Israeli Food Giant Strauss Faces Sharp Profit Decline Amid Yemeni Naval Blockade

An Israeli manufacturer and marketer of consumer foods and among the largest food manufacturers in Israel “Strauss Group” has reported a significant drop in net accounting profit, plummeting by 78% during the first quarter of this year. The decline is attributed to the ongoing war and, notably, the Yemeni naval blockade that has led to increased shipping costs and higher import expenses for raw materials used by the company, including coffee and dairy products.

According to a report published by the Hebrew economic newspaper “Globes,” Strauss has faced substantial challenges due to the conflict. The war, which escalated in October, coupled with the Ansar Allah (Houthi) threat in the Red Sea, resulted in rising prices for essential commodities during the first quarter of 2024 compared to the previous year. Specifically, Arabica coffee prices increased by 9%, Robusta coffee by 59%, sugar by 11%, and cocoa by a staggering 143%.

The company’s profit margin for the first quarter declined significantly, with operating expenses rising by 7% to reach 482 million shekels. Unusual expenses further impacted the bottom line, leading to a 78% decrease in net profit.

Strauss has implemented several price increases for its products since the beginning of this year. Olive oil prices rose by 25%, while chocolate and cocoa prices jumped by 10%. Coffee has become 12% more expensive. Additionally, earlier this month, Strauss announced price hikes for some dairy products.

In a statement, the company clarified that these adjustments were aimed at improving administrative profit margins. However, operational profitability still declined by 2.4%.

Strauss shares experienced a tumultuous year, losing approximately 16.8% of their value in 2023 and dropping by 6.2% since the start of 2024.

The report also highlighted other factors affecting the company’s profits, including the devaluation of the shekel against the dollar and the Turkish boycott.

Meanwhile, in May, several Hebrew reports revealed that major Israeli companies faced profit reductions due to the Yemeni naval blockade, which restricts ships’ access to occupied Palestinian ports. For instance, “Taavura” a large shipping company, saw its profits decline by 50% as the blockade disrupted operations at the occupied Umm Al-Rashrash Port, where the company transported car shipments to various parts of the occupied territories.

Simultaneously, prominent Zionist food companies announced varying price increases this month, reaching up to 20%. These adjustments were driven by rising shipping costs and raw material imports, compounded by the broader implications of the ongoing conflict.

Last week, the Zionist shipping company “Zim” raised container transportation costs from the east to Palestinian-occupied ports by over 37%. Analysts anticipate further price hikes for goods and products in Israeli markets in the coming period.