Strauss Group Hits New Profit Platform as Coffee International Margins Nearly Double
A New Profit Platform Takes Hold
Strauss Group's second-quarter report is less about a single beat and more about the confirmation of a structural shift. Group EBIT rose 42% to ILS 363 million, and net profit more than doubled to ILS 195 million, even as revenue declined 1.9% like-for-like on currency and green-coffee price pass-through. The margin landed at 12.6%, up from 8.3% a year ago. But the headline number that matters most is the management's own framing: “We see now that this is taking its turn.” — Shai Babad, Chief Executive Officer · 2026-08-12 That "turn" is the payoff from a three-year strategy built on doubling down on core brands, portfolio pruning, and a productivity program targeting ILS 300-400 million. Shai Babad, the CEO, called it a new platform of profit — one that he expects to be sustainable into the next strategy cycle.
Coffee International: The Star Performer
The clearest evidence of that platform is in Coffee International, where EBIT jumped 44% to ILS 148 million and the margin expanded from 6.7% to 11.1%. The driver is not just lower green coffee costs; it's a deliberate effort to maintain gross profit per kilo in Brazil regardless of commodity swings. “We are working very much to retain gross profit per kilo that we sell, and therefore, we believe that the absolute profit that we see from Brazil is a good platform, will remain and even grow.” — Shai Babad, Chief Executive Officer · 2026-08-12 Volume grew high single digits in Brazil, and the pending Yoki deal — which will diversify the non-coffee basket to nearly 40% of Brazilian sales — is awaiting antitrust approval. The company has been signaling this for a while; in May, Babad noted the correction in pricing would be passed through: “So the effect on the overall coffee business will be that there will be a continued correction in price.” — Shai Babad, CEO · 2026-05-20 Now the margin expansion shows it's working, and the Coffee International unit is genuinely a new engine.
Strategy Refresh and the Road to 2030
With the current strategy ending this year, management is set to unveil a 2027-2030 plan. The focus will shift from fixing the core to finding new growth engines, with an emphasis on AI, digital transformation, and further productivity gains. That pivot is grounded in the confidence that today's margin level is the new baseline. Tobi Fischbein, the CFO, put a number on it:
The company also guided that full-year EBIT margin will land at the higher end of its 10-12% target range. “We feel very, very comfortable that we will reach between 10% to 12% EBIT by the end of this year” — Shai Babad, Chief Executive Officer · 2026-08-12, Shai added. This confidence is underpinned by the confectionery turnaround, which contributed to Israel's strong performance. The prior quarter's comments on cocoa prices were also prescient: “So our expectation is that not only we can expect this quarter to move forward, we actually expect an improvement until the end of the year.” — Shai Babad, CEO · 2026-05-20 Confectionery EBIT is now on a path back to a 10% margin.Group EBIT reached a record ILS 363 million, up 42% year-on-year, with EBIT margin improving to 12.6% from 8.3% in Q2 of 2025.
Water and China: The Persistent Drag
The one sour note remains Strauss Water in China. Haier Strauss Water grew sales 2.6% in local currency but net income fell 14.3% on intense competition from Xiaomi and higher marketing spend. Management expects profitability to recover only by mid-2027, pushing back earlier hopes. The segment's Israeli business grew 7%, but the China drag tempers the overall picture. That said, the company is confident the new factory will cut costs and support growth. The strategic patience here contrasts with the urgency in coffee, but it reinforces the narrative that the profit platform is broad-based.
Overall, this quarter is a milestone: a food company that has been in turnaround for years now showing double-digit margins and a clear path to a new growth cycle. The margin trajectory, the pending Yoki integration, and the upcoming strategy reveal make this a name to watch.