As Regulator Demands Reports on Profits: Stores, Dairies Clash Over Who's Creaming Off the Big Profits

Supermarket chains say figures will prove that they are barely making profits on dairy products.

The Agriculture Ministry's demand that supermarkets reveal their profit margins on dairy products will simply prove it's the dairies and not the stores that are raking in the bucks, say supermarket sources.

Last week the ministry sent the dairies and the stores a letter, giving them until the end of May to report profit figures for products including fresh milk; cream; white cheeses, including Eshel, labane, cottage cheese and sour cream; puddings; and yellow cheese.


This is part of the ministry's response to last summer's cost of living protests, which began as a boycott of Tnuva cottage cheese. The product, formerly under government price supervision, became significantly more expensive over the past few years.

Most of the private supermarket chains said they would have no objection to revealing their figures, since this would prove that they were barely making profits on dairy products.

"We'll be happy to give them our profitability figures on dairy products since the time has come for them to understand that those who are earning millions are the dairies, led by Strauss, and not the supermarkets," said Adi Zim, one of the owners of the Kimat Hinam supermarket chain. The store's gross profit margin on dairy products is 15% to 16% before salary costs, he said.

Others noted that the big publicly-held chains, Super-Sol and Mega, probably had higher profit margins because of the high markups at their stores within cities. But Rami Levi, of Rami Levi Shivuk Hashikma, estimated that these stores' profit margins were probably no higher than 26%, which he termed not particularly high given their higher costs.

Sources at dairies disagreed. One senior sector source said the figures would indeed show that supermarkets are making more money from these products than dairies are.

However, the truth may emerge only if the supermarkets are specific in their reporting, he added.

Mega stated that it would respect the regulator's decisions, while Super-Sol declined to respond.