December 5, 2011

More Trouble in Tnuvaland

Tel Aviv … 2011 has been a tough year for Tnuva, which was forced to lower prices by a consumer revolt and for the first time reveal its financials in addition to facing an anti-trust investigation.  Now comes word from “Globes'' that Tnuva is considering closing its Romanian operations and pulling out of the country after having invested nearly $100 million in the enterprise. Says Globes: “Tnuva's Romanian dairy is causing heavy losses, and is one of the first issues that new chairman Shlomo Rodev is tackling. If Tnuva cannot sell the business, it will close it down. “Like other Israeli mega food companies, Tnuva ventured into Europe as part of its global expansion. Romania was Tnuva's first target for expansion, with the objective of serving as a bridgehead for international operations based in Israel with branches around the world, as the company's website put it. The 2008 global economic crisis hit Romania hard, and Tnuva's venture along with it. Tnuva could not compete against lower cost dairy imports, and Tnuva Romania Dairies' output was 50% more expensive per liter than local dairies. In the US, Tnuva took the side of a group of laborers fighting against Flaum’s in a 2008 dispute by suspending its distribution agreement with the Brooklyn-based company.