Strauss divests stake in Sabra US hummus venture to PepsiCo for $244 million
Food manufacturer sells holding in joint venture after declining sales, amid fierce competition and an uptick in the anti-Israel boycott campaign in the US
Sharon Wrobel is a tech reporter for The Times of Israel.
Israeli food manufacturer Strauss Group is divesting its 50 percent stake in Sabra Obela, the maker of hummus dips and spreads sold across the US, to its longtime partner US conglomerate PepsiCo for about $244 million.
Strauss is selling 50% of Sabra Dipping Company, which is jointly owned with PepsiCo and sells savory dips mainly in North America. The transaction also includes the Obela brand, which was created to sell the same savory products to markets outside North America. Following the deal, PepsiCo will be the sole owner of Sabra and Obela products.
The Israeli food manufacturer first bought 51% of Sabra’s operations in 2005 for about $9 million. In 2008 it signed a partnership deal with PepsiCo to acquire 50% of the operation and establish a joint venture in which each company held 50% of the shares.
Strauss’s decision comes as Sabra hummus sales in the US took a big hit and the brand has been struggling to regain its formerly dominant market share. It has grappled with increased competition as US superstores were looking to diversify hummus offerings, and heightened anti-Israel sentiment.
Sabra’s average hummus market share in the US in the quarter ended June 30 stood at 36.6% compared with 38.5% in the corresponding period last year, and is down from the more than 60% enjoyed in the beginning of 2021. The hummus maker struggled a few years ago with multiple salmonella and listeria contamination recalls.
In addition, since the outbreak of war with the Hamas terror group on October 7 last year, BDS activists against Israel intensified a 14-year-old stickering campaign against Sabra hummus products. At hundreds of supermarkets and other stores in North America and Europe, stickers denouncing Israel have been placed on Sabra product containers.
Strauss CEO Shai Babad thanked Sabra and PepsiCo for an “extraordinary journey from a small salad company to the leading hummus brand in the US.”
“This move is another step in executing our strategy, which aims to focus on our core businesses and leverage our resources in the best possible way,” said Babad.
Strauss said it expects to record in its consolidated financial statements for 2024 a net profit estimated to range from NIS 319 million to NIS 325 million from the sale.
In the three months ending June, Sabra sales generated NIS 110 million, down 5.5% compared to the corresponding period last year, while reporting an operating loss of NIS 2 million. Obela had sales of NIS 17 million during the second quarter, down 0.2% compared to last year and an operating loss of NIS 2 million.
Times of Israel staff contributed to this report.
