Israeli cosmetics exports down last year...

... and according to industry leaders, the Israeli government is to blame

By ORIT ARFA
The assembly line at Peer Pharm (photo credit: ORIT ARFA)
The assembly line at Peer Pharm
(photo credit: ORIT ARFA)
A walk through the A. Meshi cos- metics factory in Bat Yam should allay anyone’s fears that anti-Isra- el efforts to get consumers to boy - cott Israeli cosmetics factories are having any effect. Here, in a factory that spans 6500 square meters, boxes and boxes of the com- pany’s Dead Sea skin-care line and Mon Pla- tin hair-care line are stored in warehouses, with destinations written boldly: United Kingdom, Belarus, New York. The founders of A. Meshi are three broth- ers, who in 1994 started in a 120-sq.m. fac- tory in their hometown of Bat Yam. Today, A. Meshi employs 130 people and turns over about $15 million in annual sales. As proud Zionists, they would never remove the “Made in Israel” label, and they make it a point to include product information in Hebrew in every country of export, as a statement. Sometimes, he said, clients like to see the Hebrew. “There are those who love us, and those who don’t know us,” Yermiyahu Mizra- chi, one of the fraternal founders, proud- ly declared at the “Mon Platin Academy,” a salon classroom where buyers can tests products and receive an orientation about the Jewish state. A. Meshi likes to take buyers on tours of Israel so they re- ceive context for the hoopla surrounding the Israel-Arab conflict – and a roll in the mud in the ever-healing Dead Sea. Israeli politicians seem to be concerned with the impact that the Israel boycott movement might have on the Israeli economy. Take, for example, the atten- dance of Knesset members, such as Yair Lapid and Tzipi Livni, at a conference on the topic of the Boycott, Divestment and Sanctions movement held in Jerusalem in March. Yet a recent press tour of cosmet- ics factories in Israel hosted by the Manu- facturers Association of Israel reveals that the biggest obstacle to expanding export may not be BDSers, but the Israeli govern- ment itself.
“Government regulation makes it very hard for the industry to advance,” Mizra- chi said.
“I would like the government to offer more support and tools for assisting the cosmetics industry so that we can export more abroad. We would like assistance, both in terms of grants and aid in exhibit- ing abroad, and also in minimizing regu- lations for exporting abroad.”
According to the Manufacturers Associ- ation, cosmetics industry exports, includ- ing a gamut of skincare and hair products, have fallen by 10 percent from 2014 to 2015, from $609m. per year to $546m. The only region that saw an increase was Asia, a market that factories are turning to make up for the lagging sales in Europe. Sales to Asia have increased by 14%, while sales to the European Union declined by 31% and to Eastern Europe and Russia by 40%. The three companies that formed part of the association’s tour to raise awareness of their plight were all proud of produc- ing blue and white products, and none seemed really fazed by foreign attempts at boycotts. (Then again, they were all lo- cated in Israel “proper” and not beyond the Green Line. The Dead Sea cosmetics company Ahava allegedly caved in to aggressive BDS pressure and is following the ways of Soda Stream by relocating its factory from the West Bank to inside the Green Line). In total there are 80 cosmet- ics companies operating in Israel, most of them small to medium-sized, employing a total of about 10,000 people.
ACCORDING TO Haviv Peer of Peer Pharm, Israeli products are sought after by European companies. One reason is price: it is cost-effective for them to ship from Israel. Another reason is Israel’s rep- utation for inventiveness. The ingenuity that is often touted in regards to Israel’s hi-tech industry can also be applied to the realm of shampoos, conditioners, an- ti-aging face creams, baby skin products and sunscreens. Israelis have achieved re- nown for Dead Sea cosmetics, but Israeli companies have also pioneered products with other natural ingredients, like argan oil, the latest trend in haircare.
“Israel is considered one of the leading countries in the realm of cosmetics, in part due to the Dead Sea, which is a won- derful natural resource for cosmetic prod- ucts,” Peer said. “In addition, Israelis are very daring, and that finds expression in innovation and de- velopment. They’re always open to adopt- ing new standards, and they’re not closed like European companies, many of whom still manufacture cosmetics with the same recipes they created in the 1970s.” Inside the Peer Pharm factory in the Rosh Ha’ayin Industrial Park, dozens of employees work at assembly lines, taking vats of the mixed product, squeezing them through machines that perfectly measure them into the tubes and canisters, and then meticulously affixing labels. In its sterile mega “kitchens,” Peer Pharm mixes recipes for its own products as well as prod- ucts for foreign companies that commis- sion their work for private label use.
It’s for these private labels that oner - ous regulations create particular gridlock. The Health Ministry requires every new product that is released to meet licensing standards for Israel, even if the destination country has different or less stringent reg- ulations. It could take up to half a year for the new product to receive the ministry’s stamp of approval, lengthening supply time, when timing is often the most im- portant element for buyers. YAKI SHKLARSH of Spa Cosmetics, which he founded in 1988 with his wife, recalled one Norwegian company that, after two years of business together, stopped put- ting in orders for political reasons. Overall, Shklarsh said, sales are not significantly af- fected by political boycotts, although some companies request that they work under the radar as an Israeli company. The bulk of their sales to major American discount clothing chains have remained steady. Spa Cosmetics has even received the “Out- standing Supplier Award” from Target, and its Dead Sea products dominate shelves at chains like Marshall’s, Ross and TJ Maxx. “The Israeli cosmetics industry is grow - ing,” Shklarsh said, “but there are great governmental obstacles that prevent the growth of export, and regulations that create a massive workload for us. For exam- ple, while Europe has already completed adapting and registering products, in Israel you still pay a fee for each and every prod- uct. We would like Israel to fully adopt the European standards.”
Hadar Mareli, director of the Manufac- turers Association’s cosmetics department, said the association is now working with the Health Ministry to enact reforms that would, ideally, have Israel adopt European licensing standards. This would drastically streamline the process for manufacturers. “This type of double licensing doesn’t exist anywhere in the world,” Mareli said. In response to questions regarding this matter, the ministry sent a statement, say - ing: “The ministry has worked to change the legislation and initiated the writing of pharmaceutical and cosmetics standards, which will replace the law and will enable the export of cosmetics without a license. These standards will be brought to the Labor, Welfare and Health Committee in the next Knesset session and will enable cosmetics for export abroad to not have to wait for a license.”
When asked the reason behind the current rules that seem to hurt the Israeli economy, Mareli responded: “That’s an ex- cellent question.”