With the return of the economy to almost full activity, including the opening of the institutional market (hotels and restaurants), the food giant Strauss Concludes the third quarter with a growth of 6.9% in sales to a volume of NIS 2.3 billion. Net profit for shareholders amounted to NIS 204 million. It will be recalled that Strauss is under investigation by the Competition Authority, as are retail chains and other distributors.
Strauss is the second largest food and beverage group in Israel. The increase in sales in the third quarter was mainly due to its activity in Israel, as well as thanks to the activities of the water company and the international coffee company.
The company notes that in the third quarter the food industry fell by 3.6%, and that according to Sterncast Strauss increased its market share by 0.4% – to 12.3%. The company attributes the increase in sales mainly to growth in the dairy and vegetable milk industry and in the salty snack category.
Rising coffee prices
At the end of the quarter, Strauss reports an increase of about 22% in operating profit to NIS 300 million, and of 28% in net profit, to NIS 204 million. Operations in Israel – which grew by 2.4% in the quarter to sales of about NIS 976 million – contributed to 43% of revenues. The activity of coffee, which is responsible for 41% of revenues, the activity of water (Tami 4) constitutes about 8%, and the activity of dips and spreads in the international arena constitutes 8%.
Despite the increase in revenues, the company reports stability in gross profit, which amounted to NIS 828 million. The operating profit (before the profits of the Podtech incubator) decreased slightly, and amounted to NIS 248 million. The erosion is largely due to rising raw material prices, mainly green coffee and milk, as well as due to rising world production and transportation costs following the impact of the corona crisis.
In Brazil, the company will increase coffee prices by about 37%. The rise in coffee prices has also taken place in Eastern Europe. Strauss emphasizes that the reports relate to the events that took place, and that this is not a warning for the future to come.
The rise in coffee prices (green beans) is reflected in a 58% increase in the Arabica variety and a 39% increase in Robusta. The sugar jumped by 30%. Strauss notes the rise in transportation prices by 404%. The company does not believe that a recession is expected in the jump in shipping and freight prices.
Along with the increase in raw material inputs and transportation, the company notes the increase in wage costs, not only in Israel – as a segment that is not expected to disappear, and alongside it a continuing shortage of manpower, especially in production. On the other hand, to the credit of the company is the strengthening of the shekel against the dollar / euro, but asked against the Russian ruble the shekel weakened.
The investment in Podtech pays off
About six years ago, Strauss launched the FoodTech incubator in partnership with the state. Since then, the group’s representatives have met about 900 entrepreneurs, most of them Israelis, and about 22 of them have entered the incubator. In the current quarter, Strauss recorded a profit of NIS 52 million from its podtech operations, mainly due to the round of recruitment of Alef Farms, whose operations it manages. The company, which develops cultured meat, does not anticipate the date when it will encounter its products on store shelves.
It is interesting to note that in recent months the company has also been joined by a company that produces cultured fish meat. Recall that Osem recently launched a vegan substitute for tuna as part of its meat substitutes – a segment that has been relatively neglected so far (fish substitutes).
According to Giora Bar-Dea, CEO of the Strauss Group, the company “continues its growth campaign alongside tackling the impact of the corona plague on the global economy. This effect is reflected in, among other things, a global rise in commodity prices, world transportation costs and energy tariffs for industry.
“The group’s management works to maintain resilience and stability, along with investments that will ensure the company’s suitability and continued growth in the future. Accordingly, the group shows growth in the core business alongside initial fruits from its strategic investment in innovation and the podtech industry. Investments in the areas of sustainability, and is constantly improving the ESG indices. “
In the sum of the first three quarters of 2021, Strauss’ revenues amounted to NIS 6.5 billion. It will be recalled that it ended 2020 with sales of NIS 8.3 billion. The company employs about 16.5 thousand workers in 20 countries. There are 4,500 employees in the country.