Strauss expands in Russian coffee market

Strauss buys out partner in Russia's Le Café, Instanta for $13.4 million.

Strauss Group Ltd. (TASE:STRS) subsidiary Strauss Coffee BV has acquired full ownership of Russia's Le Café and Instanta, after buying a further 49% in the companies for $13.4 million. Strauss said that the transaction would be financed by Strauss Coffee's own resources and that it was subject to approval by the Russian antitrust authority.

In late 2010, Strauss Coffee acquired the controlling interest in Le Café and Instanta for NIS 50 million, including shares, real estate assets, and in the establishment of a roast and ground coffee production plant. Russia is one of Strauss Coffee's fastest growing markets and it has made several investments there in recent years.

Russia and CIS countries are Strauss Coffee's second largest market, after Brazil, accounting for 20% of sales. Most of the Russian business is for instant coffee, in which Strauss Coffee has the third largest market share.

Strauss Coffee posted NIS 608 million revenue in Russia in January-September 2012, 23.5% more than in the corresponding period in 2011. Strauss Coffee's revenue was NIS 3.1 billion in January-September, half of Strauss's total revenue, after growing 11% compared with the corresponding period in 2011. Strauss Coffee is the world's fourth largest coffee company, and has 6,250 employees.

Strauss Coffee CEO Todd Morgan said, "This transaction enables Strauss CIS to further develop its manufacturing and supply chain regional foot print, along with enhancing its cost structure and operational effectiveness".

Strauss president and CEO Gadi Lesin said, "The roasted and ground coffee plant, which we completed last December, along with the instant coffee packaging facility, are becoming Strauss Russia's major infrastructure for production, packaging and logistics in addition to the freeze-dried coffee plant that serves us from Germany. All these facilities form an important foundation in the realization of Strauss Coffee's strategy as it continues to invest and develop capabilities in Russia and the CIS countries."

Strauss raised NIS 250 million in a bond offering on the TASE last week.

Published by Globes [online], Israel business news - www.globes-online.com - on January 27, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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