What went wrong in Strauss’ judgment

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The sedative siren that arrived on Friday afternoon, four days after the company revealed it had been found Salmonella in the liquid chocolate factoryWill not prevent the destruction of millions of food products, amounting to an estimated quarter of a billion shekels.

The negative answer came only two days later That Strauss expanded the recall, Which in the first phase included only chocolate products produced in the last two months. Its expansion, following initial indications of suspected salmonella in snacks until midnight and a quarter to seven, which have already hit stores, led to the cancellation of the product production deadline, and the extension of collection to all factory products, including chewing gum, candies, cakes and cookies. It was an extreme step, designed, according to the company, to address the apparent confusion among consumers regarding the question of which products should be destroyed.

On the face of it the unprecedented recall in its scope is an irrational move, which has no explanation, unless it is based on considerations that do not relate to the fear that the additional products have been contaminated, but to insurance considerations

On the face of it, this is an irrational move, which has no explanation, unless it is based on considerations that do not relate to the fear that the additional products have been contaminated, but to insurance considerations. Calcalist has learned that Harel is Strauss’ insurer, but it is not known what coverage it has purchased and the conditions that allow it to receive indemnification from the insurance company. The accepted definition of a recall insurance case is a defect in a product or series of production resulting from a production plan, packaging or instructions for use of the product, which may cause damage. In one-off events, companies avoid activating the insurance that jumps the premium, but in an extreme case, such as Strauss’s, there seems to be no escape from activating it. It is possible that closing the plant for long weeks will allow the company to receive higher compensation than it would have received for the partial recall it made in the first phase. However, the company’s chiefs’ admission of failures in managing the plant could cause the insurance company to refuse to indemnify the company for its expenses and losses.

In Strauss, which has been backed for about a week by the Ministry of Health, which was updated on suspicion of salmonella and chose not to oblige the company to update the public, last Tuesday felt a change of direction on the part of the regulator. When the failed conduct of the Ministry of Health, and at the head of the Food Service, which has left the public for years in the hands of food producers, was once again exposed in a Strauss recall, the ministry decided to sacrifice the company in an attempt to curb its harm.

The first signal of this came at a press conference held by the ministry, during which Health Minister Nitzan Horowitz said: “The incident will be investigated in great detail. Because if we do not save, there will be a jungle. ” Strauss realized that the leak of failures by the ministry was only a matter of time and convened a press conference, where they revealed the incidents recorded at the plant in recent weeks, in an attempt to control the message and not be required to respond to leaks. Eyal Dror, Strauss CEO Israel, revealed that at this point the company had identified four material failures, each of which could have led to the intrusion of salmonella into the production environment. According to Dror, in the weeks before the first discovery, the company carried out a renovation of a factory that was not conducted according to the company’s procedures, and may have had an impact on the pollution. In addition to this about a month ago there were several days that detected ions in the liquid chocolate factory. Even in such a case of ion penetration there are work practices, but they did not exist. Another failure concerns the improper handling of one of the raw materials, but the fourth failure is most troubling: Dror revealed that the company received a number of inquiries from a source to whom it sells the raw material, according to which its inspection yielded exceptional results.

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Strauss Elite products are off the shelves

(Photo: Elad Gershgoren)

Calcalist has learned that this customer is Unilever Israel, a manufacturer of Strauss ice cream. The company buys chocolate from Strauss, and combines it with, among other things, Magnum and Kremismo ice cream products. Learning from experience following Thelma’s salmonella contamination in 2016’s cereal, which apparently occurred following the exposure of the products to pigeon droppings, Unilever has set up an internal laboratory, where it performs indicative tests. These speed tests give an indication of an abnormality in the quality of the product. The company has warned Strauss several times that its lab results show abnormalities in chocolate, but Strauss has ignored them. Dror explained: “Several times we received indications from one of our customers that he also does internal tests on the chocolate he buys from us and there are anomalies, but we work with certified external laboratories, and our answers were correct, and here we did not check these things again and it was wrong, we were We need to behave differently. ” After Strauss, ignoring the findings she presented to her and performing a recall late, Unilever was forced to join the move and recalled dozens of ice cream products, even those that did not include chocolate but were found in the same production environment. Two days after the recall decision, lab tests ruled out the presence of salmonella in all ice cream products, but these have already been destroyed.

Although Strauss is responsible for failures and public risk, the Ministry of Health bears no less responsibility. For decades, severe cases – the most notable of which was a deficiency of vitamin B1 in the baby food compound of Remedia and the silicone in Tnuva milk – revealed that the food service in the Ministry of Health was not functioning. The service leaves the food producers the decision on how to operate and backs them up, also at the expense of consumers.

The State Comptroller’s report from 2020 revealed a particularly disturbing sequence of failures, which if the Ministry of Health had corrected, the current recall could have been avoided. Prevent morbidity. “Defects were found in all phases of the food service’s handling of contaminated food products marketed and regarding morbidity associated with these food products, including a delay in the requirements from food manufacturers and food marketers to carry out recall,” the report stated.

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From the right: Ofra Strauss, Chairman of Strauss, Giora Bar-De’a, CEO of Strauss, and Nachman Ash, CEO of the Ministry of Health. Something is wrong with the decision-making and oversight processes

(Photos: Yair Sagi, Dafna Gazit)

The Comptroller stated that the information disclosed to the public is incomplete, and that the enforcement actions taken against food producers who violate the law are ineffective, and the ministry has not yet formulated a detailed procedure regulating the establishment and operation of its financial sanctions and enforcement policies. The National Food Service operates only the low administrative fine route, which stands at NIS 1,000 for a violation.

The Ministry of Health was careful to remove responsibility from itself in the case of Strauss, when it stated that the regulator checks the suitability of the control system and procedures in the factories to maintain the integrity and safety of the products. However, the last inspection of the liquid chocolate production line was conducted a year ago, and the Ministry of Health claimed that this is the required period of time and that the frequency of inspections is determined according to risk management in which various factors are taken into account. The Ministry of Health is currently examining a connection between Salmonella outbreak in Europe following eating Kinder chocolate products In the case of Strauss, if it turns out that the two companies purchase raw materials from the same factories.

Ofra Strauss, chairman of the group, flatly rejected the conclusion of personal conclusions towards the company’s management: “Do we draw conclusions about people and do we cut salaries or in any other way in people sitting here or elsewhere? The answer is absolutely no. We are currently repairing all deficiencies. “The fastest to return with the products to make and manufacture. People who have worked in these processes of chocolate are exactly the same workers who work in recent years and produce, sell, distribute and are responsible for our results, so our job during this period is to support them and allow all means to correct defects.”

Strauss’s are in line with the DNA of the company that founded her family, but it is not certain that the shake-up will allow her to preserve the legacy of protecting the company’s management, as admitting failures could lead minority shareholders to demand a refreshing management backbone.

Strauss also referred to shareholders in the week in which the stock fell by about 9% and mimicked NIS 1 billion from the company’s value: “Everyone who puts their money, and the capital market is a part of our lives, is unequivocally hurt. “Who also put the money in the same funds. We are going to sleep with it at night, and it is our responsibility to return and rehabilitate as soon as possible.”