Agriculture is usually considered boring, outdated, and a money-loser, but there are topnotch companies in this field, too. The best example is probably Gan Shmuel Foods, owned by Kibbutz Gan Shmuel, which manufactures natural juices and materials for the beverage industry in Israel and around the world. The company earned an NIS 18.9 million profit on revenue of NIS 476.5 million in 2002, compared with a NIS 10.6 million profit on revenue of NIS 386.2 million in 2001.
Gross profit amounted to NIS 95.7 million last year, compared with NIS 73.7 million in 2001. Management and general expenses and marketing and sales expenses grew only slightly to NIS 41.7 million in 2002.
In any case, it appears that Gan Shmuel also benefited from the shekel depreciation. 83% of the company’s output is for export, to 35 countries spread around Eastern and Western Europe and the Far East. Gan Shmuel is Israel’s largest exporter of processed food.
The company’s largest target market is Western Europe. Sales there totaled NIS 178 million in 2002, compared with NIS 147 million in 2001. Sales to Eastern Europe amounted to NIS 106 million in 2002, compared with NIS 87 million the preceding year, and sales to the Far East totaled NIS 105 million, compared with NIS 72 million in the preceding year. This is impressive growth, while sales in Israel remained level at NIS 79 million.
Most company sales are raw materials for the natural beverage and soft drink industry, but the company also supplies natural juice in consumer packaging directly to overseas retail chains. This field was one of the reasons for the company growth in 2002, together with higher sales to the Far East, the recovery in European markets, and increased activity by overseas subsidiaries.
Gan Shmuel’s products fall into three main categories: citrus food products, tomato products, and tropical products. The company is now at the height of the citrus fruit season, having absorbed 52,000 tons of fresh fruit by mid-March. That sounds impressive, but it is 10% less than in the corresponding period of last year.
One factor in the company’s 2002 growth was the expansion of its subsidiaries. After analyzing its business environment, the company decided that in order to preserve its relative advantages in marketing and distribution, and guarantee the supply of raw materials purchased overseas, it must expand in to additional overseas fields. The company set up subsidiaries in Italy, Spain, Poland, Uruguay, and South Africa for this purpose.
Kibbutz Gan Shmuel received NIS 20.2 million for personnel services, purchase of fruit, and general services from its company. The kibbutz also received NIS 400,000 for the services of the company managing director, another executive, and a director.
Published by Globes [online] - www.globes.co.il - on 28 April 2003