Brands Survey: Tnuva Losing Crown as Dairy Queen of Israel

Closer look shows the public is hopping mad, but still buying.

The cost to Tnuva of the public protest over the cost of living in Israel is palpable in the TheMarker's annual survey of the leading brands in Israel, conducted with research company MarketWatch. The weighted index for dairy brands, which asks to what degree consumers would recommend a company's products to their friends, places Tnuva last among the biggest four: Strauss is now in the lead, followed by Tara and Gad. Tnuva had traditionally been No. 1.

Make no mistake, people are still preferring Tnuva at the shops. But they're spitting mad at the company, which had the gall to brand itself "home" to Israelis, then - they perceive - stabbed them in the back.

Tnuva factory
David Bachar

Conceivably, Tnuva's sheer size could be blamed for swaying the index. The company has the biggest share of Israel's dairy market and the index is an indicator of potential future growth (customers recommend to their friends, more people buy ). Smaller brands, therefore, have an inherent advantage.

But the net figures place Tnuva in last place regarding cottage cheese, yellow cheese and milk, too. The net figure consists of the proportion of people who would recommend a company to their friends minus the proportion of negative recommenders.

In previous years Tnuva had always been No. 1. The public voiced a clear preference for its products.

Tara had suffered from the outright preference for the giant over the years. In the past, when it tried to drum up sales through special deals (volume or price ), consumers still reached for the Tnuva milk. Nevertheless, few would claim to discern a different taste in Tnuva's milk compared with Tara's.

To be clear, consumers are still exhibiting a clear preference for Tnuva at the stores. They just wouldn't recommend the company to their friends - which means, they're hopping mad at the brand that had been a comfortable household staple for decades.

Their anger becomes even more crystal clear thanks to yogurt, where Tnuva sells Yoplait, not its own product marked with its own logo. The proportion of people who would recommend Yoplait, in net terms, is higher than the proportion of people who would recommend Strauss' yogurt, unchanged from 2010. They clearly aren't associating Yoplait with Tnuva.

Not mad at Strauss

Consumers are showing no anger toward Strauss, though its market share is far bigger than that of Tara or Gad, and despite the fact that the company has been charging about the same prices as Tnuva. The proportion of people who would recommend Strauss is the same as the figure for Tara, and is much higher than the figure for Gad. Then again, Tnuva's slogan positions the company as a "home" for consumers. Strauss never purported to be their home. It offers pampering or health, not hearth. Health and pampering are luxuries; the home is supposed to embrace, not gouge. People feel Tnuva betrayed them by jacking up prices without taking them into consideration.

Heavy discount? You're not buying my heart

Consumer anger over the high cost of living in Israel (compared with Europe and the United States, for instance ) is also crystal clear in the brands survey section on supermarkets. Warm feelings for the entire category cooled year over year. Hardest hit were the brands Super-Sol and Blue Square, which runs the Mega chain of supermarkets. Consumers were angriest at the sub-brands Super-Sol Sheli and Mega in the City, neither of which is characterized by discount shopping.

The heavy-discount chains also failed to turn consumers' hearts warm and fuzzy - with one exception: Rami Levi Shivuk Hashikma leaped to lead the category at the expense of everybody else, including Makhsanei Kimat Hinam and Yesh, which is the Haredi branch of the Super-Sol group. Even Hatzi Hinam, previously a popular chain, has sunk in the ratings.

The Jewish Year 5772 is shaping up to be tough for the leading chains - Super-Sol, with its 37% market share, and Blue Square, which has a roughly 21% share of the retail chain sales market. Both have been losing customers to the private-label chains for years, and clients are expected this year to vote with their feet. The brands survey certainly discerned soured sentiment.

Last year, 35% of respondents said they would recommend Super-Sol to their friends, in net terms (minus the ones saying they wouldn't ). This year, the number was 17.5%. In 2010, the number of respondents saying they would recommend Blue Square was 14% in net terms. This year, it's 5%.

Rami Levi has taken on the trappings of an Israeli Robin Hood. He is widely credited with triggering the heavy-discount battles (his "chicken for a shekel" special sale is deeply etched in the collective memory ). He has excellent public relations and manages not to disappoint his customers, who respond with warmth that the rivals can only view with bitter envy.