In a world where both market competition and consumer demand are always growing, standing still means losing out or even shutting down. The traditional food industry is now adopting innovation as a value and is dedicating resources for R&D – and the Israel Innovation Authority is helping Israeli players compete in their constantly changing market
Eshbal, a veteran company, wanted to shift from producing conventional food by traditional methods to producing healthy and innovative food by advanced modern techniques, however, they needed R&D help.
Subhi Nachlé Ltd. knew that if they could only manage to switch from manual, traditional methods to a mechanized production line, they could vastly increase output. “We recognized tremendous potential for business,” says the Samer Nachlé, the firm’s development manager, “but we couldn’t have achieved it without the aid we received from the Israel Innovation Authority.” And indeed, after a long and complicated development process, his company managed to modern industrial methods of production that make approximately 4 four tons of freekeh (green wheat toasted and cracked) per hour.
Food production, in general, is a traditional industry. As such, it occasionally takes more time to implement changes – and that includes responding to consumer demands and trends. For example, one of the more striking global trends recently is the Demand for a “clean label” – that is, for fewer preservatives and artificial ingredients in food products. A manufacturer that desires to sell their goods must, therefore, understand and respond to this consumer trend. The Israel Innovation Authority supports many businesses in this endeavor, even large corporations who need to change.
More generally, the ability of various food producers to compete is directly affected by their response to the changing tastes. Recently, the trend is Health and Being Healthy. However, even though a decent portion of the food sector’s innovation and development does include health aspects, (such as reducing salt, fat, sugar) – healthy ingredients are not the only concern. Some firms are striving to develop packaging that will keep moisture and oxygen away from foods for a longer time to require less use of preservatives.
From traditional problems to innovative ideas
Such examples demonstrate exactly why the Israel Innovation Authority, in 2007, started a unique program to encourage innovation in traditional industries. The program is intended to help firms in these industries generate technological advances that improve their, competitiveness and other advantages in Israel and Globally. Encouragement comes in the form of special conditions for development grants, and additional benefits for the selected projects.
Dr. Ofra Lotan, a member of the Authority’s team of Innovation Evaluators and Professional Consultants, explains: “We deal with companies in the traditional food and beverage sector, where innovation is considered the improvement of existing products, or addition of more items in a familiar category. We think that advanced innovation occurs when companies replace the product’s raw materials with healthier components or by reducing the quantity of less healthy ingredients. All changes need to meet the challenge of maintaining taste and texture that define the product and make it successful. In other cases, we support innovation that focuses on new product development or innovative production methods.”
The Innovation program goals are to expose advanced manufacturing companies to the culture of innovation, which they may be unaccustomed to, and motivate them to innovate – in response to their financial needs and for the welfare of the economy in general.
“Traditional industry often focuses on the question of how to make the production process more efficient, even at the level of saving just a few pennies,” says Dr. Lotan. “We are asking them to think of new ideas – like revolutionary packaging, the addition of a unique flavor, or using fewer preservatives – and thereby become more competitive.
“We also encourage companies to invest in breakthrough Innovation that will bring them success in markets with less competition, and when they can obtain a premium for the products they develop."
“In traditional companies, innovation is a growth engine. But to make a real innovative change, one that will enable them to cope better with market difficulties, they have to change."
The Israel Innovation Authority understands that some companies are ready to engage in development, and it supports them. We run many activities to raise awareness about our programs, and to make executives understand that they can turn to us and benefit greatly by implementing innovation.”
Avner Shadmi, Director of the Advanced Manufacturing Division at the Israel Innovation Authority, speaks about the upsurge in the number of food companies that joined Innovation programs in the last year. “While we only received about 13 requests for R&D support from the food sector in 2014, in 2015 and 2016 the number doubled! The trend is continuing this year as well. It’s a clear indication that the industry is maturing and that it understands what it should do to survive.
“In deciding whether to support a company, we focus on the quality of the idea and the project, how innovative it is, its economic potential, and the company's ability to put it into practice. Particularly challenging R&D programs receive attention because of their potential, despite the risk involved. The Israel Innovation Authority’s way of improving traditional industry doesn’t only enhance a company’s profits. It also spurs employment, and expands the country’s knowledge in science and technology.”
From manual labor to a mechanized process
One of the companies that took advantage of the Authority’s Innovation program is Sobche Nachlé – a food company that was established by Mr. Sobche Nachlé, with four of his five sons eventually joining the family business. It includes four food divisions: coffee, nuts and seeds, spices, and legumes. The company has about 100 employees in Shfar’am, and it is considered the food industry’s biggest employer in the Arab sector.
Samar Nachlé is a coffee expert and the firm’s development manager. “Our company is turning traditional industries into sophisticated factories. We brought the Israel Innovation Authority an idea of ours, and with their support, we’ve developed innovative production, storage, and transportation methods for coffee and nuts. We prefer to innovate and streamline, and we have seen the results!”
The company’s current challenge is the production process for Freekeh, which is green wheat that has been toasted and cracked. Freekeh is considered a health food and it is now in high demand both in Israel and Globally. The traditional method for producing Freekeh is long and complicated. It goes back thousands of years, and it yields relatively small quantities.
“The conventional, primitive production method can never produce large amounts, and it’s also not hygienic enough,” Nachlé explains. “With the Innovation Authority’s help, we’ve turned the harvesting stage of the Freekeh into a controlled mechanized process that produces better results. We began by adopting a technique that doesn’t use a Combine. It uses a unique cutting method instead, plus fast and efficient transport from the harvester to the factory. The innovative cutting method enables us to harvest the wheat when it’s still green, without waiting till it dries. Then we designed new carts that bring grain to the machine that transfers it in precise amounts to the oven for uniform toasting. We also invested in developing burners for a special oven so that the result is completely the same as traditional Freekeh. Afterward, we have conveyor belts that can withstand the high toasting temperatures perform high-quality uniform results. Finally, ensuring superior results includes drying, peeling, and cleaning.
“In the beginning, we tried to initiate the changes by ourselves, but when we understood that there could be a feasibility issue, we turned to the Israel Innovation Authority. They loved the idea – inventing a system that would always work and always provide consistent results. They saw the hidden potential. Now, we send the Innovation Authority regular reports, and the reporting helps us significantly in the analysis to further our development. Our collaboration with the Innovation Authority is in the field of mechanics. We translated our ideas into technology and created a prototype that has brought us excellent results. Now we’re working on a second prototype.”
Introducing Functional Food
Eshbal also used to be an extremely traditional food company. Eshbal was established in 1949, and since then it has undergone many ups and downs. At the beginning of 2014, it was purchased by several entrepreneurs who wanted to bring about some positive change.
The CEO, Ran Katz, says: “We understood that in the conventional food sector, our products were defined as ’commodities,’ so margins are low and profit very challenging to achieve. Our idea was to change our products and develop and produce the unique foods that we named ’functional foods’ – that is, foods that supply some health component and answers a health need above and beyond basic nutrition.”
This decision led the company to enter the arena of Gluten-Free food. Ever since, the company is researching Gluten substitutes that can provide good taste and texture, and then develops them in responses to various needs. “Gluten-free products used to be considered substandard food,” notes Katz, “but today, Gluten-Free food is distributed globally for many types of customers.”
Eshbal’s flours contain 25 dry powder ingredients which are combined in a process that requires lots of thought, research, and development. “Whoever buys our products can quickly appreciate the results,” says Marketing Director Tomer Bar-Meir. “Meanwhile, the large quantity of ingredients enables us to protect the knowledge that we developed.
“Our developments allow other firms to make a full range of Gluten-free foods: bread, pita bread, cookies, etc. In addition to the flours, we also market prepared foods that are Gluten-Free. For example, we have a light calorie bread that took us two years of research and development so that it would have exactly the right taste and texture – and it was accomplished with the support of the Israel Innovation Authority. There is no other Gluten-free, Low-calorie light bread like it in the whole world (with such a low-calorie count per slice), and the retail price is like regular light bread.”
All Eshbal’s Gluten-free baked goods have all the certificates required in the Gluten-free industry. The products contain less than 0.2% gluten and satisfy GMP quality conditions as well as proper export conditions. “Our internal requirements are even stricter than what the market demands,” says Saul Koder, director of development.
The company is not satisfied with just providing products for the Gluten-free market, they are also looking ahead, as they see the trends for healthier food, functional food, and nutritional supplements. They are now setting themselves the goal of developing and producing nourishment that targets specific population groups, such as children, elderly, athletes, and dieters. Development projects that are funded by the Israel Innovation Authority are the dietary supplements and Gluten-free products
Katz adds: “We provide products that cater to the population from the "cradle to the grave," starting with super-food cereals for six-month-old babies and all the way to cholesterol-free health food for the golden age – we are always looking for new things to add. The Israel Innovation Authority has collaborated with us on all these ideas.”
“We injected high-tech into low-tech,” says Bar-Meir.
Katz explains: “Our development division is our growth engine, and it works nonstop on developing products for us as well as for our customers. At the same time, they also help entrepreneurs who want to examine whether it’s possible to develop a idea. We’re always open to new innovative ideas, and we’re happy to cooperate.
The Israel Innovation Authority's support enables us to invest in development and innovation, and to maintain – or even increase – our profitability.”
The R&D Preparatory Incentive Program for Companies in the Low-Tech industries enables many businesses to move ahead with modern technological developments and stay abreast of global trends. "There is an investment in marketing the program, as well as in opening preliminary tracks for the R&D Program (such as training tracks and the R&D Preparatory Incentive Program), allows companies to dream up better and healthier products, tasty and unique foods, improved manufacturing processes, and even entirely new products. As more companies dare to dream, the Authority is there to help the dreams come true.