Hello everybody. Welcome to our third quarter 2021 conference call. All listeners are in listen-only mode right now. At the end of our discussions, you'll be able to ask questions. If you'd like to put the questions either in the chat box or send them to me on WhatsApp. I'd like to remind everybody that any statements that will be made here today are forward-looking statements, and the actual results may differ materially. Today with me are Giora Bardea, CEO and President of Strauss Group, and Ariel Chetrit, CFO of Strauss Group, and myself, Daniella Finn, Head of Investor Relations. Giora, please go ahead.
Good morning and afternoon, all. No question that we are experiencing very complex season or, you know, days. The combination of in some countries, in some geographies, the corona is almost over, or even people behave that it's over already. We see very nice GDP growth in many Western countries and some Eastern as well. Inflation, very high inflation in some countries. At the same time, we see unbelievable boom at what we call the labor market. People move. We know, I know Israel, United States, people move and change position and career almost overnight. At the same time, a set of very interesting kind of challenges when it comes to supply chain, inventory, delays on supplying materials, raw materials, spare parts. We see the increase, the inflation of raw materials and packaging goods all over.
Some of the climate crisis impacts many businesses, but mainly our business, and the coffee, green coffee is part of that. All together, it's a kind of perfect storm during the last half a year, and nobody knows how long it will take. We believe that we in Strauss, we navigate our business, our people, our commitment to the stakeholders, in a decent and positive way. Allow me very quick couple of words about our main business, and then Ariel will deep dive on the financial details. A bit about the group. We are very happy with what we call the momentum of the growth. 7% growth after a couple of years of stagnant growth, or even from time to time, it was negative growth. We are very happy on that.
Our financial stability and flexibility stay very strong. Yes, but at the same time, very complex. As I mentioned at the very beginning, how to enjoy, how to leverage the growth of the top line and to take it all the way to the gross profit, operating profit and net profit. Very challenging, and later, I believe, part of my review, and Ariel will deep dive, will share how we believe we can do. We have very strong home base, and more and more, we understand the importance and the critical position of our home base in Israel.
Our global journey needs the backbone, if you want, of the Israeli Strauss Israel, Strauss Coffee Israel, Strauss Water Israel, and we see the results that are very, very strong, which allow us to go and expand our business out of Israel and do a lot of innovation as well. We complete the quarter with ILS 300 million operating profit and ILS 200 million net profit. Yes, part of that comes from the kitchen, the food tech kitchen innovation that we have here in Israel, and later I will elaborate specifically about the ILS 52 million. For many reasons, hold on, change the slide. Just a second. Okay.
When we talk about Israel, in Israel, the growth of Israel, this is the fifth or sixth years that quarter after quarter, Strauss Israel are growing. This quarter, it's even more powerful since the food and beverage industry in Israel are declined. Since because of the corona, because of the holiday season, by 3.6%, and our Strauss Israel increased and grew 2.4%. We see a lot of new categories that meet the consumer needs and the consumer new trends that Israel grow on behalf of that. The market share of Strauss Israel, you know, I believe you remember, we check not just the brands and the categories, we check the total position of Strauss Israel in the food industry in Israel.
We increased 0.4%, which puts us at 12.3% of the total food and beverage. Very nice increase in EBIT. We improved the EBIT by 6.4%. Yes, I repeat again, not to hide it, there is some issue with the margin or the gross margin. The gross profit is okay, the margin eroded. Coffee still same true story about the momentum. Very nice momentum of the growth. The majority, very clear to see, comes from Brazil. You know, the amount and the proportion of the business in Brazil in the total coffee business is huge. The coffee business in Brazil doing very nice.
The total coffee company, if we excluded the currency impact, are 14%, and together with the currency, it's 20%. Very nice growth. Yes, in Brazil, and I'm sure you know, the hedge off on green coffee is very, very short, and it's a physical inventory. So Brazil suffered the first. Before any of our the rest of our business, coffee business, Brazil suffer or got the hit before all of them. Very soon, increased prices and made another couple of measures in order to protect the business. We can see unbelievable growth, both in volume and in value in Brazil. A bit about Sabra. In Sabra, there is some good news and some less good news.
The good news is that we see that the category is stagnant, because a couple of quarters before, we were a little bit concerned about the category decline, but now the category stagnant. We see growth of Sabra 1.3%, and we protect the market share, more than 61%. Yes, in Sabra, we still, let's call it, suffer or got hit by the coronavirus, mainly in our supply chain. In the factory, a lot of turnover of employees, a lot of changes in the production line in order to protect the people there. So we invest a lot of money. We lost a lot of sales that we were not able to produce and to deliver to the market. Therefore, you see the Sabra having still having a set of challenges.
We believe in the category, we believe in the product, we believe in the brand, we believe in our partner, and no question that the future should be much, much better. Strauss Water continue the momentum of amazing growth in Israel and in China, improving the operating profit and improving the installed base in Israel. As you know, when you put or install a machine in a family in Israel, it's for 36 months from the moment that we install the you see in the picture. It's very important for us not just to sell parts or service, but to install and to have better and higher household penetration.
China grew 9%, and the new factory already in China, in Qingdao, work almost in full capacity, and we believe it will help us with one of the major challenges in China, which is better technology and to move from OEM orientation or strategy to at-home technology that will allow us to be more premium product. Last but not least, the growth and innovation in business. Here, as I said before, we continue to invest in new initiatives or startups in our kitchen. Nowadays, we are having 22 different companies. As we already reported to the market on July, we had amazing round of Aleph Farms, raising almost more than $100 million.
We gain from a little bit the dilution, more than ILS 50 million that help us to this quarter to improve our operating and net profit. I will hand over to Ariel to continue from here.
Thank you very much, Giora. Good to see you, everybody. Good day to you all, and I will continue with a brief overview of the financial results for this quarter. Daniella, please interrupt if you don't see the presentation or do not hear me well when I move the slides. An overview for the third quarter and year to date, we can see that in the top line, as Giora mentioned, we are in a quite nice growth momentum, which is derived both by volume growth and especially in this quarter, price growth, mainly in Brazil, where we have increased our selling prices quite considerably, and we will see it later in the Brazil activity results.
This momentum is eroded once we look at the gross margins of the group, both in the quarter and the year to date. The gross margin itself is higher than in the previous period, but the gross profitability eroded in the quarter and in the year to date, mainly due to the very considerable increase that we are meeting in our different imports. We must say that the main increase, both in percentage and in monetary terms, is the increase of the green coffee.
When we look at the EBIT lines, quarter and year to date, we can see an increase in our profit and in our profitability, and it is leveraged into our net income, which both in the quarter and the year to date, increases by a higher percentage than the increase in the EBIT lines. When we look at the top line and our sales, we can see that our sales momentum comes from most of our segments. We can see that in Strauss Coffee, the momentum is both from volume and price increases in Brazil, totaling almost 12% this quarter. In Strauss Israel, 2.4%.
Like Giora said, the market, the food and beverage market in Israel declined by more than 3%, therefore, we are increasing quite materially in our market share. You should also take into consideration that the timing of the holidays this year was in such a way that we lost some sales in September and gained them back in October, i.e., the fourth quarter. Therefore, the normative percentage of growth is a bit higher. Different spreads, as Giora said, we are stagnant in local currency. I won't talk more about it because Giora already mentioned the different challenges that we have in Sabra.
In the water segment, we are growing almost 5%, continuing our very positive momentum with the innovation, a very strong base of customers in Israel. As you know, Strauss Water China is not incorporated in the sales, but rather 49% is our share in their net profit is incorporated in our equity profit line. But as Giora mentioned, we grew in China by 9% in sales this quarter, therefore, the momentum is really excluding Sabra across the board. We can see that in the different channels, we started to look at it since the coronavirus began.
We can see that we are continuing to grow quite rapidly in the retail channels, although the market is opening and the away-from-home activity is gradually but steadily going back to the levels that it was previously. The retail is still growing, at least for Strauss Group, and therefore we see it as a very positive sign. The away-from-home is recovering, not yet to the full normative level that it was before the Corona in 2019. Still around 15%-17% lower than the levels that we registered in 2019 previous to the Corona.
If we look at the gross profit, as Giora mentioned, we are growing in the gross profit only by ILS 4 million, therefore, our growth, the massive growth in sales eroded our gross profitability by almost 2% due to the steep increase of different inputs, materials, but mainly, as I said, coffee. If we look at the different segments, we can see that the erosion in gross profitability in Strauss Israel is relatively low, from 39.2% to 38.9%. There was, of course, an increase in the different inputs in Israel, raw materials, raw milk, energy, shipping, of course. This erosion was mitigated by two major facts.
First of all is the significant increase in sales both in volume and in market share, which was leveraged to the gross profit line, leveraging our fixed or semi-fixed manufacturing costs. The second mitigation was different optimization and efficiency programs that we have for automation in our factories, our plants. This helped us a lot to mitigate the erosion in gross profitability. When we look at coffee, most of the erosion, it's quite a significant erosion, almost around 3%, a steep percentage. Most of the erosion is due to the steep increase of green coffee prices. I remind you that our coffee green coffee coverage outside of Brazil is for longer periods, mainly 6-12 months, depends on the circumstances.
Therefore, in many areas, we are still, let's say, enjoying benefiting from lower and older prices of green coffee. In Brazil, our coverage is almost immediate, only two or three months physical coverage, and therefore, most of the decrease in gross profitability came from Brazil this quarter and also the previous two quarters. We can see that this was the main effect on erosion of the gross profitability of the group. Also in the other two segments, they are much smaller, but we can see an erosion in gross profitability both in Sabra and Strauss Water due to the increase in the input prices. When we look at Brazil, it's important to understand what's happening there.
We can see this quarter a beginning of a turnaround in profits. Not in profitability, but in profits. As we've seen in previous quarters, but we see it in this quarter very significantly, we are increasing our top line, not only by volume. We are increasing our top line in volume for many, many quarters now, and we have talked about it for the past few years. This is very good news, of course, because the business is really growing. This quarter we are increasing our top line also by increasing our selling prices. Our input prices in Brazil rose by close to 60%-70% these nine months, and we have increased our selling prices by a few dozen percent increase in selling prices.
We have not increased the prices enough to mitigate the whole input green coffee price increase, but at least some of it, and you can see it in the results here. The gross profit grew absolutely speaking in monetary terms by BRL 50 million. These are data in 100% in local currency. BRL 50 million, we can see that BRL 346 million for this quarter is the highest gross profit that we've seen in Brazil. I think ever, but you can see here the previous third quarter for the last three years. In monetary terms, we have increased our gross profit quite dramatically. Still, we haven't increased the prices enough to maintain the gross profitability. Therefore, the gross profitability is still eroding.
What we look at as a very, very positive sign is that our monetary gross profit is growing and, as we said, it's a process. It's a gradual process, and this is what we've seen in Brazil in the past 20 years when there were up cycles and down cycles, and we're starting to see the up cycle now in the profit itself. You can see that the gross profit went down or was leveraged down to the EBIT profit, BRL 101 million. Quite a high number compared to in monetary terms to previous years' third quarter, but still the profitability is lower.
The conclusion for the third quarter is that we are progressing in the right direction in Brazil. When we look at the EBIT line for Strauss Group, we can see that our profit is ILS 300 million compared to ILS 250 million in the third quarter of 2020, a steep increase in profitability, but if we look at the different causes of profit and profitability, we can see that they are varied. In Strauss Israel, we see a nice increase continuously over the many past quarters, as Giora said, a nice increase in profit and in operational profitability this quarter. In Strauss Coffee, as I said before, the main cause is Brazil.
We can see also a decline in profitability in Strauss Coffee Israel. This is mainly due to the holiday seasonality, as I explained before in Strauss Israel. It also affected the Strauss Coffee Israel, but mainly the erosion came from Brazil in terms of profitability. The profit itself starts to, let's say, meet the same numbers that we had last year due to the phenomena that we've seen this quarter in Brazil. In Sabra, we can see a decrease in profit and profitability, and hopefully, we see a starting, let's say, a beginning of positive signs for an improvement in next year's Sabra results. In Strauss Water, we continue to see very strong profit results and profitability.
You can see from the materials if you look, deep dive into them, there is an increase in the profit and profitability in Strauss Water Israel, and a decrease in profit and profitability in Strauss Water China. The decrease in Strauss China is mainly due to a one-time tax benefit that we received in the third quarter of last year, and we did not receive this year. Still, the profitability, the net income profitability in Strauss China this quarter is almost 12%, 11.9%, which is quite high, and we are quite satisfied with these areas of net profitability in China. Therefore, this quarter we see China's results as very satisfying. Of course, there is the food tech results.
We already reported in July that we will see a substantial profit from the fundraising in Aleph Farms, the cultured meat company, and we can see this profit registered in the third quarter, which increased quite nicely our operating results. As we said before, we see our food tech activity as a very promising activity for our future to increase the value of Strauss Group in so many areas, and also in monetary terms, of course, economic value in the future. You can see our disclosure in the MD&A about the fair value of that 22 company portfolio that we have. You can see that steadily it is increasing every quarter.
We just want to mention and to remind you that there will be a volatility in profits and losses from the food tech activity in the future. All in all, we do expect to see more profits than losses in this activity in the future, therefore also a positive, let's say, accounting contribution to our results. Net profit is mainly contributed by the operating profit increase. We can see an increase in the net profitability to 8.9%. The other items, finance expenses and taxes are without any material changes compared to the third quarter of last year.
Therefore, I will not go through it, and I suggest that I stop my presentation at this point and let you ask any questions that you have for our third quarter results.
Thank you, Giora and Ariel. I have a question that was passed from Chris Riemer from Barclays Bank, and Chris has two questions. The first one is regarding raw material costs, what's the overall impact, and how do you see the potential for passing on costs in the current environment?
Regarding the raw material cost itself and the cost increase, we did not give monetary disclosures regarding this increase. We gave a detailed table of the percentage increase. You can get the idea. If you want to guesstimate, let's say, the input cost increase in this quarter, you can just take the 2% erosion in our gross profitability. If the sales for this quarter were roughly ILS 2.3 billion, 2% of it is ILS 66 million. Of course, we have mitigated, as I explained before, this erosion quite nicely with different measures, as I explained, this quarter.
You can double it roughly to guesstimate the area of a cost input increase for this quarter. You know, anywhere between ILS 120 million to ILS 140 million, ILS 150 million will be a good guesstimate. This is the best estimate that I can give you without disclosing materials and the data that we didn't disclose in our financial statements. With relation to how we are dealing with it or do we believe that we can pass it through in the future, we cannot relate to our future plans and estimates with relation to that. What I can say is the following.
First of all, you've seen, and we explained exactly what we have done in the previous three quarters, and you can see that, at least for now, as we're speaking, November 16th, we are passing through our price increases, and we are not tackling any significant, let's say, challenges. As you know, it's a global phenomenon, therefore, we are not the only ones that are increasing our prices where we have done it. This is the first thing to state as a fact, for now, of course, there's no assurance that we will not meet any challenges in the future, but we can. As I said, we cannot talk about future plans regarding pricing.
The second thing that I want to say is look at the history. At least we explained and we showed you very well the history in Brazil and in many other coffee countries in Europe and around the world. When we look at the past 20 years, we can see that both in steep decreases and in steep increases in green coffee prices, the market eventually adapts. The market prices to consumers eventually adapt and close the gap if it's a downturn or even if it's an upturn. Therefore, we can only say that the very long history in the past 20 years teaches us that markets adapt, and we will have to see what happens this time.
As I said, for the third quarter, we have positive signs of increasing profit absolute numbers, and we see it as a positive signal.
Thank you. The second question from Chris Riemer from Barclays. Specifically in Sabra, there was a sequential improvement in operating margin. Is there anything that still needs to be addressed in the operations, or should we see improvement from here on?
Yeah. Thank you. Please allow me to make a little bit wider picture about Sabra, and it will be much more clear. You know, we in Israel, during the last 20 years, we are this small company, globally very strong in Israel. The journey to go out of Israel and to expand the business internationally, having ups and downs all the way. I remember the days of everyone in Israel and out of Israel look at us as crazy when we talk about selling coffee to the Brazilians. I remember the days about talking about selling water in China. Nowadays, people ask the same, not you specifically, but we ask ourselves about selling hummus in the United States. It's very similar. We are here for long journey.
We believe, and we just finished now a project that we got some feedback both from Interbrand United States and McKinsey. They all talk about a brand which is much, much bigger, stronger, wider than the product. Huge potential. We talk about plant-based product. We talk about healthier product. With hummus is a convenient food and snacking. We have all the ingredients, let's call it, in order to build a sustainable business. The journey in Sabra started very nice, and we jumped very fast from the day that we bought Sabra and then Pepsi joined us to unbelievable market share and distribution. I'm sure that you, some of you may be having the experience about United States market share. Our distribution is 87%. Market share, 61%. It means that in the United States, there is still huge potential.
Yes, it's all about better and excellent execution. Nowadays, because of a lot of very nice, you know, reasons and explanation, we don't do good enough, but we will do. We have all the building blocks to make Sabra much bigger and more profitable. We believe 100%, and Pepsi together with us ready to invest time and money and what we need in order to make it or bring it back to the highway.
Okay. If there are no further questions, we will end this call. A recording of this call will be available on our website. Thank you all for joining us today, and we look forward to seeing you next quarter.
Thanks. Goodbye.
Bye-bye. Thanks a lot.
Bye, everybody.