PepsiCo buys out Strauss Group from Sabra and Obela joint ventures for US$244M

USA – PepsiCo has agreed to acquire a 50% stake in Sabra Obela, the maker of hummus dips and spreads sold across the US, for approximately US$244 million.

This transaction also includes the Obela brand, which markets similar products outside North America. As a result, PepsiCo will buy out Israeli food manufacturer Strauss Group, becoming the sole owner of Sabra and Obela products.

Strauss Group initially purchased 51% of Sabra’s operations in 2005 for about US$9 million. In 2008, they partnered with PepsiCo to acquire 50% of the operation, establishing a joint venture with equal shares. Obela was later established in 2011, focusing on supplies to Australia, New Zealand, and Mexico.

Steven Williams, CEO of PepsiCo’s North American foods unit, stated, “As we evolve our food portfolio and bring people more choices for more occasions, our aim is to meet the growing demand for positive choices and on-the-go options. Nutritious, simple foods like refrigerated dips and spreads represent a space we have long desired to expand in the US and Canada.”

Strauss’s decision to divest comes as Sabra hummus sales in the US have declined, with the brand struggling to regain its dominant market share. Increased competition and heightened anti-Israel sentiment have impacted its performance.

Sabra’s average hummus market share in the US for the quarter ending June 30 was 36.6%, down from 38.5% in the same period last year and significantly lower than the over 60% share it enjoyed at the beginning of 2021. The brand has also faced challenges with multiple salmonella and listeria contamination recalls.

Strauss CEO Shai Babad expressed gratitude to Sabra and PepsiCo for their “extraordinary journey from a small salad company to the leading hummus brand in the US.” He added, “This move is another step in executing our strategy, which aims to focus on our core businesses and leverage our resources in the best possible way.”

Strauss expects to record a net profit of between NIS 319 million and NIS 325 million from the sale in its consolidated financial statements for 2024.

In the three months ending June, Sabra sales generated NIS 110 million, down 5.5% compared to the same period last year, with an operating loss of NIS 2 million.

Obela reported sales of NIS 17 million during the second quarter, down 0.2% from last year, and an operating loss of NIS 2 million.

PepsiCo and Strauss have also reached an agreement regarding their Strauss Frito-Lay venture, which markets salty snacks in Israel.

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