In this episode of the Capital Compass, Ricki is speaking with Tomer Bar-Meir, CEO of Eshbal Functional Food (TSXV:ESBL), a company focused on developing functional products designed to meet the growing demand for healthier, “better for you” foods.
The company has just taken some major steps into the US market, most notably entering into a definitive agreement to acquire a majority interest in New York based Dare to Be Different Foods and signing a partnership with Active Marketing Group to act as its US broker. Together these moves position Eshbal for a much broader North American footprint.
Ricki: Thank you for being here. So Tomer for those who may be new to Eshbal, can you start by introducing the company and your mission within the functional food space?
Tomer: Sure. Definitely. Eshbal is an Israeli food tech company with over 20 years of experience in developing and producing various “better for you” products. Our mission is basically making healthy eating as easy, accessible and enjoyable as possible.
We’ve learned over the years how to solve complex problems and transform them into scalable products. We have proven success in Israel with about 16 million Canadian dollars in revenues for 2024.
Aiming to finish 2025 with about 19 million, and our next step is expanding our market into North America.
Ricki: Great. And so, the term “better for you” foods gets used quite a lot in the industry. So how do you define that and what does it mean in the context of Eshbal’s product development?
Tomer: First of all, “better for you” is a very broad term, I’ll admit. For us it means improving nutritional value of everyday foods with as little compromise as possible addressing different dietary needs.
And therefore, we operate in various categories such as gluten-free, sugar-free, low carb dietary supplements, nutraceuticals and others. We see consumers looking for healthier choices in various different categories, and we try to focus on these.
For North America, we would like to go and introduce our gluten-free baked goods, although we have a very large pipeline to add as we go on, starting with pita bread, which is a clean, innovative product.
And surprisingly with very little competition. We would like to bring some innovation into a category that was dormant for many years and haven’t seen much progress.
The gluten-free market itself is interesting because it has been growing about 10% annually for the last decade and is projected to continue growing at 10% for the next decade, which is about three times faster than average grocery growth. So we’re very excited to start with this.
Ricki: And speaking of North America, you just announced some big moves in the US notably an agreement to acquire a majority stake in New York based Dare to Be Different Foods and signing a broker agreement with Active Marketing Group. So how do these strengthen your position in the American market?
Tomer: Basically, it gives us exactly what a company needs when entering a new market. It will give us presence, market access, sale execution, AMG as a broker will act as our sales force and gain us some retail access.
The Dare to Be Different brings product synergy with their cauliflower and broccoli based gluten-free products, but they also bring something very important as well, which is market reach.
They already are present in the market, selling in the market, and they could act as a launchpad for Eshbal’s product entering North America.
Ricki: Amazing. And do you have any other acquisitions on the cards?
Tomer: A few or more than a few. But what’s more interesting is Dare to Be Different is a great example in that “better for you” category.
You see many small, mostly founder led brands that lack scale and that makes it hard for investors to access this fast growing segment.
For us being public, we can open the door for these investors as we plan to actually execute the rollup of these companies, scale, create efficiency, add some value, and become some sort of a vehicle for investors that would like to join.
Ricki: And are there any large players in this industry?
Tomer: Sure. A lot of the players, a lot of the big players have different gluten-free offerings. But giants usually present those after doing acquisitions. Similar to PepsiCo acquiring Siete Foods or Conagra purchasing Udi and Glutino brands.
Big players need scale. They will probably not buy 10 small different brands, but we will. Maybe in the future we can create some value to these players in the market.
Ricki: So Tomer, how do broader consumer trends toward clean label, functional and “better for you” foods shape your growth strategy over the next year?
Tomer: The shift towards a clean label and functional foods is accelerating and it shapes our strategy in two main ways. First is practical innovation. We need to develop and produce products that solve problems similar to the pita I mentioned before.
But the second is reliable scale. Retailers and food service want partners that can deliver quality and scale. We would like to take our 20 plus year experience and apply it to our US execution.
Ricki: Amazing. Great. And so keep looking ahead now. What are the next steps as you roll out this US expansion and what milestones should investors be watching for over the coming months?
Tomer: The key part is the rollout strategy. Finding those M&As that through them we can expand stores, expand production and logistics.
Investors should expect more like the deal we did with the Dare to Be Different. We believe that the time is right, we have strong partners, proven demand, and some great products, even if I say so myself.
Ricki: Great. And is there anything else you can tell me about Eshbal Foods?
Tomer: Yes. We recently started trading on the TSX Venture Exchange. We are building, we’re working now to build some awareness. We are targeting 19 million Canadian dollars in revenues for 2025, while our market cap is only $13 million. And we think there’s an opportunity here.
We also think “better for you” foods are shaping not only how people eat but also reshaping where smart capital goes. An opportunity to join early in this fast scaling category.
Ricki: Amazing. Well, thank you so much for your joining us and sharing the latest about Eshbal Functional Food.
Tomer: Thank you very much, Ricki.
This article is disseminated in partnership with Eshbal Functional Food Inc (TSXV:ESBL). It is intended to inform investors and should not be taken as a recommendation or financial advice.
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