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First of Michigan Corporation
100 Renaissance Center. 26th Floor, Detroit, MI 48243
50
FRIDAY, JULY 6, 1990
Manufacturer Says
Industry Is Stifled
JOEL BAINERMAN
Special to the Jewish News
A
successful local entre-
preneur teamed-up
with a foreign in-
vestor group, a large national
company, and a management
team with proven past
marketing expertise might be
a good recipe to create a suc-
cessful enterprise in Israel.
The Israeli government is
an exception.
In 1987 Shimon Welner
began working on a project to
establish a mineral water fac-
tory in Moshav Aniam near
Katzrin in the Golan Heights.
But officials in the Ministry
of Industry and Trade won't
grant the venture "Approved
Enterprise" status because
they claim the local market
for mineral water is already
over-saturated with brands
made by the Tempo and
Tabouri beverage firms.
Weiner asserts that while
that may be true, he has pro-
duced letters of intent from
importers in England and the
U.S. which have already com-
mitted themselves to buy
20-30 containers a month.
"When the bureaucrats in
Jerusalem told me that I
would not be able to export
the mineral water I told them
that's what everyone told me
when I took Yarden and
Gamla wines from the Golan
Heights a few years ago and
put them on the shelves of ex-
clusive wine shops in New
York and London," says
Weiner.
Even so while the Ministry
of Industry and Trade claims
the local market is saturated,
imports of mineral water in-
creased 40 percent in 1989
from $1.6 million to almost
$2.3 million. It recently gave
permission to Tavori to ex-
pand their production of their
Mei Eden brand of mineral
water for about the same
volume as Weiner would have
produced in the first year.
Another indication that the
local market is not yet
operating at full capacity is
the plans by Coca Cola
(Israel) Ltd. to enter the field.
The first marketing trials in
Eilat will soon begin.
Weiner claims the govern-
ment is ushering in yet
another sanctioned monopoly
in Israel.
"While it professes to be in
favor of encouraging industry
in the peripheral areas of the
country, permission was
given to increase the output
of mineral water in a com-
pany located in the coastal
region while our venture bas-
ed in the Golan Heights was
turned down."
Weiner was formerly the
marketing director of Golan
Heights Winery and was in-
strumental in creating the ex-
clusive image of the Yarden
and Gamla labels. The pro-
posed mineral water factory
is a joint venture of himself,
headed by the Sonol Oil
Company.
heded by the Sonol Oil
Company.
The consortium is seeking
to build a $2 million facility
of which 38 percent will be a
grant from the Ministry of In-
dustry and Trade. Weiner
agrees in principle with the
argument that if-he is so con-
vinced of his chances for suc-
cess he should go through
with his plans without
government loans.
Yet he points out that in
Israel, if an industrialist fails
to obtain the coveted "Approv-
ed Enterprise" status from
the Ministry of Industry and
Trade, it is literally impossi-
ble to compete with firms
which are "approved" and
subSidized for everything
from water and electricity to
land and capital.
How can officials
in the Ministry of
Industry and Trade
know how many
players 'should' be
in the mineral
water industry?
"Either offer government
grants and preferential treat-
ment to all players in a
market or none," he says. "If
one company receives govern-
ment loans and the others
don't it creates an unfair play-
ing field when the early com-
panies are able to sell their
products for less as they in-
vested less of their own
capital and because their sub-
sidized manufacturing ex-
penses don't reflect their true
cost."
The real issue is how can
the officials in the Ministry of
Industry and Trade know
how many players "should"
be in the mineral water in-
dustry? Should "saturation of
of a market' be given as a
reason to restrict access to a
market? Is such a concept
even relevant? If the com-
peting producers lose a
percentage of the local
market they will be forced to