Dairy products. 'Dairies believe social protest behind us'

Protest dies out, dairy prices bounce back

Month after Tnuva ended its aggressive price cuts, Strauss and Tara following suit: By end of month, major dairies plan to discontinue economy packs, special deals on cheese

Gil Kalian, Calcalist|Published: 12.21.11 , 12:10

By the beginning of 2012, there will be no more active dairy-product deals in Israel's food chains, Calcalist has learned.

Since the end of August, when the social protest that swept the country drove down cottage cheese prices, the market has been replete with dairy-product deals by major dairies aiming to get consumers to fill their carts with their products and to cut into competitors' market stakes.

Pulling Out

Tnuva quits Romania dairy over losses

Ynet

Cooperative has lost more than $100 million since establishing dairy in 2007

Tnuva quits Romania dairy over losses

However, by now major dairy Tara has discontinued its economy size packs and Strauss will likely end its special deals by the end of the month at the latest. Economy packs that are still on the shelves are from stocks held by food chains but are not expected to be renewed once the year ends.

"They offered the deal because of the holidays and the protests, but the truth is that the dairies are dealing with rising costs and they eventually have to profit. They probably believe that the social protest is behind us," one major retailer told Calcalist.

A survey by Calcalist reveals that once Strauss ends its deal, prices of several of its products will dramatically rise, such as Danone yogurt which will cost NIS 14.8-16 ($3.9-4.2) for a pack of four yogurts instead of NIS 10 ($.2.65), for example.

The survey further revels that urban food chains are keeping cottage cheese prices down for the time being after they were cut during the social protest.

The low prices of cottage cheese call attention to the prices of soft cheeses. For example, Strauss's Ski cream cheese which costs NIS 5 ($1.3) each when buying a pack of two, will cost NIS 6.42 ($1.7) per unit starting 2012.

How have these deals affected the dairy market? According to market research firm Nielsen Global Services, figures for November dairy product sales have not changes much as compared with the previous month; hence, even if the special deals shrunk dairies' proceeds, increased sales set off the downturn.

As for cottage cheese, the third quarter showed a 20% drop in the sales of the product due mainly to the social protest; however, cheese was back to its normal sale levels in November.

Generally speaking, according to Nielsen, food prices were up 3.2% in the 12 months ending in December 2011 and the appreciation rate of food products dropped to 1.8% in the third quarter.