Sabra sees double-digit loss in sales and market share after hummus plant closure

Dive Brief:

• Hummus maker Sabra saw a 32.4% drop in sales during the first quarter after it temporarily halted manufacturing at its Virginia plant to implement production adjustments because of a recall linked to salmonella last year. As a result, Sabra’s market share fell from 61.7% in first-quarter 2021 to 45.8% in the most recent quarter.  
• Strauss Group, which has 50% ownership of Sabra as part of a joint venture with PepsiCo, said the hummus brand had resumed partial production and sales. It expects Sabra to return to full production capacity in the second half of 2022. Strauss estimated its share of Sabra’s operating loss in the second quarter will total $15 million to $17 million. 
• Sabra has faced issues with salmonella and listeria contamination before. Most recently, the company issued a voluntary recall in March 2021 of a single hummus item, and in December received a warning letter from the FDA highlighting several violations at the Virginia plant making the product.

Dive Insight:

Hummus has a lot of characteristics that make it well suited for better-for-you trends. Its ingredients typically include chickpeas, which are high in protein, fiber and various minerals. It’s also officially been embraced as mainstream, ranking among Americans’ favorite dips.

But as its popularity grows, hummus — and its components, including the sesame paste tahini — have also been implicated in different outbreaks of foodborne illness and recalls over the past decade. Sabra issued voluntary recalls of various hummus products in 2015 and 2016 due to potential contamination from listeria.

This most recent episode dates back to March 2021, when the FDA discovered a tub of Sabra’s 10-ounce Classic Hummus contaminated with salmonella during a sampling at retail. In response, Sabra initiated a voluntary recall of that product. After the FDA and a state regulatory agency inspected the hummus plant last April and May, they found several violations of Current Good Food Manufacturing Practice and Preventive Controls rules. In December, the FDA released its findings in a warning letter, along with this guidance:

“The Agency is very concerned about the findings of Salmonella in your finished product. We acknowledge your voluntary recall and proposed corrective action recommendations. However, in addition to correcting the deviations cited in this letter, we strongly recommend that you conduct an in-depth analysis of all aspects of your food safety plan and take robust corrective action in the event of an unanticipated food safety problem to prevent the reoccurrence.”

Sabra’s adjustment plan, detailed in Strauss Group’s last quarterly earnings presentation, required a shutdown of its Virginia hummus plant in February. The size of the impact is just now being realized in terms of its loss of sales, profits and market share. Recovering from the plant shutdown provides a sizeable challenge to Sabra CEO Joey Bergstein, who joined the company less than a year ago from personal care company Seventh Generation.

Strauss Group, an Israel-based food manufacturer of products including coffee, confections, dairy and pasta, has faced its own challenges in this area. In April, news site Globes noted a drop in its stock price after discovery of salmonella at one of its chocolate factories in Israel, which also resulted in a recall and plant shutdown. 

The financial impact of Sabra’s hummus recall is being revealed as another U.S. outbreak is causing problems. This past weekend, J.M. Smucker announced a voluntary recall of Jif peanut butter products due to potential salmonella contamination. It has triggered several additional voluntary recalls by retailers and food manufacturers who used the recalled Jif products in prepared foods, including major grocery chains and Fresh Del Monte, as well as chocolate makers. So far, the FDA has received reports of 14 illnesses and two hospitalizations in a dozen states connected to the Jif peanut butter salmonella outbreak. The first consumer lawsuit about the contamination was filed in a Georgia court yesterday..