Osem Plans to Boost Sales of Veggie Meats, Salads

22 Apr 2008 • by Natalie Aster

Osem Investments Ltd., the Israeli unit of Nestle SA, plans to increase sales of Tivall vegetarian meat substitutes and Sabra salads in Europe and the U.S. to drive growth at the foodmaker, Chief Executive Officer Gezy Kaplan said, reported The Bloomberg.

``Our strategy is to put effort into developing international activity,'' Kaplan said in an interview at Osem's headquarters in Petah Tikva, Israel. ``Nestle is encouraging us to develop the meat-free and salad businesses outside of Israel'' because they don't compete with the Swiss company's products.

The food company may also enter the kosher infant-formula market in the U.S., U.K. and France after agreeing to buy control of Israeli baby-formula maker Materna Laboratories in October, Kaplan said. Osem controls 62 percent of Israel's pasta market and 49 percent of salty snack sales, according to research by A.C. Nielsen.

Tivall has 70 percent of the market for substitute meat in Italy and is the biggest seller of the product in the Netherlands and Sweden, Osem said in its 2007 annual report. Osem owns 58 percent of Tivall, which also makes meat-free cutlets, hotdogs and kebabs from soy and vegetable protein.

``We see Tivall as the main growth engine,'' Harel Finance, Trading & Securities Ltd. analyst Eran Yunger wrote in an April 10 note. ``The year 2008 will see the fruits of its new Czech factory, which we believe will enable sales to grow 30 percent.''

Osem added 0.1 percent to 42.87 shekels at 11:01 a.m. in Tel Aviv trading, giving the company a market value of $1.37 billion. Before today, the stock had gained 34 percent since Kaplan became CEO in April 2006, compared with a 23 percent jump in the Tel Aviv 100 Index.

Osem's revenue rose 11 percent last year to 2.95 billion shekels ($854 million). Exports reached 412 million shekels, or 14 percent of sales. Vevey, Switzerland-based Nestle, the world's largest food company, owns 54 percent of Osem.

The Israeli company last year completed construction of the $30 million factory to make Tivall foods, and plans to sell hummus, a spread made from chickpeas, and other Middle Eastern salads abroad, Kaplan said. The factory will eventually boost Tivall's sales to as much as $200 million, according to Osem, which hasn't yet published revenue figures for the unit.

Kaplan, 59, started Tivall as a kibbutz factory in 1986 and moved to Osem a decade later when it bought the company. Osem has an option to buy the rest of Tivall by 2012.