Salmonella not the only thing weighing on Strauss

• Author: Hezi Sternlicht
• Published date: 27 April 2022
• Publication title: Globes (Rishon LeZion, Israel)

Within two days, more than half a billion shekels have been wiped off Strauss's market cap, with the share price dropping about 5%. Anyone who bought Strauss Group shares a year ago now shows zero return on the investment. The main casualty is of course the Strauss family (siblings Ofra, Irit, and Adi Strauss) which holds 57% of the company

The trigger to the slide in Strauss's share price is of course the salmonella discovered at the factory at Nof Hagalil. It looks, however, as though investors have been responding to other events at Strauss Group as well, with its international food business.

The salmonella episode has caught Strauss Group at a problematic business juncture, and follows other events of the past few months that have cast doubt on the company's future performance.

Troubles at US unity Sabra too

Strauss Group is active in twenty countries, employs some 17,000 people around the world, and has a strong business base in Israel. According to Storenext, Strauss is the second largest food and beverages group in Israel in sales turnover terms, with 12.4% of the local market in 2021.

Subsidiary Strauss Coffee, Strauss Group states in its financials, is among the ten leading coffee companies in the world for market share. In 2021, the group's consolidated sales turnover was NIS 8.7 billion, and since 2016 it has recorded 5.5% average annual sales growth.

Despite the good looking numbers, however, the current crisis at Strauss is one more in a series of events that cloud the picture. According to one market analyst who covers the company, the salmonella incident has the signs of a temporary glitch. The analyst, who prefers not to be named, says that the affair "could have an adverse effect on the company's sales after production returns to normal, but incidents of this kind are passing episodes. Even if we bring to mind a much more serious event, such as the affair of the silicon in Tnuva milk in the 1990s, in the end, who stopped drinking milk? It didn't really happen."

Nevertheless, he says, "This crisis has caught Strauss in a challenging period, not just in its activity in Israel. The Sabra subsidiary (the US hummus and dips producer held in equal shares by Strauss and PepsiCo, H.S.) is in a weak period, and there too contaminants similar to salmonella were found by the US Food and Drug Administration, and not for the first time...