Food manufacturer Strauss, controlled by the Strauss family, reported a 6.5% rise to NIS 153 million in profit and a 4% increase in revenue to NIS 2.2 billion in the third quarter of 2019. Excluding the effect of exchange rates, Strauss's organic growth in the third quarter of the year was 6%. Strauss attributes most of the improvement in its top line to activity in Israel and to the Jewish holidays, which fell in September this year.
On the other hand, Strauss said that its improvement in sales was partially offset by the depreciation of the real, the local currency in Brazil, where Strauss has coffee business, and to "falling prices in certain geographic areas as a result of lower green coffee prices, mainly in Brazil."
Strauss's revenue was unchanged at NIS 6.4 billion in the first nine months of 2019. Its profit, however, jumped 11% to NIS 446 million during this period as a result of an improvement in operating profit.
Strauss's share price responded positively to the company's results today, and has gained 30% this year, setting a record. The company's market cap is NIS 12.5 billion.
Strauss is the second largest company in the Israeli food market with an 11.7% share of the retail market in terms of monetary value in the first three quarters of 2019, according to StoreNext.
A month before the Ministry of Health's reform requiring that food products containing undesirable quantities of sugar, sodium, and fat be marked takes effect, it is interesting to note that Strauss's fastest growth category in sales terms is the pleasure and enjoyment sector, which includes sales of candy items such as Parra Chocolate, and snacks such as Tapuchips and Cheetos. Revenue in this sector totaled NIS 286 million in the third quarter, 9.4% more than in the corresponding quarter last year.
Sales in the health and quality of life category, which includes Strauss Dairy, salads, fresh vegetables, prepared meals, and other items, rose 6.5% to NIS 613 million in the third quarter.
"Globes" recently reported that Strauss was on the way to obtaining a marketing and distribution franchise for Alpro milk substitutes in Israel, after Alpro was acquired three years ago by Danone, a 20% partner in Strauss Dairy. This agreement could boost Strauss's sales in this category substantially.
Strauss is starting this year to see the first results of its investment in its food-tech incubator. The company reports that it made a profit on the sale of its holdings in food-tech companies in financing rounds conducted by the companies. These rounds, which diluted Strauss's holdings in the companies, were held at higher company valuations than Strauss's investments in the those companies, most prominently the financing round by Aleph Farms, a startup that is developing cultured meat.
Published by Globes, Israel business news - en.globes.co.il - on November 20, 2019
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