the past few years, the Israeli C&T industry was worth $1.087bn in 2008 (the most recent data available) which represented a 2.9% growth on 2007, according to industry sources. The best performing sector in 2008 was premium cosmetics – including colour cosmetics, fragrances, skin care and sun care – up 5% on the previous year to total $266.1m, which is evidence of a mature and demanding market. Typically popular in the Middle East, the hair care sector reported revenues of $223.1m in the same year. However, this was also the only category to record slight losses in 2008, down by 0.5% on the previous year. Meanwhile fragrances ranked in third place, totalling $211.8m and up 3.4% on 2007. An even more impressive growth was achieved by colour cosmetics with the sector jumping by 4.6% to total $132.5m.
Strong support
Israeli C&T companies export to the world’s most discerning markets thanks in part to Israel’s free trade agreements with the US, the EU and the European Free Trade Organisation (EFTA) which comprises Iceland, Liechtenstein, Norway and Switzerland. According to the Israel Export & International Cooperation Institute, the advantages and incentives of these agreements make Israeli products attractive to international manufacturers.
Exports, which currently stand at around $400m, represent about 40% of the C&T turnover and the market includes about 200 local companies of which roughly half export their products. One of the main exports are ?Dead Sea products which have gained popularity worldwide with the rise of the natural and organic trend. Besides marketing via overseas branches and distributors Israeli beauty products also have a noticeable online presence. In fact Israel is thought to have one of the world’s most technologically-literate populations and a large IT industry with around 3.7 million people (over half the population) having internet access.
Local allegiances
One unique quality of the Israeli C&T market is that despite the strong presence of international multinationals, local companies still manage to attract large numbers of consumers. While the main international challenger is Dove (Unilever), domestic brands Careline and Ahava have remained in first and second positions in the market and enjoyed a value share of 10.7% and 6.5% respectively in 2008. Other strong local brands are Sano’s Crema, Halavin’s Love Line and Premier Dead Sea.
One reason for strength of local brands is the wealth of natural ingredients that Israel has at its disposal. Not only the famous Dead Sea minerals, which have proved a blessing for the Israeli beauty industry, but olive oil, honey and citrus are also sourced in the country. Furthermore natural ingredients are also hugely popular with Israeli consumers as they consider them to have superior beauty benefits compared with non-natural products.
There’s also the fact that local companies are more aware of Israel’s weather conditions and the effect this sunny and dry climate has on the domestic consumer’s skin. Having a hot climate means that consumers demand products that protect their skin and this has been a driving force behind the local development of sun care, hydrating and anti-ageing products.
The Dead Sea goldmine
Salts, black mud and a rich array of minerals are just some of the benefits that the Dead Sea, renowned for centuries for its therapeutic properties, offers local cosmetics manufacturers. And the trend for Dead Sea-inspired C&T products is growing all the time which has led to a vast array of products entering the market.
According to the Israel Export & International Cooperation Institute there are around 50 companies dedicated to producing skin care and other beauty products based on these unique resources. According to Daphna Sternfeld, executive at the Consumer and Goods Division of the Institute, exports of products based on or featuring Dead Sea minerals accounted for an impressive $290m in 2007.
Dead Sea mud, either used alone or combined with other ingredients, features deep cleansing and skin stimulating effects. Minerals extracted from the Dead Sea meanwhile, such as calcium, magnesium and potassium, are said to improve the metabolism, stimulate circulation and repair cells naturally.
Some Israeli cosmetics companies combine the use of Dead Sea based products with advanced methods such as nanotechnology, therefore occupying a unique place within the international marketplace. This is the case for local success story Ahava, which set up a special R&D ?programme to investigate the possibilities of Dead Sea ingredients being processed in nano size, including nano emulsion and nano suspension with nano particles of mud.
Alongside the popularity it has gained for its beneficial ingredients, the Dead Sea also represents a goldmine for Israel’s leisure and tourism industry. The beautiful coastline features an array of spa centres and health resorts, which offer the latest treatments and cosmetic therapies. The Dead Sea has almost year-round sunshine and is said to be unpolluted and rich in oxygen, which makes it the ideal place to naturally enhance health and beauty.
Aggressive players
Sano (CosmoPharm) is among the many successful local companies in Israel. Max Kuperman, international sales manager for the company, says: “Sano was set up in 1965 and was one of the first industrial companies in Israel. The cosmetics market in Israel is dominated by Sano’s brands Crema and Keff and by multinationals such as P&G and Unilever.” And even in the face of tough competition and the global recession, Sano remains a local success story.
“Our turnover in 2009 was approximately $300m,’’ says Kuperman, “Our export activities grew by approximately 70% last year and we recently won the Outstanding Exporter of Consumer Goods award from the Israeli Ministry of Industry & Trade which we are very proud about.” The company has recently started to sell its products in France and in various regions of Russia while weathering the recession with little drama. “We actually increased our sales during the credit crunch because consumers were saving money but still wanted high quality products, and that is what we deliver.”
Sano’s best selling product in 2009 was its Crema Shampoo & Conditioner. Crema is one of the most popular brands in Israel and it features hair care products, deodorants, body and hand care products and the Crema Spa line, which includes products such as Aromatic Body Wash and Aromatic Body Oil. Meanwhile Sano’s Orbitol brand offers the consumer dental care solutions ranging from Orbitol Whitening ?Toothpaste to Orbitol Mouthwash while also offering a dedicated children’s range. Continues Kuperman: “Our consumers are people looking for high quality, pleasantly scented, long lasting C&T products that come at a reasonable price. The Israeli market is unique in that, unlike most other foreign markets, the local Israeli manufacturers of cosmetics like ours can hold up well against multinational competition, whereas in smaller countries the foreign multinationals really do dominate.”
One emerging local manufacturer of note is Marine Cosmetics, whose Buta’I brand has steadily grown in popularity since it was founded in 2006. “Marine Cosmetics was founded with the aim to deliver a fresh new concept: the next generation in natural cosmetics. We believe that in there should be clean cosmetics to mirror our clean lifestyles,” explains Anne Reiss, co founder and vice president of marketing. “It took our team of biochemists almost two years to develop the Buta’I range. Headed by Professor Nissim Garti, a worldwide expert in natural supplements, we set ourselves a challenge to deliver 100% natural products of an extremely high quality.”
Reiss explains that the products feature the patented liquid technology known as NSSL, which stands for nano-sized, self assembled liquid vehicles, and this is at the core of the range’s success. Buta’I, which claims to be kind to the environment by not featuring petrochemicals, synthetics, GMOs, colouring agents, artificial preservatives, fragrances or emulsifiers, includes eight face and body care products and is the first company in Israel to receive certification from BDIH, the well-respected German certification body. With 2009 being the first year of actual trading, the company is satisfied with its sales figures. Continues Reiss: “We launched at the start of 2009 at a time where retailers and distributors were still not keen on investing in new products. We managed a successful launch in France that has grown steadily throughout the year and put us in a good position to expand in Europe throughout the rest of this year.”
Having had an undoubtedly successful few years, the Israeli C&T industry is expected to grow by almost 11% in value terms during the 2009-2013 period. Once the recovery of the global economy has been accomplished, the Israel C&T industry will no doubt shine on an international stage.
Dead Sea products - what makes the grade?
The Dead Sea is located at the lowest point on earth, 410 metres below sea level and contains a range of minerals and plants said to have therapeutic and rejuvenating beauty benefits.
The waters of the Dead Sea contain 8.5 times more minerals than the Mediterranean Sea which itself features a salt concentration of 3.5%.
Dead Sea Âbased cosmetics are rich in minerals produced from the waters drawn from the Dead Sea and also from the mud in the surrounding areas.
In 2009, The Israeli Manufacturers Association developed a quality control label for Dead Sea products with the aim of distancing counterfeit products from genuine ones.
To gain certification, the source of mud must come only from the Dead Sea and must contain the appropriate concentration of minerals.
Bath salts for example must contain almost 100% Dead Sea-derived ingredients while the concentration required for a face mask for example would be slightly lower.
Source: Manufacturers Association of Israel
Ahava - a Dead Sea success story
' Founded in 1988, Ahava is dedicated to bringing the virtues of the Dead Sea to people throughout the world. Years of careful, exhaustive research into the effects of Dead Sea minerals, mud and plants have resulted in the creation of Ahava s unique skin care products. Each of the lines encapsulates the essence of the Dead Sea virtues and the inherit promise of the Ahava brand: rejuvenated skin and renewed vitality.
Ahava operates fully owned subsidiaries in New York, London and Wiesbaden, Germany which play a major role in the marketing of Ahava in European and North American markets.
The Ahava brand can be found in over 30 countries in the world s most discerning department stores, perfumeries and retail outlets with flagship stores in Israel, Germany, the UK, Hungary, the Philippines and Singapore.
It has earned international acclaim from customers who appreciate its genuine benefits. Through its ongoing and dedicated efforts, Ahava has cultivated a unique concept and identity which is synonymous with vital purity and cosmetic effectiveness.
Ahava has recently launched a Mineral Make-Up Care line. Our expertise in mineral skin care is based on years of ongoing research into the effects that Natural Dead Sea minerals and algae have on the skin. Ahava has harvested this vast knowledge base in the creation of this new range. All products are approved for sensitive skin, are paraben-free, fragrance-free, allergy tested, ophthalmology tested, non-comedogenic and not tested on animals.'
Niche within a niche
' I developed Shain Dee Cosmetics and its products lines to address the specific needs of my clientele, Jewish orthodox women. Religious observance of the Sabbath and its laws prohibits the application of certain beauty products in certain forms. My products reach out to this niche market of consumers who have a stringently religious lifestyle but who still want to look beautiful.
My products are all natural and mineral-based. They have been tested, checked and approved to conform with Jewish laws and regulations regarding the products that are allowed to be applied on the Sabbath day.
With regards to the size of the market, this is difficult to estimate, primarily because it appeals to a fairly niche market. Some of my customers purchase my products because they enjoy the personal attention I give them and the more boutique, specialised cosmetics
that I sell.
My products are sold across the US, Canada, Israel, Australia and in the UK and my best sellers are the mineral foundations, bronzers and eyeshadows. I believe it s important to talk about Kosher cosmetics as many women may not be aware of this option yet, and they should be. '