Amid war, Strauss to hike prices of 25% of its products, lay off 150 employees
Strauss olive oil, chocolate bars, hummus and other items will cost more starting Feb. 1 to offset high costs of raw materials; layoffs won’t affect reservists and evacuees
Sharon Wrobel is a tech reporter for The Times of Israel
Strauss Group, one of the country’s largest food product manufacturers, announced on Monday that next month it will start another round of price hikes of some of its products, including chocolate, olive oil, and hummus, as well as fire about 150 of its employees.
Prices will increase on February 1 by 1.7 percent on average and will affect 25% of the food manufacturer’s products. Among them are chocolate bars, which will rise by 14%, and chocolate snacks, which will be hiked by 4% to 9%. The cost of Shokolit instant cocoa powder will increase by 10%, Yad Mordechai olive oil by 25% and pastries by 8%-14%.
Strauss cited a steep increase in the cost of raw materials over the past year as the main reason behind the need to raise prices. The cost of cacao spiked by more than 88%, tahini by more than 33%, and sugar and olive oil by more than 60%, said the food manufacturer, which estimated the impact at more than NIS 100 million in annual terms.
As part of a streamlining and efficiency plan, Strauss will fire about 150 employees, which is expected to lead to annual savings of about NIS 45 million to NIS 55 million, the food giant said. Most of the layoffs will affect administrative and managerial positions. The streamlining move will skip employees who were evacuated from their homes or those who serve as reserve soldiers during the ongoing war with the Hamas terror group.
“We are aware of the difficult situation, and therefore the price increases are the minimum steps that are necessary in the current business reality,” said Strauss CEO Shai Babad. “The streamlining moves within the company will allow us to continue investing in infrastructure and future growth.”
“In 2023, we invested hundreds of millions of shekels, in all the factories and our supply chain all over the country, and we will continue to do so this year as well, out of a commitment to provide food security in general, and in times of war in particular,” Babad added.
Strauss noted that other products did not go up in price, including dairy products, Turkish coffee, instant coffee, and Yad Mordechai honey. However, the February price update marks the fourth round of hikes by the food giant since December 2022, and is hitting Israeli consumers in their pockets as the repercussions of the war and the high interest rate environment are already taking a heavy toll on households.
Food prices in Israel are about 51% higher than in EU member countries and 37% higher than in OECD countries, according to a recent report by the State Comptroller, who lashed out at lawmakers for failing to tackle the rising cost of living.
Israel’s economy is characterized by over-concentration in some sectors, such as household goods, compared to other markets, as the 10 largest suppliers and importers control a market share of more than 50% of the food and consumer products industry, according to the report. The lack of sufficient competition has enabled importers of food products and toiletries to generate high profit margins.
Listed on the Tel Aviv Stock Exchange with a market cap of about NIS 8.5 billion, Strauss generated over NIS 9.5 billion in total annual revenue in 2022 and employs about 18,000 people worldwide, including 6,000 in Israel, at about 28 manufacturing sites.
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