At IsraelNewsletter.com, we like to focus on Israeli impact on public markets.  Whether it’s the 100+ Israeli companies listed in the U.S., M&A, or strategic partnerships, Israel technology is making its way into the global Fortune 100.  While IOI analyst Katsman continues to like G. Willi Foods (WILC) for their leading kosher export business (see what he’s written here), there is more applied Israeli technology to the food industry than the general public realizes.

In today’s Globes, there’s an interesting article about Nestle’s (NSRGY) cooperation with Israeli food company, Osem.  Seems the Swiss recognize Israel’s value proposition in various industries as I wrote about Novartis’ recent acknowledgement of Teva’s (TEVA) superiority in the generic pharma field.

Who knew about packaged food though? (Continue »)

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Aaron Katsman
IsraelNewsletter.com

The inflation bug has most of us worried. Recently in Israel the CPI was released and showed a 4.7% surge in prices. This is obviously not just a problem in Israel. Throughout the world, inflation, especially food inflation, is alive and well, and has been for quite some time. While at first glance investors might think that food stocks should benefit from higher prices, in practice they have performed poorly over the last few quarters. They have been unable to pass on their higher costs to consumers.
This is why today’s earnings report from G. Willi Food International (WILC), is interesting. For consumers, the earnings report signals more food price hikes coming down the road. For G. Willi, it means a return to strong growth.

Why?

Because commenting on the report, CEO Zwi Williger said, ” Furthermore first quarter’s results demonstrate that we are beginning to regain the momentum that had been building over the past few years as we have been able to successfully pass on some of our costs to our customers.”

The problem that has plagued food stocks of late is that they haven’t been able to pass on costs. The fact that G. Willi has started to do so, potentially could prove to be a big boost to their bottom line.

As for its report, the company showed strong revenue growth aided by recent acquisitions, like Shamir Salads, who produce healthy Mediterranean salads, like Hummous.

While the company refrained from providing guidance for the rest of the year, if we see a drop in the price of food materials, G. Willi could potentially benefit.

Disclosure: Author’s fund has a position in WILC. He has no position in any other stock mentioned as of 5/28/08.

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Aaron Katsman
www.IsraelNewsletter.com

G. Willi-Food International Ltd(WILC), one of our favorites here at Israelnewsletter.com, reported a 21% increase in revenues for Q3 ‘07 versus the same quarter ‘06. As expected profit decreased as the company suffered from a drop in margins. The worldwide increase in dairy prices impacted G. Willi’s Q3  gross margins, as they declined to 20% compared to 27% in the same period a year ago.

Mr. Zwi Williger, President and COO of Willi-Food commented, “Third quarter results are in line with our expectations for the period. In this period, nearly all of our shortfalls can be attributed to gross margin decline in our dairy business. As previously stated, Willi Food and the global dairy industry continues to experience cost pressures due to weather related problems, reduced milk production, cessation of EU dairy export subsidies at the same time that consumption and demand for dairy has increased in growing emerging markets. These factors have negatively impacted Willi Food’s near term sales and gross margins on cheeses and other products.”

Mr. Williger continued, “While we believe that this trend shall continue through the remainder of the year, we anticipate that the cost of raw food materials will stabilize by mid-2008. In the interim, we are successfully leveraging our infrastructure, hedging our strategic direction through smart acquisitions and setting the stage for growth in 2008.”

The company continues to grow and we continue to like this for the long-term. With limited volume the stock price is subject to large swings. Long-term investors should keep their eye focused on the long-term regarding this stock. As they continue to execute their business plan, I would expect the stock to continue to move up.

Please see our Disclaimer HERE.

Disclosure: Author has a position in WILC. He holds no position in any other stock mentioned, as of 11/29/07.

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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Aaron Katsman
www.IsraelNewsletter.com

I was never big on bragging, well maybe I was, just never had much of a chance, but today’s news that G. Willi Food Intl (WILC) signed a binding term sheet with the owners of a Russian dairy distributor was predicted. The distributor is a leading supplier and importer of dairy products in Russia, and together they will form a new joint company. Willi Food would hold a 51% interest in the new company. This reminds me of the Philosopher Kings classic lyrics, “I am the man, that’s what I am.  I’m a straight shooter with a master plan.” Okay, to all you jokesters out there (and you know who you are) who are now going to remind me of some of my less-than-stellar analysis, give me a break and let me have my fun.

For ‘07, analysts think this distributor will sell roughly 36,000 tons of cheese products to a base of over 1,000 customers in Russia and generate an estimated $120 million in sales.  According to HLB Prime Advice, a Russian appraisal company, the distributor is a leading distributor of all cheese types in Russia and the biggest supplier of hard cheeses such as Gouda and Edam to this market. I love my GOUDA cheese! Nothing like watching football with some Gouda and crackers. This follows on what I have said in the past: that G. Willi is making a big push into the Russian food market.  It’s become clear that with growing wealth and more disposable income, Russian consumers have created a large demand for imported, premium products. G. Willi can help satisfy that demand with their broad selection of healthy dairy products and other foodstuff.

Mr. Zwi Williger, President and COO of Willi Food commented, “We are very excited about this transaction, which represents a bold step for Willi Food as we continue to expand our global footprint. According to market data, over 650,000 tons of cheeses are consumed in Russia each year of which roughly 50% is imported. We believe that NewCo will provide a well-developed distribution platform for Willi Food and its subsidiaries to drive market demand for dairy products in all categories including premium branded products, kosher and healthy living styled dairy products, as well as other categories.”

As I write this, my local Dolphins fan (ouch), Zack “Facebook“Miller, asks,” What’s their competitive moat?” First of all, what the heck is a Moat? Anyway, the answer lies in Arkadi Gaydamak.  He owns the parent company Willi Food Investments and he is the largest egg distributor in Russia. He himself is a huge distribution channel, and with this new deal, look out. Willi will carve out nice marketshare in the Russian food market.

How is that for some Moat!

If you are looking for a small food company that’s about to explode onto the global scene, have a long look at G. Willi. The stock has taken a hit, and looks attractive as a long-term investment.

Please see our Disclaimer HERE.

Disclosure: Author has a position in WILC as of 10/22/07. Author has no holdings in any other stock mentioned.

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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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