Israeli food and beverage maker Strauss Group is setting up a joint venture with Virgin Group's Virgin Green Fund to sell Strauss Water products in England and Ireland and later on in France, Australia and South Africa.

The joint venture, in which Virgin Green Fund will initially invest $7.5 million (4.8 million pounds) and Strauss Water $2.5 million, will be based on Strauss's existing drinking water operations in England, Strauss said on Sunday.

Following the investment, Strauss will own 58 percent of the joint venture and Virgin will hold 42 percent.

Virgin Green Fund has an option to invest another $6.2 million while Strauss can invest another $3.8 million, which would bring Strauss' stake to 51 percent and Virgin to 49 percent.

The partnership with Virgin is of great strategic importance for the continuing development of Strauss Water as a major engine of growth for the company in coming years, Strauss Group President and CEO Gadi Lesin said in a statement.

Under the agreement, Virgin will grant Strauss Water a 30-year licence to use its brand name for marketing and sales in exchange for royalties to be paid by the joint venture, which will purchase products and services from Strauss Water.

Strauss Water makes drinking water solutions that purify and provide hot and cold water for in-home and away-from-home markets. It has a joint venture with Chinese home electronics firm Haier <1169.HK> called Haier-Strauss Water to sell high-quality drinking water in China.

Strauss, the second-biggest food company in Israel, is the world's sixth-largest coffee firm.

(Reporting by Tova Cohen; Editing by Elaine Hardcastle)