FDA has found salmonella in chickpeas produced at a Sabra plant, jointly owned by Strauss and PepsiCo

The Food and Drug Administration (FDA) has found salmonella in chickpeas produced at a Sabra plant, jointly owned by Strauss and PepsiCo Global, in Virginia. Following the FDA's review and findings, the company received a warning letter in December. During the tests, FDA investigators found serious violations of production procedures, and determined that chickpea products produced in the factory were prepared, packaged or kept in non-sanitary conditions so that they could be contaminated or harmful to health. Sabra conducted a voluntary recall for products.
Strauss announced that following the FDA warning, an adjustment plan for the plant in Virginia was formulated, which was approved by the Sabra board of directors. The plan will reduce the company's production capacity. To reduce the damage, production activity will not be suspended at once, and adjustments will be made in such a way that Sabra's production will be on a partial scale, and return to full production capacity in the next quarter.
In addition, the plan will lead to an increase in production costs and costs. At this stage, the Company estimates that the expected impact on the Group's results is not material, but the Company estimates that the implementation of the said plan may have a material impact on the results of Sabra's operations, including a significant decrease in Sabra's sales and profitability in 2022. But these are only estimates and the actual impact depends on the response of Sabra customers to reduce product marketing and return them to the shelves, the pace and degree of success of the adjustments that will be made and no less than additional requirements that the FDA can raise later.
Sabra and Ovala, jointly owned by Strauss and PepsiCo, produce and distribute chilled dips and spreads through Sabra in the US and Canada, and through Ovala in Mexico, Australia, New Zealand and Western Europe, also through the Florentine brand.
As of the end of the third quarter of last year, Sabra is the largest chilled and dipped spread company in the US. 62% in the corresponding period last year In the third quarter of 2021, the market share was approximately 61.7%, compared with approximately 60.9% in the corresponding period last year.
Sabra sales decreased in 2020 by 6.4% and amounted to NIS 1.28 billion. The decrease was caused as a result of the Corona crisis, among other things by reducing the consumption of products outside the home. Operating profit decreased by 20.2% to NIS 126 million, as a result of a decrease in sales, a change in the product mix and an increase in expenses. In the past year, the company has faced an administrative shake-up, following the decision of Tomer Harpaz, the company's CEO, to resign after 3.5 years in office. Bergstein, who came to the position from Seventh Generation, a subsidiary of Unilever, became the company's first non-Israeli CEO.
The adjustment plan that the company is required to carry out, following the audit conducted by the DFA at the plant, comes at the end of two challenging years, also in the operational aspect of the group's spreads activity.
The company, still had difficulty in the third quarter of last year recovering from the corona crisis. Sabra faced a slight 1.3% increase in sales in dollars, which in translation to the shekel showed a decrease of 4.3% to NIS 313 million, along with a sharp decrease of 29.9% in operating profit due to an increase in production and transportation costs. In Ovala, the decrease in sales amounted to a sharper rate of 10.7% to NIS 40 million and the operating loss was reduced to NIS 1 million.