| Israel

Strauss sees strong coffee sales globally but group profits falter

The Israeli food and beverage firm achieved double digit growth in its international coffee business, but reports that an extensive recall of products due to a factory salmonella outbreak caused operating profit to fall 65% to $30m

Strauss Coffee reported 32% sales growth in the first quarter of 2022 following double digit growth internationally | Photo credit: Strauss Group

Strauss Group has reported strong revenue growth for its global coffee business as overall group sales were adversely impacted by a major product recall due to a salmonella outbreak at Strauss's Elite chocolate factory in Nof Hagalil, Israel. 

Total operating profit for Israeli-based food company Strauss Group fell 64.7% in the three months ending 31 March 2022, with a recall of products overshadowing the success of Strauss Coffee in international markets, which reported sales growth of 44% compared to the first quarter of 2021.

The food and beverage firm’s coffee segment, Strauss Coffee, reported 32% revenue growth in the first quarter of 2022 to NIS 996m ($23m) following increased sales internationally and in Israel.

Its coffee businesses in Brazil, Poland, Romania and Serbia experienced double-digit growth in the quarter in local currency, and 2.7% in Israel. Operating profit increased seven percent to NIS 105m ($31m) in the period.

Strauss Group has also partially resumed operations in Ukraine, with the company noting steadily increasing sales in the country during the start of the second quarter.

However, total operating profit for Strauss Group fell by NIS 187m ($55m), 64.7%, to NIS 102m ($30m) following an extensive recall of products announced in April due to the discovery of salmonella in products of Strauss's Elite chocolate factory in Nof Hagalil.

The company estimates that the recall and the shutdown of the factory will result in a decline of between NIS 170-239m ($51-$71m) in its annual net profit.

"Along with growth in the Group's international coffee business, including a recovery in business activity in Ukraine, continued growth in the Group's water company in Israel and in China, and growth in all activities in Israel, the Group is dealing with complex challenges in Sabra and in the confectionery business in Israel,” said Giora Bardea, Strauss Group CEO.

“I am convinced that the resilience of our brands, finances and people will enable us to successfully overcome and return to activity and growth in the near term,” she added.

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