Going organic, once a fad limited to a handful of die-hard health buffs, has caught fire with the mainstream over the last few years. The market is still comparatively small, comprising just 1.5% of Israel's agricultural output, with 90% exported, mainly to Europe. But it involves a wide range of players, including the Super-Sol and Mega supermarket chains, specialized chains and growers with direct sales to their own customer base. Overall the industry generates about NIS 1 billion in sales a year, including associated food products, and around NIS 300 million in earnings.
"Customers who regularly buy organic produce tend to mostly buy direct from growers, and only in the past two years have dozens of new sale points opened," says Dr. Ornit Raz, who heads the Israel Bio-Organic Agriculture Association.
The major chains, however, haven't fallen behind and are striving to seize a chunk of this market niche and expand their organic offerings.
There are five leading chains specializing in natural and organic products. The oldest, Nitzat Haduvdevan (The Cherry Bud ), opened its first store in 1986 and now has 17 branches throughout the country. The next was Teva Castel, established in 1999, which now operates five outlets in the center of the country. These were later joined by Eden Teva Market, which sold 51% of its shares to Blue Square (Mega ) five years ago and now has 20 locations, including nine within Mega supermarkets; and Organic Market, bought up by Super-Sol last year, which numbers eight stand-alone stores. The fifth is Super-Sol's health food operations - dubbed "Green" - comprising a distinct section within 15 regular Super-Sol stores. In addition, rumors abound that Rami Levi Hashikma Marketing also intends entering the organic field shortly, further adding to the competition and supply.
"It should be understood that we have a developing trend here that has passed the point of no return, and it's just getting stronger," says Raz. "This isn't a revolution that occurred overnight, however, but a process where consumers are becoming more aware and include more items considered healthy on their shopping lists."
Organic products are already competing with regular products in appearance and packaging too, and not just in terms of being healthier, she claims. "The market has grown and is now targeting average consumers interested in a better lifestyle, not only the captive upper middle-class crowd that's already been buying for years," says Raz.
Guy Provisor, CEO of Eden Teva Market, claims that although the organic market currently accounts for just 1% of Israel's food sector compared with 4% to 5% in other countries, it can and must grow. "The market can triple or quadruple its present size, and the chains are certainly trying to promote this process," he says.
Eden Teva Market will double the number of its stores in Israel within three years, he predicts.
Price differences upward of 100%
Where are the cheapest organic products found? Surveying the five chains, we put together a list of 34 organic products - including fresh produce, dairy products, dry foods and even organic cleaning products. Price variances reached as high as 116% for a product, with the difference between chains averaging 40%.
Super-Sol's Green department offered the lowest prices on 10 of the 13 fruit and vegetable items we checked. Organic Market was cheapest for seven products, some priced identically to those at Super-Sol Green, but two other items were actually the most expensive among all the chains. For example, organic cucumbers costing NIS 6 per kilo at Green cost NIS 13 per kilo in Organic Market - a 116% difference.
The chain offering the highest number of cheapest items overall was Eden Teva Market, with the best bargains for dry foods and dairy products. Harduf 3.8% goat milk yogurt, for instance, was priced at NIS 14 there as opposed to NIS 17 to NIS 18 at other stores - a 20% to 30% gap.
Teva Castel, the priciest chain across the board, claimed in response that its fruits and vegetables are of the highest quality sold in Israel. Of all the compared items, 22 were most expensive at this chain - at prices up to double those found at its competitors. Nitzat Haduvdevan didn't stand out for either comparatively high or low prices.
The results were the same when comparing a shopping cart of 24 identical products available at all the chains. Eden Teva Market offered the cheapest cart at NIS 357 while Teva Castel had the most expensive at NIS 441, 24% higher.
In most cases prices at the stand-alone Eden Teva Market store we visited were identical to those in the Eden Teva section inside Mega Bool, aside from some slight differences probably attributable to branch-specific markdowns. This, however, was a far cry from a comparison between Super-Sol's Green in-house departments and Super-Sol-owned Organic Market, with a number of organic products priced substantially lower at Super-Sol Green. Adanim Tea, for example, cost NIS 10 at Super-Sol as opposed to NIS 16.90 at Organic Market, and Adama Olive Oil was selling for NIS 45 at Super-Sol but cost NIS 52.90 at Organic Market.
"The Green sections operate as a store-within-a-store while Organic Market branches are stand-alone stores," explains Super-Sol. "In addition, organic products are also sold at other Super-Sol branches depending on various considerations like store size and customer preferences. Moreover, Super-Sol views the organic field as a whole, and health products specifically, as a strategic target in complementing customers' basket of goods according to customer needs and global trends in this area."
The shopping experience was pleasant at each of the sales locations. Cleanliness was above par and service was efficient, with the number of knowledgeable staff willing to help well beyond what is customary at a regular store. The selection of products on the shelves was more lavish than in the past. Harduf and Adama labels are still prominent and lead the market, but they no longer have the shelves to themselves.
The store-within-a-store format presented by Super-Sol and Mega is straightforward and doesn't make shopping any more burdensome, since the entire purchase - including regular products from the rest of the supermarket - can be paid together at the same checkout counter. The only potential confusion is in weighing the organic produce - which is performed separately - which could cause mix-ups if no sales people are around.
The chains still seem to have a problem, however, when it comes to the freshness of produce, and they have a hard time competing with private organic farmers who deliver direct from the field to the customer's doorstep. "The stock arrives at the store chains after passing through a number of hands and, since the shelf-life of organic produce is relatively short, fruits and vegetables in supermarket bins often appear unattractive," says Raz.
Provisor, however, claims he sees no problem with the freshness of produce. "Eden Teva Market is regulated and operates in compliance with the Law for the Regulation of Organic Produce," he says. "We buy fresh goods solely from growers and inspected authorized dealers, and only sell produce that was harvested up to 48 hours previously. As opposed to private growers, we maintain quality control and refrigeration throughout the process, including transportation and storage."