Strauss Group unveils StraussOne plan aimed at focusing more investment in four markets

ISRAEL – Strauss Group, the Israel-based food-and-beverage business, has unveiled a new business plan that will enable it to reach more profits by focusing on four named markets.

Under its newly unveiled StraussOne plan, the company will concentrate its investment in Israel, Brazil, the US, and China while “maintaining continuity” in the geographies in which it currently operates.

The StraussOne plan, approved by the snacks, dips, and coffee company’s board of directors, also houses plans for “flattening the organization and reducing management layers to strengthen organizational flexibility, streamlining and effectiveness” and to grow through both acquisitions and “ventures with new business models”.

The shift in direction will also see the business’ plants and supply chain in Israel come under one division, though in the future.

In addition, the branded, multi-category, and innovative food and beverage group is exploring plans of centralizing its headquarters and building a “center of excellence”.

The new model of business comes just a fortnight after it announced the appointment of Shai Babad, a former director at Israel’s Ministry of Finance, as its new CEO, effective Dec.01.2022.

Outgoing CEO Giora Bardea said: “The plan includes steps to advance sustainable growth that will be achieved by focusing investments in selected geographies in which we will continue to develop a competitive advantage, launching new business models, expanding current partnerships, continuing to invest in food-tech, and building excellence in our core areas.

“The plan also includes adapting the operating model and reorganizing per the changing reality and the challenges in our economic environment. We are earmarking resources in growth areas while streamlining in places where it is suitable to create synergies in Israel that will support strengthening organizational effectiveness and excellence.”

The company noted the “synergies” created by the new operating model will contribute to the estimated annual savings of ILS65m-80m (US$18.3m-22.5m) before tax and one-time costs.

The company has had a rough ride after the Israeli government suspended production at the plants in Nof Hagalil in April, which had been under the spotlight after a nationwide recall of products made by Strauss Group subsidiary Elite.

In the first six months of the year, Strauss Group’s operating profit tumbled by more than 59% to ILS204m due to costs linked to the recall and food-safety problems at a dip’s factory in the US.

Later in August, the Israeli government granted Strauss Group the green light to resume production, but the affair has taken a chunk out of the company’s market cap.

In a note, Jefferies analyst Martin Deboo welcomed Strauss’s new strategy, saying the plan looks like an important step in sharpening Strauss’s investment and executional focus and should be welcomed, in our view.

They added: “The absence of emphasis on Russia should be a positive for global investors, although the relatively high level of geographic concentration will persist. We assume that incoming CEO Shai Babad is on board with the plan, so no continuity issues should arise.”

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