Tnuva consortium wins foodtech incubator tender

Winning consortium Photo: Ministry of Economy

Tnuva, Tempo, OurCrowd and Finistere beat out a consortium headed by Jerusalem Venture Partners, which has operated in the Galilee for years.

Following a close contest with Jerusalem Venture Partners, led by Erel Margalit, the Israel Innovation Authority has announced its selection of a consortium consisting of Tnuva, Tempo Beverages (led by Jacques Beer), crowdfunding platform OurCrowd, and US agritech and foodtech fund Finistere to run a foodtech incubator in northern Israel. The government will provide NIS 100 million in funding for the incubator over the eight-year franchise period.

In the final stage of the selection process, the Innovation Authority held  a meeting with the two bidders and the committee members yesterday, in which each group made a presentation. Complaints about pressure were heard over the past month, with Kiryat Shmona becoming a focus of interest for international companies wanting to set up the foodtech incubator there, headed by the heads of the various authorities and with the support, or lack thereof, from the two competitors.

The new incubator will benefit from terms for an incubator in an outlying area, and will be part of the Innovation Authority's incubators program with benefits granted to technological incubators. The lowest investment by the franchise holder will be NIS 50 million, and full points will be given to a party investing NIS 150 million.

The goal is for the tender winner to accept and promote foodtech companies throughout the food and beverages value and supply chain, including the next generation of food and beverages, crop efficiency, preservation of freshness of food and beverages, food and beverages processing, food and beverages production, food and beverages safety, adaptation to food and beverages consumers, supply platforms, and sales of food and beverages to consumers.

JVP waited for this day for five years

JVP and Margalit waited for this day for five years. They competed in the tender together with partners from the Weizmann Institute of Science, Technion - Israel Institute of Technology, the Hebrew University of Jerusalem, Netafim, Galilee Development Joint Agricultural Association (representing the kibbutzim in the area), and 17 regional corporations, as well as global food companies such as Nestle, Mars, Unilever, and food retailer Tesco.

"After five years of work in Kiryat Shmona and Upper Galilee, we finally managed to create a business opportunity that will bring economic competition to Kiryat Shmona, but we never imagined that another group would come and try to deprive us and run us over using any means in order to take this business opportunity," sources in the Galilee who are cooperating with JVP said. "It will be a tragedy if JVP does not win the tender."

The story of the foodtech tender goes back to 2014, when Margalit and his partners began to operate in the north in an attempt to bring startups to the northern outlying area (JVP also founded innovation centers in Jerusalem and Beer Sheva). It was decided at that time, in cooperation with local authority heads in the eastern Galilee, to focus on foodtech and combining technology with food development, health, and medicine. Margalit strove to create an entrepreneurial ecosystem in the Galilee. He founded an innovation community in cooperation with the Ministry of Economy and Industry, including a special foodtech accelerator in Kiryat Shmona, activity with academic institutions for academic training in foodtech, a package of incentives for foodtech companies moving to the north, and production of conferences and events aimed at promoting high tech in the Upper Galilee and Kiryat Shmona.

JVP's competitor, Tnuva, managed by CEO Eyal Malis, was led by Haim Gavrieli. Tnuva assembled a consortium. Tnuva and Tempo are both among Israel's 10 leading and most veteran food companies. Their products portolios are very different, so there is almost no area of overlap and competition between them, with the possible exception of the fruit juices distributed by Tnuva.

How important is winning this tender for Tnuva? Tnuva, a veteran company, is Israel's largest food company. It has been shaken up in recent years by changes of ownership and management and various disputes with regulators, while neglecting innovation for a long period.

Today, Strauss Group, a competitor of Tnuva for whom innovation is part of its basic concept, also operates a foodtech incubator in partnership with the Innovation Authority under the name "The Kitchen." In the past year, Strauss also adopted one of the startups in the incubator that developed a vegan product. Strauss has made this one of the shelf products that it markets.

On the other hand, Tnuva has been left behind in the aspect, with innovation being a weak link absent from the group's DNA. It now has an extraordinary opportunity to change this picture and ensure diverse foodtech investment opportunities with government support, together with international partners.

"You can't invest in such innovation in a company with such a low profit margin," says an informed market source. He adds that the partnership between the various members in the consortium is a great opportunity for both Tnuva and Tempo. On the one hand, the consortium contains parties in the industry who are familiar with the needs and demand among consumers and are able to conduct the necessary examinations. On other hand, it also contains financial parties with experience in building companies, holding offerings for them, and bringing them to market.

Published by Globes, Israel business news - en.globes.co.il - on June 11, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Winning consortium Photo: Ministry of Economy
Winning consortium Photo: Ministry of Economy
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