“The Biochemistry Industry Could Be a Golden Egg-laying Chicken; in Israel, It’s Only Starting to Sink In”

If you were to ask the CEO of Gadot Biochemical Industries (GBi), Ohad Cohen, the chemistry and biotechnology industries, as well as their interfaces, are the high-tech industry of tomorrow, if not already of today. “Around the world, there are eyes on fermentation processes, such as the production of meat and dairy proteins using natural fermentation methods. We’re talking about the future of food. However, in Israel, this industry has yet to be paid proper attention, and investments are small, in comparison to its vast potential,” he eagerly explains.

“Our factory is home to fermentation facilities with a 50,000 ton capacity, and experts we’ve been working with for many years,” he adds. “The field of biotechnology can be studied at universities across the country, and beyond the bounds of academia, there are Israeli engineers who are able to develop and scale the field. Nevertheless, everyone is still focusing their attention on classic high-tech, and have branded that field as a success. I think that the worlds of biotechnology, nutritional supplements, health, and wellbeing are developing just as quickly as high-tech. They are technological and in need of investments, studies, and experts. This is a highly profitable and essential industry, and over the past three years, we have proven this to be true. We are in the presence of a golden egg that has been laid by the local chemical industry; one that is not receiving the platform it deserves, in the State of Israel

Products for the nutritional supplements industry

GBi was established in 1974 and hit the ground running with two main production processes: the fermentation of citric acid and the manufacturing of fructose from sugar. Later, the company was acquired by Delek Group and continued to manufacture fructose, citric acid salts, and phosphorous salts. In 2015 Delek closed the factory where fructose and citric acid were being manufactured. Three years later, the company was acquired by private equity firm Fortissimo Capital, and Ohad Cohen was appointed as the company’s CEO. This served as a turning point for the company’s management strategy, and in a very short period of time, several changes were implemented, including (and most significantly), a shift to a business focus that, today, drives the factory’s develop. The numbers speak for themselves. The company reports experiencing 36% growth in the past year. According to Cohen, a 60% growth rate is to be expected in 2022.

Today, GBi leads the production or organic salts for the food industry, focusing on products that provide added value, most of which are then exported abroad. The company’s European and US branches enable GBi to scale globally. Their clients are large-scale corporations, such as Coca-Cola, Pepsi, Nestle, Danone, Abbott, Solgar, and others. For years, the company has also been a supplier for dairy and dairy alternative products. “We’ve worked with these clients for years, and work with them to develop their products. Even in the most trying times brought on by Covid-19, Gadot has lent a hand to help them with shortages; our collaborations only keep growing.”

The company develops products for the nutritional supplements, beverages and energy drink, dairy and dairy alternative, baby food, cosmetics, sporting goods, animal and pet industries and contributes to the enrichment of juices, concentrates, and sweets with minerals. The company’s sales are divided according to markets: roughly 24% are sold to the beverages market 19% to the dairy market; 18% to the nutritional supplements market; approximately 10% to the detergents market, about 9% to the blender market; roughly 6% t the baby food market, and approximately 14% to other fields. About 60% of the company’s products are sold directly, while 40% are sold through distributors.

Beyond manufacturing products with high added value

Cohen holds a bachelor’s degree in chemistry and a master’s degree in chemical technology management, which integrates applied chemistry and business administration. He comes from the entrepreneurial world and applies this focus on operations at GBi – business entrepreneurship for new products for new industries, and market development.

As part of the company’s strategic management revolution, over 20 new products have been added to their offering, over the past three years. These have been joined by unique technologies such as granulation, coatings, and compaction, so as to optimize the fit between their products and end products. “One of the products we manufacture is zinc citrate, which has become a highly-consumed product over the past two years, due to its contribution to the immune system, hair, and nails,” Cohen recounts. “We’ve also produced special formulations and products, such as apple cider vinegar powder, zinc and magnesium gluconate, calcium phosphate, and zinc phosphate. We continue to develop additional products, such as iron fumarate supplements, magnesium bisglycinate, and others. Our focus is on growing markets, alongside a specialization in the products themselves.”

The company’s most significant change was its shift from manufacturing products with low added value to those with high added value. Cohen explains that “a significant change in priorities is taking the world by storm, due to, in part, by a lengthening life expectancy and humanity’s critical need to live better quality, happier lives. To meet humanity’s needs, emphasis has been placed on the chemical and biochemical industries. This because, crops, including those yielding fruits and vegetables, no longer offer the same, satisfying nutritional value, due to intensive growth schedules. Additionally, our water has been desalinated and, therefore, contains less calcium, magnesium, and other micro-elements. All of these vitamins and minerals are essential to our body’s health and productivity, yet they are lacking in the food and drinks we consume. Rather, we currently ingest iron, magnesium, and calcium etc. in the form of nutritional supplements.

“Here is where the innovation happened; it’s high-tech from another world,” he emphasizes. “It stems from the fact that the world is moving towards new trends. For new clients – not just the aging population, but the entire population – subjects such as health and lifestyle are becoming more and more important. They are examining the ingredients in their food and cosmetic products. There’s also a focus on preventative consumption. Namely, what will help me prevent leg cramps, be healthier, be sportier, etc. For these reasons, it’s important to know that magnesium citrate is responsible for roughly 300 bodily processes. Zinc participates in over 200.”

Investing in research, development, and regulatory compliance

In line with their high-tech perspective, the company heavily invests in research and development. “It’s not enough to manufacture good minerals, they need to optimally demonstrate their added value, upon ‘encountering’ end products,’ Cohen explains. “If, for example, we were to create calcium citrate or phosphate to enrich milk substitutes – such as oat milk, almond milk, etc. – and the mineral doesn’t properly fit within the food matrix, our efforts will result in calcium that sinks to the bottom of the milk substitute’s packaging, or a ‘sandy’ sensation, when drinking the milk substitute. As such, there is a need for technologies that optimize the products. GBi’s products do not sink, nor do they produce a sandy sensation, as they are adapted to fit the food matrix. Even the transition from calcium carbonate – popular yet inaccessible to the body – to calcium citrate – which is much more accessible to the body and strengthens bones – are some of our consumers’ behaviors that the company seeks to change.”

To that end, the company heavily invests in upgrading the factory’s clean rooms, in addition to building new ones. These rooms serve as significant OTC product development spaces, where nutritional supplements, which require exceptionally high levels of consistency, are manufactured. “Presently, there is great demand for improvements in the fields of research and regulations. We are making significant investments to ensure that we are up-to-date and supply those products that meet both requirements, head-on,” GBi’s CEO clarifies.

Applied chemistry

Cohen emphasizes that the company’s 65 employees are the chief reason behind the majority of GBi’s success. “Employee turnover is very low, and our human capital and their many cumulative years of experience are being retained. The chemical industry is an extremely developed high-tech space with a future of its own creating a wonderful opportunity for those looking to work for a company that is developing at lightning speed. We are not a manufacturing plant, in traditional terms. We focus on applied chemistry which takes pas business development into consideration – what the market is looking for and what might be profitable to develop – in order to make the manufacturing process more efficient and produce products that are high-quality healthy, accessible (to the body), and more profitable.”

To explain the concept that is “applied chemistry,” Cohen describes a lecture/thesis defense presented by a doctoral student at the Faculty of Chemistry at the Casali Institute for Applied Chemistry (the Hebrew University’s chemical industry branch), where he acquired some of his education. “One of the doctoral students presented his work. Once he answered all of the lecturers’ questions without hesitation, Prof. Sasson from the Casali Institute turned to him and indicated that the manufacturing material presented, which costs 50 dollars per kilo, was used to produce a substance that was worth just two dollars per kilo, and asked: ‘Can you do it the other way around?’” According to Cohen, this example reflects the difference between chemistry research and research based on applied chemistry.

The most advanced sewage facility in northern Israel

To Cohen, it’s important that the stigma that all chemical industry facilities are necessarily polluting, be dispelled. He promises that the sewage water exiting the GBi factory are clean. He adds that the factory’s chimneys emit relatively less pollution than those of residential wood-burning fireplaces, which are not bound by any regulations. The factory operates under the close supervision of its own Operations team, as well as that of the dedicated regulator.

The company goes above and beyond in the field of environmental protection, offering companies devoid of efficient sewage facilities to use their own, and receive services from GBi. This is a facilities with a capacity of 3,000 cubic meters. “We monitor our chimneys and sewage system, and the factory isn’t connected to municipal sewage waters. We take care of our own sewage water. We even have rainwater pass through our sewage facility,” Cohen emphasizes. “What’s more, over the past year, I have transitioned the factory to production based on natural gas, which is much cleaner. Hazardous substances, such as ammonia, which previously could be found on site, have since been removed. This means that everything the company currently manufactures is safe for human consumption. Gadot is not a polluting factory; we meet the highest standards possible.

“In general, and let’s set aside the fact that Gadot is considered a clean factory, just for a moment, there’s a common misconception that the chemical industry in the Haifa Gulf area is polluting, but studies have shown otherwise, and that perception belongs in the past. Today’s environmental protection standards are much higher; all of the industrial operations in the Haifa Gulf area, including the refineries, are together responsible for just 10% of the (country’s) environmental pollution.”

The factory is located near the Kishon River, west of Haifa’s Histadrut Boulevard. In recent years, heavy resources have been invested into its renovation. “We are working in full compliance with the most stringent standards in the field,” Cohen exclaims.

Chemistry that can make an impact

Towards the end of the interview, Cohen repeats his complaint about the “undesirable reputation” that has been assigned to Israel’s chemical industry. “I’ve reached my current position in life, after having spent 14 years in Europe, which has broadened my horizons, as well as my understanding that, in Israel, this field simply is not being paid the attention its due. There’s an entire industry focusing on high-tech and the development of smartphones and all sorts of chips. In addition to their important contribution, it’s important to remember that the fields of chemistry and biotechnology directly affect us, our health, and our quality of life on a personal level. That’s far more important that the purchasing of another advanced cellphone.” According to Cohen, this industry is fighting to survive in Israel; it hasn’t been developed nearly enough (for years!), and much of what is produced is exported. Even the foodtech industries, which are supported by the Israel Innovation Authority, take most of their developments to partners outside of Israel.

“Our factory houses the country’s largest fermentation facility, and we have tens of years of experience in the field, with clients from around the world. We have large-scale partnerships with partners around the world, who approach us with problems we are happy to resolve. Unfortunately, I don’t see nearly enough requests for joint initiatives from Israeli companies; it’s a shame,” he concludes. “This world is creating change. It’s a game changer and it’s significantly impacting the resilience of both the State of Israel and its citizens. Israel could have become the next Monaco ages ago, thanks to its industries and innovations, but much of it is seeping beyond our borders. I’m talking about good chemistry between people, which is most certainly chemistry that can contribute to us all. Fields such as chemistry and biotechnology are important and must be paid more attention. I am certain that if the State of Israel were to properly allocate its resources, it would discover that it could benefit from a chicken laying golden eggs.”

In collaboration with Gadot Biochemical Industries