Israel's second-largest supermarket chain, Blue Square, is riding the health wave with a plan to buy a natural foods chain. TheMarker has learned that the big retailer plans to operate its planned acquisition as a subsidiary, which will also support selling natural groceries in branches of its own chains, Mega, Super Center and Shefa Shuk.

Blue Square CEO Gil Unger has said in the past that he sees the health trend as an engine for growth for the chain, and that he plans to expand the offerings of organic foods. At the moment, organic food accounts for less than 1 percent of the Israeli consumer's shopping basket, and is estimated at NIS 2.5 billion in turnover. Those figures are growing, however. In the U.K., for example, the organic foods market is growing twice as fast as the general food market, accounting for 1.1 billion pounds sterling in trade in 2005.

As a result of this rapid growth, major food retailers are entering the health food market, leveraging their sophisticated distribution systems and commercial conditions that are better than those available to smaller companies. The food producer giant Tnuva bought out Harduf, which offers organic vegetables, legumes, pasta and breads; major dairy Tara bought up Zuriel Dairy Farm, which specializes in premium cheese and tofu products; and in 2006, babyfood maker Maabarot, maker of Materna, acquired Adama. Shelf space dedicated to organic food is expanding and Blue Square's entry into the sector is likely to give the entire market a boost.

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Guy Provisor's Eden Teva Market announced it plans to establish a huge supermarket for natural and organic foods and products in Netanya's Poleg Industrial Zone. Other major players in the natural food industry include Nitzat Haduvdevan, Organic India and Shkedia Geva Industries.

Organic food is grown without the use of chemical pesticides, artificial fertilizer, antibiotics, growth hormones or genetic engineering, and no preservatives or artifical color is added during processing.