Having spent the last year doggedly plugging M?ller dairy products imported from Germany, Tara is staging a comeback of its own house brand. The dairy company revealed Tuesday that it's starting a revamp: Expect a new logo, slogan and packaging too, as well as bright smiles by sales agents at retail centers as they plug the company's good old wares.
Tara is investing up to $2 million in the makeover. Top people at the company, which is owned by the Central Bottling Company ("Coca-Cola Israel"), says the company will remain focused on dairy, in which Tara is a major player. That distinguishes it from the competition, management explains.
"Even though we're the third player in the market by sales, we're the only ones who remained loyal to dairy for 66 years. The rival companies, Strauss and Tnuva, are giant concerns that operate in a wide range of areas, such as coffee and chicken," says deputy chief executive Harel Chaikin.
Management firmly denies that the troubled economic times are what drove the company to focus on basic products of its own rather than the premium M?ller brands.
In the world of dairy, one must distinguish between "basic" products like regular milk, and premium products, such as enriched milk or soy milk; regular soft white cheese as opposed to chive-and-salmon flavored cream cheese; simple unflavored yogurt versus fruit-flavored brands and puddings. Think of "basic" as commodities and "premium" as "something added."
The timing for a return to basics seems perfect. Consumer confidence is cracking as layoffs spread across the land. But while admitting that the timing is fortuitous, Tara chief executive Aran Elsner says that in fact, the makeover has nothing to do with the economic crisis; it had been in planning stages well before the trouble arose.
Also, Elsner says, there's no consensus that crisis necessarily sends people reeling back to basics: Some take comfort in buying premium pudding, he says.
Basic products comprise 60% of Israel's total dairy market, Elsner says. There's plenty of room in that niche for three players (Tnuva, Strauss and Tara).
Dairy isn't high-tech, Elsner says. It's a growth industry but it isn't going to grow by 30% a year- or contract by 30% a year for that matter because of economic crisis. People have to eat.
They do, and Israel's dairy industry turns over NIS 7 billion a year. Tara invested a cool $5 million in promoting M?ller from February 2008. The brand did make an impact, achieving a 16% share of the flavored-yogurts market. But devoting its budgets to pushing M?ller may have cost Tara dearly when it came to products in completely different categories. Not pushed, their market share fell.
In soft cheeses, for example, in 2008 Tara had a 10% market share (in financial terms), down from 2007. Moving on to cottage cheese, Tara had a 14.5% share of the market in 2008 - down from 16% in 2007.
Also, while M?ller was a success, it remains third in its category, far after Tnuva's flavored yogurts (45% of the market, in terms of sales, according to the Nielsen rating company) and Strauss (37%).
All in all, though it's a well-known company, Tara has remained a relatively small player with 8% of Israel's dairy market in 2008, up from 7% the year before. Tnuva grew to 54% of the market last year, up from 53%, while Strauss fell from 22.5% to 21%.
Elsner isn't worried that in some areas, Tara is losing ground.
"Tara as a dairy has preserved its market share," he says. "We grew in the category of milk and fell back in other categories, but we added the market share of M?ller."
Chaikin adds: "It is trivial that in a year when you are focused on a launch, that's where your management attention goes, rather than to other directions. I believe that next year, we'll be better prepared. We have set up separate teams for M?ller and Tara, and focus and resources will be routed as necessary next year."
No, Tara has no intention of neglecting or abandoning the M?ller brand, Chaikin says. The dairy company will continue to promote it, as it did in 2008. "We haven't finished with the M?ller launch," he says. He is also perfectly confident that Tara can handle the double-barreled attack on the market, investing in itself and in M?ller too.
Elsner won't reveal whether Tara has made back the money it put into M?ller's launch so far (actually, he says, "We have no idea if we made back our investment yet"), and says it's advancing as planned. No, Tara hasn't suffered an operating loss on M?ller, he says.
"M?ller built us a basis for other categories, and it isn't that the brand has been wiped out along with the investment," he says. "If when we're sitting here in 2010 they say we're a quality dairy, I'll say we returned our investment."
Yet despite the heavy investment in M?ller, it seems unable to compete with the premium brands of Tnuva and Strauss.
Chaikin: "We believe M?ller still has places to go. We've already got a quarter of the institutional market for fruit [flavored yogurt] and hadn't expected to achieve that much. Each launch has its initial phase, only after which are innovations and expansions added."
What market share do you aspire to achieve in 2009?
"We don't declare our targets publicly," says Chaikin. "Our goal is to continue to grow and to be perceived as a good dairy."
As good as M?ller, Elsner adds.
Will you settle for remaining Number 3 in the market, after Tnuva and Strauss?
Elsner: "It's enough for us to be a quality Number 3 that meets consumer needs. In a market of NIS 7 billion, being the third player can be very good."
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