It was environmentally sustainable. But Negev Nectars wasn’t financially sustainable.
Three years after launching, the company, which aimed to develop a North American market for small-scale Israeli farmers producing olive oil, jams and other foodstuffs using a breakthrough, desert-friendly approach to agriculture, has suspended operations.
However, its founder, Marvin Israelow, 65, who has been passionate about Israel’s Negev region since his days as a kibbutz volunteer there in 1966, said he’s not abandoning the enterprise and instead hopes eventually to “reinvent” and try again.
Israelow, a longtime volunteer with American Friends of Ben Gurion University and UJA-Federation of New York, began Negev Nectars in 2009, initially using his Chappaqua basement as a shipping warehouse to distribute individual items and gift baskets. While the products have gotten a positive reception, he said he has been unable to grow sales enough to make the business viable. In particular, it has been difficult to sell the products — both to consumers and potential retailers — at a price high enough to cover expenses, let alone generate a profit.
Sales — primarily done online or through subscriptions, many to members of Jewish community-supported agriculture (CSA) groups — grew steadily at first, Israelow said, and the company built an e-mail list of 2,000, approximately 1,000 of them paying customers. [Full disclosure: this reporter purchased a subscription in the first year.] But when Negev Nectars raised prices to reflect costs — $18 for a 500-ml bottle of olive oil, for example — revenues flattened.
“Not surprisingly, artisanally produced products cost a lot of money to produce,” Israelow said. “Our big learning is that in order to expand the market for higher-priced products, we needed initially to have established a stronger brand. If we were to start from scratch again, we’d be doing things like making sure we had first put our olive oil in competitions and had received awards.”
Negev Nectars failed to establish itself “as a premium gourmet brand that would justify the kind of prices required to become financially sustainable,” he added.
Despite Negev Nectar’s challenges, Israelow said the market for gourmet olive oil — the company’s signature product — is growing, even as the number of suppliers also grows.
Vineyards in California and Australia are beginning to dedicate space to olive production; olive oil tours, like wine tours, are emerging worldwide, and “there’s a shop in Tel Aviv that’s devoted just to olive oil,” he said.
Aided by a discovery that olives can grow “as well if not better” using brackish water, Negev Nectars’ producers were actually poised to have a “competitive advantage” in the organic olive market, Israelow said, since it easier to avoid pesticides in the desert heat, where there are fewer insects, particularly “olive flies.”
Ironically, the Boycott, Divestment and Sanctions (BDS) movement that has been a source of concern for many Israeli businesses only helped Negev Nectars, Israelow said.
“Pro-Zionist organizations looking to combat BDS were more receptive to wanting to promote Negev Nectars,” he said, noting that the controversy this spring at the Park Slope Food Co-op triggered a “high-publicity” moment for the company.
“We set up a table outside during the Park Slope Food Co-op vote and handed out samples of Negev Nectars products,” he said. “We literally showed the face of the farmers the people who wanted to boycott Israel would be affecting.”
Fortunately for the farmers, none were yet dependent on Negev Nectars; although the plan had been eventually to expand production to serve an export market, for now domestic sales account for the majority of their revenues, Israelow said.