As dairy giant stumbles, Israel's social protest scores a key victory
Zehavit Cohen's resignation from Tnuva shows that local consumers are not apathetic, and that the social protest movement has managed to lower the cost of living.
Until recently we used to say that according to the Israeli system of democracy, we vote just every four years, while the rest of the time the government doesn't give a hoot about the citizens. We would even say that the public was actually apathetic and that there were no limit to the extent that local consumers could be exploited.
None of that is true anymore. On Sunday, it turned out that the Israeli consumer is capable of influencing the government's agenda even in the middle of its term. On Sunday, it became apparent that the social protest movement had managed to lower the cost of living. On Sunday, it also became clear that the local consumer is anything but apathetic, and that if anyone pushes too far in trying to take advantage of him - that individual will ultimately pay a heavy personal price.
Zehavit Cohen can continue to insist until the cows come home that she resigned as chairwoman of the Tnuva dairy of her own accord so that the company could have a full-time chair. But in fact, Cohen was forced to resign because she hurt Tnuva's reputation and its profits. The owners of the Apax investment fund that has a controlling interest in the company don't like having their profits hurt.
Cohen resigned because she damaged the reputation of the dairy giant, which came to represent monopoly control and became a target of protest. Tnuva's advertising aims to position the company as Israel's "home," but that image has been tarnished by the consumer boycott. Those who are boycotting are buying products instead from competitors Strauss and Tara, which drives the people at Tnuva crazy for fear that the public will find that the others' cottage cheese is not inferior to theirs.
Another reason for Cohen's resignation is the investigation the Antitrust Commission is conducting of Tnuva, due to suspicions that it failed to turn over certain information as required. That already says something about Cohen's mistaken judgment: She didn't understand that public pressure was growing. And the once docile commission has sprung into action and is even raiding Tnuva's offices.
In light of the pressure, Apax is now ready to forgo Cohen's leadership, to release the profit and loss statement it had apparently refused to disclose, and also to lower prices. Anything to stop the bleeding.
The cottage cheese protesters understood a thing or two about prices and knew they shouldn't take on all three major dairies at the same time. They knew that if the biggest of them, Tnuva, was taught a lesson - the others would get the message, too.
And in fact, when Tnuva announced it was cutting prices, Strauss quickly followed suit and Tara said it would take similar steps soon. Two weeks before Rosh Hashanah, Tnuva announced a series of sales promotions, but the students from Tel Aviv University who were involved in the protest rightly demanded permanent price cuts instead.
Did they get what they were demanding? The prices just announced by Tnuva and Strauss in many instances are actually higher than the current reduced prices, so maybe the two dairies are trying to pull the wool over our eyes?
The real solution to a situation in which a cartel controls the market is to open it up completely to competition from imports - duty-free and without any other restrictions. Only then will we see permanent price reductions. There is no other solution.