It's easiest to resolve a crisis after the event, but when a media storm explodes you have to gamble. Tnuva gambled that the cottage cheese ruckus would fade as quickly as it began. There had been plenty of news reports about high dairy prices in the past that made no stir. So Tnuva hunkered down and waited for the storm to blow over.
But the wind built up into a hurricane. The smell of sour cottage cheese permeated the entire public debate. Rage over the rising cost of living converged into outrage against Tnuva and led to a grassroots boycott the likes of which had never been seen in Israel.
For days, battered by headlines, Tnuva's management considered whether to capitulate and cut prices. Many consultants urged them to, but management decided to wait. It made sense: Voluntarily lowering prices would be tantamount to admitting they had been robbing consumers for months and could still turn a profit at a lower retail price.
Tnuva prayed for salvation to come from the regulator, like the mobile operators before them, and force it to lower prices. But allowing dairy imports is not trivial; the politicians didn't want to bring back price controls; let the public howl against Tnuva, not the government, they figured. Tnuva chairman Zehavit Cohen's plea to regulate pricing together fell on deaf ears. Tnuva and Cohen became targets.
The worst was when Nochi Dankner, who owns Cellcom, Super-Sol and any number of other companies, remarked that prices were too high. (If he thought so he could just lower them.)
Super-Sol indeed jumped on the bandwagon and yesterday morning announced it was cutting the price of cottage cheese. When Tnuva bowed yesterday and said it would reduce its price, Super-Sol hastened to say it had been first.
Ofra Strauss, chairwoman of Strauss Group, says the people have lost faith in the business sector. To restore that faith, "We have to ask ourselves questions. One is whether we're using our power properly," she said.
Here lies the problem. Tnuva forgot to ask if it's using its power properly. With calculation, Tnuva raised prices of staples that had been relieved of price control in order to maximize profit. Now it will have to spend millions on rebuilding its good name.
Its betrayal of Israelis was the worst kind, that of a family member. After consumers barred the cheese from their kitchens, they won't be in any hurry to embrace the company that makes it.
What about Strauss? It also raised prices in the last year, in some cases by more than the cost of its inputs. Strauss has so far chosen to toe the line Tnuva drew in the cottage cheese and did not provide a cheaper alternative.
Instead of competing through price and trying thereby to increase market share, Strauss improved its balance sheet. Yesterday too, three-plus hours after Tnuva, it announced: "Since the authorities have not acted with the requisite speed to create a comprehensive move for the consumer's sake, to build a basket of products affordable to all over time, we have decided to lower the price of cottage cheese ..." That's today. What the morrow will bring remains to be seen.
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