Last week, Strauss announced the appointment of the former director general of the Ministry of Finance, Shai Babad, to the group’s CEO, replacing Giura Bar-Dea. This is a surprising appointment, and not only because Babad has no background and experience in the world of food retail, but because Strauss has A tradition of internal appointments and the widespread explanation was that this time too the replacement would come from within the company.
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Babed does not come from the food industry and does not know the intricacies of the market from the inside, and has never managed a company of the size of Strauss. Strauss is considered a company that is careful about solid and “calm” conduct, which does not really characterize Babed. He left the previous position as CEO of Alon Riboa Blue, after leaving the Ministry of Finance, after less than six months.
Strauss updated this morning (Sunday) that it signed an agreement for the sale of land in the city of Safed in exchange for an amount of approximately NIS 88 million plus VAT. Strauss is expected to receive the money within 3 months and no later than January 25, 2023 and the company estimates that it is expected to record a profit of approximately NIS 60 million upon completion of the transaction. The announcement of the transaction may not be accidental, and it is not impossible that the report was intended to “soften” the impact on theshare of appointing an inexperienced CEO.
BAD comes to Strauss in one of the most challenging times the company has known. The group has worked hard in recent months to get out of the salmonella crisis and the biggest recall in the history of the economy. Strauss is currently traded at a value of approximately NIS 10.1 billion, so since the salmonella incident it has shaved over a billion NIS from its market value. Also hanging in the background is the Competition Authority’s investigation into the price-fixing case, in which the Authority’s investigators raided the Shufersal and Strauss offices on suspicion of a binding arrangement between suppliers, competitors and retailers. It is also interesting how the appointment will affect the struggles with the cost of living. As of December, Strauss will be headed by someone who previously represented the other side. As someone who led in the past as a representative of the government moves to curb or minimize price increases, perhaps we will find the one who will be the representative and mediator of the manufacturers and suppliers with the government.
Without a background in the food market, how will Babad lead Strauss’ strategic plans?
In the Strauss strategic plan published in March of this year, about a month before the recall, the company put growth as a key strategic goal, with a long-term ambition to grow at an average annual rate of about 5%. Strauss intends to both expand its operations in Israel and enter new areas of activity and also to invest in accelerating growth and expanding its main international anchors. When it comes to implementing all the plans, the company realizes that it also depends on the management team. And this is where ABD enters the picture.
“It is surprising that they brought in someone from outside the company and even more surprising not from the food market at all, but he is probably young and talented enough to learn the field,” an executive in the retail industry told Globes. “Today, Strauss dominates many arenas. This is a company with great social responsibility, sustainability and nutritional responsibility, an ideological company. Shai Babed is an ideologue leader. Maybe this is also one of the reasons he left Alon Riva Blue. There it had no chance in the first place, because Moti (Ben Moshe, Shas) is a very dominant man and Shay is dominant as well. There was no CEO position in the square before, it was an attempt to create a new position that did not exist before and in practice Moti continued to be. There is a big difference here because it is very clear what the role of the CEO is.”
The official also adds that “in the UAE he knows the macro from his role as CEO of the Treasury, there is an ecosystem of customers and suppliers and regulation and farmers and producers and long-term planning and strategy and he has an entire team under him, we must forget that this is not one company but a concern of companies and there are many talented managers There. Strauss is very deeply rooted in every refrigerator and cabinet in the kitchen of every Israeli, it’s not some start-up that needs to be established. It’s an established company.”
“The Ministry of Finance is a management school”
Baad has held quite a few significant positions in the business, public and international sectors. “As director general of the Ministry of Finance, there is nothing you do not deal with, and there is nothing in the Israeli economy that you do not see,” says a senior official in the industry. “50% of Strauss’ activity is abroad, so they were looking for someone with such abilities. He has abilities in the international arenas. It is surprising that they brought someone from outside but on the other hand it is refreshing. Bring in new blood that is earmarked for years to come. At Strauss, the CEOs usually accompany the company for the long term.”
Indeed, Giora Bar-Dea eight years ago replaced Gadi Lesin, who held the position for about a decade. Erez Vidogman before him served for a similar period of time. Bar-Dea was not supposed to stay for decades. In Abed it’s a different story. “He doesn’t need experience in the food field. He needs to know how to manage. There are roles that if you know how to do, you can do them in a variety of ways and sectors. You learn everything else,” says the senior.
“People testify that he is a brilliant and talented person, and the Ministry of Finance is no less complex than Strauss. You are constantly dealing with political, public and media pressure. Obviously it is different, but it is not just that people from the Ministry of Finance later go to senior positions in the economy. It’s a management school, building strategies. Take situations, create a new work plan and implement it. In the end it’s management.”