Strauss-Elite (TASE: STEL) subsidiary Strauss Salads is beginning its international activity with the aim of becoming the world’s largest salad company. The first step is signing an agreement to acquire 51% of US salad company Sabra from Blue and White Foods LLC for $8.7 million.
Strauss-Elite group CEO Erez Vigodman said the acquisition was strategic. He predicted Sabra’s sales would grow from $27 million this year to $75 million in 2009.
At the same time, Strauss-Elite decided on a strategic plan through 2009, under which the group would make most of its investments overseas, not in Israel. “Overseas activity is extremely important and critical. We see less potential in Israel for investments that general value,” Vigodman said.
In the current deal, both Strauss Salads and the Blue and White Foods (controlled by American Jew Yehuda Pearl), will have put/call options for the sale of Blue and White Food’s remaining 49% stake in Sabra to Strauss-Elite within four and a half years.
Sabra is also designated to become Strauss Salads’ business and future growth arm in North America in other areas besides salads that are found to be suitable. Vigodman said, however, that entering cheese and other dairy products in North America was subject to a partnership with Strauss Dairies and Groupe Danone (NYSE: DA; XETRA, Paris: DANO), which was strong in the US.
Vigodman also announced that under the new strategic plan, the company would lead in sales and profits, overtaking Tnuva Food Industries (formerly Tnuva Central Cooperative for the Marketing of Agricultural Products in Israel Ltd.), Israel’s largest food manufacturer, which had NIS 4.8 billion in sales. He further promised that Elite would finish the year over 10% growth in overseas business and 4-5% growth in Israel. International business will account for 28% of the group’s sales, and profit on overseas business will grow and strengthen.
Elite Industries CEO Giyora Bar Dea said that activity in North America would be his responsibility. He declared that the salad company was now Strauss-Elite’s main growth engine, with over 10% annual growth over the past two years, compared with 1.6% growth in the overall food market.
Sabra’s growth reached 50% in each of the past three years. Sales turnover is expected to reach $27 million this year, compared with $18 million last year.
Strauss noted that Sabra had the highest growth rate in salads in North America, and that sales of humus accounted for 80-90% of that growth.
Consumption of humus and Middle Eastern salads is growing rapidly in the US, as a result of the health and ethnic food trends sweeping the country. This market, which barely existed a decade ago, is now estimated at $200-250 million a year.
Published by Globes [online] - www.globes.co.il - on August 28, 2005