Cheese Prices Have Barely Dropped Since Import Duties Were Lifted; Tnuva Still Rules

Tnuva remains the dominant player in the local market for hard cheese.

Making cheese on a Tnuva production line.Gil Eliahu

The lifting last year of certain customs restrictions on imports of hard cheese has been felt only slowly and has not as yet resulted in a drastic drop in retail prices.

For imported cheese, the house brand of Rami Levy’s eponymous discount supermarket chain was found to be the cheapest, at 27.30 shekels per kilogram ($7.25)when cut or sliced to order at the in-store deli counter and 32.60 shekels per kilogram when purchased prepackaged in the refrigerator case.

The highest price was Tnuva’s, whose product is subject to government price controls. Its Emek variety cheese has been selling, on average, for 44 shekels per kilogram at the deli counter and 66.80 shekels prepacked.

Tnuva remains the dominant player in the local market for hard cheese. The company, now controlled by Bright Foods of China, has retained a huge share of the market and apparently is in no hurry to cut its prices as a result.

That market dominance is proof of customer loyalty to the veteran dairy company. Since the lifting of duties on imported cheese last year, Emek’s market share at deli counters dropped 12%, but Tnuva retained monopoly status in the sector with 53.3% of sales, far exceeding its competitors.

All one needs to appreciate Tnuva’s dominance in the sector is to recognize that Tara Dairy, which holds the No. 2 spot, has just 14.2% of the market, according to a presentation prepared for the Economy and Industry Ministry’s quota committee. The information is based on data from the Nielsen market research firm.

The new competition has only grabbed a small piece of the market, not only at the deli counter but also in the refrigerator case, where prepackaged cheese is sold.

Super-Sol, the country’s largest supermarket retailer, is also the biggest importer of cheese, making it in effect the third-largest player behind the deli counter, with a market share of 7.3%.

Next comes Rami Levy, with 2.9%, and Neto, the importer of Alma brand cheese, at 2.5%. Gad Dairy of Bat Yam, which only entered the market this year competing for customers of its cheese at deli counters, has a 0.9% share.

When it comes to packaged cheese, Tnuva has lost 4.1% of the market for its Emek variety, but still has a 54% piece of the market. Its Gilboa variety has an 8.7% share, compared with 9.1% before competition from imported cheese was opened up.

All told, Tnuva’s package cheese brands still have a 62.7% market share, down from 67.2%. Tara has also suffered little from the competition from imports. Its packaged Noam variety slumped by 4.1% to 14.9% but recovered this year, growing to 17.6%.

The information presented by the Economy Ministry shows how little the consumer has benefited in the form of lower prices.

Although Tnuva and Tara face new competition from Super-Sol, Rami Levy, Neto and Gad, the price of cheese from the refrigerator case has only dropped from 44.40 shekels per kilogram in 2014, before duty-free imports were introduced, to 41.10 shekels this year on average.

The comparable price of packaged cheese slipped from 69.70 shekels per kilogram on average in 2014 to 64 shekels this year. (All of the figures compare the period from January through August of a given year).