Strauss reveals update on Salmonella recall fallout

A committee created after a Salmonella chocolate recall and temporary plant closure in 2022 will shortly report its findings.

In August 2022, the board of directors of Strauss Group passed a resolution to establish the independent committee to investigate the recall in Israel, discuss the courses of action open to the company, and make recommendations to the board.

The committee held its first meeting in December 2022, featuring the company’s legal counsel. More than 30 meetings have since taken place. The committee is expected to complete its work sometime in May 2024.

A possible court case involving alleged damage to the company following the recall is on hold until the committee completes its work and the board of directors at Strauss have discussed and reached decisions on the recommendations.

The update came as Strauss Group published its financial statements for the fourth quarter and full year of 2023.

Salmonella recall of 2022
In April 2022, Salmonella was found on some production lines in the confectionery plant in Nof Hagalil and on products in the factory, following routine tests. All items produced at the plant that made it to market were recalled.

The site was closed until all manufacturing systems had been cleaned and the entire inventory was destroyed. Production resumed in August 2022 and products from the factory began to be sold again from November.

As of Dec. 31, 2023, the group had not regained its pre-recall sales volumes and market shares in some product categories. The main reasons for this were growing competition and the phased return of products to shelves, said Strauss.

Company officials made the decision to discontinue some bakery product lines and to terminate production of some wafer products.

The negative effect for full year 2022 following the confectionery recall was NIS 482 million ($129 million) on sales, NIS 380 million ($102 million) on operating profit, and NIS 293 million ($78 million) on net profit. 

Legal angle
Motions for class certification were filed against the company relating to alleged harm caused to the public associated with the positive Salmonella findings in the Nof Hagalil plant and in some of the products.

In September 2023, the Jerusalem District Court ruled that four of seven motions for class certification would be struck out, and the other three would be combined. However, an appeal by claimants in one of the struck out motions was made to the Supreme Court and a new joint amended motion was submitted in April 2024.

A proposal for mediation on the joint motion was accepted. This process is expected to begin in October 2024.

Shai Babad, Strauss group president and CEO, said: “The group has ended 2023 with growth across most financial parameters, after a series of business processes that was set in motion during the year and will continue into 2024. The strategy update reflects the process of change which focuses on the group’s core businesses and the strengthening of the company’s financial strength, as we continue to build infrastructure for strategic growth drivers.”

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