Thursday, August 4, 2011

Strauss buys Russian coffee brand

Ambassador Coffee Brand

Israeli food company to pay $8 million for Ambassador brand, which includes instant freeze-dried coffee, roasted coffee and ground coffee, and another $ 2.4 million for non-compete clause on part of seller

Strauss is continuing to chip away at the ice encasing its Russia coffee sales: The company announced Sunday the acquisition of the Ambassador coffee brand which sells in Russia, the Ukraine and Moldova, in a deal valued at $10.4 million.

Strauss will pay $8 million for the brand which includes instant freeze-dried coffee, roasted coffee and ground coffee, and another $ 2.4 million for a non-compete clause on part of the seller – the Sucafuna group.
Strauss has designs to turn the Russian brand, which chalked up $10 million in sales in 2010, to a premium brand in Russia and other FSU countries. The company estimates that no further major investments will be required for this.

The acquisition follows the acquisition of the Le Café coffee brand announced by Strauss on late November 2010. Strauss acquired the La Café brand which recorded annual sales of $23 million, for $37 million and for an additional $6 million – acquired the brand operator's buildings and warehouse real estate.

Strauss decided to use the property for a logistics center for its coffee activity in the operator's country and for a roasted ground coffee factory, at an investment of an additional $6 million.

The acquisition comes in the wake of the 2010 reports that showed a standstill of Strauss's coffee activity in FSU countries. According to the financial reports, sales were bogged down at NIS 543 million ($158 million) in 2010. Revenues from these markets dropped to 7.9% against 8.6% in 2009.
Strauss Group President and CEO Gadi Lesin imparted in the company's announcement: "The Ambassador deal is another important step in Strauss' expansion in Russia and in other FSU countries".

Strauss Coffee Division CEO Todd Morgan said, "The acquisition of Ambassador brands consolidates our competitive standing in Russia and the FSU countries and constitutes a new level in the development of our instant coffee business following the acquisition of Le Café."

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