November 17, 2011
Israel, the brand
In a few short decades, the country has developed a reputation for quality products
In the 19th century, industry in what became the State of Israel consisted mainly of small workshops that made farm implements. Today, the country manufactures everything from drugs to lasers to shoes, and the closest thing to farm implements are complex drip irrigation systems.
Everyone knows the big names in Israeli manufacturing, like Teva Pharmaceutical Industries and Ahava cosmetics, and there are others, just as successful on the world stage, that fly under the radar. The establishment of world-leading companies and brands marks a significant stage in a country’s development.
“BMW is Germany. Hermès is very French. Burberry is very British,” said Tim Calkins, a professor of marketing at Northwestern University’s Kellogg School of Business. “For some brands, location is a big part of the brand meaning. A strong brand can give a sense of pride to a country.”
Manufacturing generates almost one-fifth of everything Israel produces in an average year, according to the Manufacturers Association of Israel. North America is Israel’s largest export market, with 30 percent, or $12.7 billion, of all exports, with Europe close behind at 29 percent.
Even 40 years ago, Israel didn’t have the luxury of thinking about branding. Manufacturing had advanced, but until the 1970s most of the country’s resources were directed into economic necessities: food production, infrastructure and immigrant employment. Traditional industries such as food processing, textiles, furniture, pesticides, rubber and plastic products provided most of the country’s industrial output, according to the Ministry of Foreign Affairs.
The next phase of development concentrated on weapons manufacture due to various arms embargoes, and that in turn created the base for the high-tech industry that hogs the limelight these days. But even as high-tech has exploded, manufacturing has grown, too, often from a base in Israel to production facilities around the world.
“No doubt, the good reputation of Israeli products and companies in countries around the world contributes a great deal to how Israel is perceived,” said Shraga Brosh, who heads the Manufacturers Association. “It is the Israeli industry’s commitment to assure that our products are not only competitive on a global scale but also leading in both their quality and innovative technology.”
For example, Strauss Group Food Products, the country’s second-largest food and beverage company, makes Sabra-brand chilled dips and spreads. It also owns the Max Brenner Chocolate Bar chain, which has locations in New York and Las Vegas, in addition to 36 others, and is an international corporation with 13,500 employees manufacturing in 21 countries.
Less visible is Delta Galil Industries, whose apparel products most people have worn, although they may not have known it. The company’s clientele includes retail giants such as Target, Wal-Mart, Calvin Klein, Nike, Maidenform and Tommy Hilfiger. Delta has design, development and manufacturing centers on four continents and employs 7,000 people.
Israeli manufacturing also has its grittier side. ICL is one of the world’s leading fertilizer and specialty chemical companies, with a monopoly on certain Dead Sea and Negev Desert extraction concessions. Palram Plastic Products makes polycarbonate, PVC and other thermoplastic sheets for industries such as construction and graphics.
And then, of course, there are high-flying consumer product brand names like Naot, which makes footwear; Ahava, maker of cosmetics with Dead Sea ingredients; and Gottex, the high-fashion swimsuit manufacturer.
Such companies aren’t as big as Teva, which operates in 60 countries, but they play an important role in shaping Israel’s image. Nations have long defined themselves by their manufacturing. The production of luxury goods has shaped French identity, for example, at least as far back as the days of the Sun King, Louis XIV, who nurtured those industries in the belief that the sale of shoes and Champagne would help him dominate Europe.
Like 17th century France, modern Israel is known for the export of footwear — sandals — and edibles — hummus. And in decades the country has developed to the point when it has its own brand, one that mainly plays off the country’s rugged beauty, wholesome natural products and active lifestyle.
“There’s no question that Israel is bolstered by some of its strong brands,” Calkins said. “They reflect back on the country, and the country reflects on the brand. It enhances both.”