Salmonella Scare Takes $300M Out of Strauss’s Market Value

YERUSHALAYIM
View of Kif Kef, Taami and Energy chocolate-coated crackers, on which Strauss issued a recall following the discovery of salmonella on the production line at a factory. (Avshalom Sassoni/Flash90)

The Strauss Group has lost close to a billion shekels (about $300 million) off its market cap in just three days, after a salmonella scare prompted the corporation to issue a massive recall of its chocolate products.

The recall was announced on Monday after routine testing in the Nof HaGalil chocolate factory detected traces of salmonella on the production line, prompting the company to pull dozens of products off the shelves nationwide in the largest food recall to take place in Israel to date. Several subsidiaries and companies using Strauss Group’s chocolate in their products have announced small-scale recalls as well, citing precautionary measures.

As of Wednesday evening, Strauss Group shares were down 9%, as investors quickly realized that what was first considered a minor glitch was a much more comprehensive problem. The company’s announcement to investors noted that events are expected to impact its 2022 profit projections.

The future of the Strauss Group is unclear as it is unknown how long the factory will remain closed. The Health Ministry said Tuesday that the facility will not resume operations until the production line proved safe – a process that could take two weeks.

Strauss might also be subject to fines and lawsuits over claims that the issue was, in fact, detected several days before the recall was announced but the company failed to immediately inform the public.

Formerly Strauss-Elite, the Strauss Group is one of the largest food products manufacturers in Israel. It focuses on dairy products, coffee, water, snacks, salads and dips. Its subsidiary, Strauss Coffee, is a leading coffee company in Eastern Europe and Brazil.

Company records show that Strauss wrapped up 2021 with 4.2% sales growth and, according to StoreNext, holds a 12.4% share of the Israeli food market. Chocolate sales in Israel make up only 8% of its annual revenue.

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