Israeli food manufacturer Strauss is returning to Germany after 15 years and entering the freeze-dried instant coffee industry for the first time.
The company announced last week that it had signed an agreement with German manufacturer Viva Coffee to operate its freeze-dried instant coffee production plant in the country for a period of five years.
The agreement includes an extension option for three additional years as well as a call option for acquisition of the company for €53 million (about $70 million).
According to Strauss, Viva Coffee will mainly produce freeze-dried instant coffee for Strauss Coffee's subsidiaries in Russia and former USSR countries. Strauss took a loan of €28.6 million ($38 million) from German banks to finance the activity.
Strauss Coffee officials estimated that an additional investment of some $3.5 million will be needed to improve the production equipment at the local plant.
Strauss pulled out of its coffee activity in Berlin 15 years ago due to financial losses.
Freeze-dried instant coffee, defined as "premium coffee", was first introduced to the Israeli public by Osem-Nestle, which currently controls the local market.
Strauss may import the coffee from Germany in the future under the Elite brand.