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Repercussions from Social Protests of Dairy Prices Continue to Mount

Idele Ross, KT Israel Bureau Chief

Jerusalem... The social protest driven discounts on dairy products have come to an end as the country's main dairies discontinue the economy size containers and special deals.  A survey by the Calcalist business newspaper found that while cottage cheese prices are remaining low, yogurts and soft cheeses have gone up significantly in price now that the mass demonstrations against the rising cost of living have gone into hiatus.  Sales of cottage cheese, one of Israel's most popular foods are back to normal after dropping in the third quarter of 2011 because of the public boycott of high prices. A Neilsen survey found that food prices were up 3.2 percent in 2011.

Now it is the workers who are paying the price of the social protests.  Layoffs are taking place at several of the country's dairies in response to weak sales and lower profits during the summer and fall months. The Strauss Group has begun downsizing.  Scores of workers are to be laid off as the dairy says it is streamlining.  Strauss said that "in light of recent changes the company is reassessing its strategy and changing needs." Strauss Group is Israel's second largest food manufacturer after Tnuva and before the Osem Nestle group.  The company employs 6000 workers in Israel and 7000 abroad. The Calcalist newspaper also found that Tnuva is downsizing and firing employees from its food division and dairy in the wake of the social protests and consumer boycotts which affected sales.

Israel’s’ Antitrust Authority is investigating whether Tnuva exploited its monopoly position to raise prices. According to Globes, gross profit margins in the milk division rose by tens of percentage points after Tnuva came under the ownership of Apax, and that this sharp rise correlates with the price increases that Tnuva introduced in its milk products. The figures also show that the growth in the value of sales was mainly a result of the price rise, and not of real growth in consumption of Tnuva products.

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