Labor Sanctions Cause Israeli Dairy Giant Daily Losses in the Millions

Workers halted distribution of Tnuva cottage cheese a week ago, at an estimated cost to the company of NIS 1 million a day.

Labor sanctions are costing Tnuva Food Industries an estimated NIS 1.5 million every day, and that sum is likely to jump to NIS 2.5 million in the wake of their decision last night to halt distribution of Yoplait yogurt.

Workers halted distribution of Tnuva cottage cheese a week ago, at an estimated cost to the company of NIS 1 million a day. On Tuesday they upped pressure by halting distribution of the company's Shock brand of chocolate milk, increasing the company's estimated daily losses by NIS 500,000.

Tnuva protesters - Moti Milrod
Moti Milrod

So far, these sanctions have cost the company about NIS 7 million.

Tnuva is expected to lose an additional NIS 950,000 for every day its Yoplait yogurts, made under license with the French company, are not distributed to sales points.

Workers are fighting for 5% annual raises. Negotiations with management broke down a week ago.

Yoplait will be gone from shelves starting tomorrow if distribution ceases, said Rami Levi, who owns the Rami Levi Shivuk Hashikma discount supermarket chain.

Shock chocolate milk and Tnuva cottage cheese have been missing from supermarket shelves for several days now. Products by competitors Strauss and Tara are also in short supply, due to the increased demand created by the lack of Tnuva goods.

Some branches of Super-Sol and Rami Levi have no cottage cheese or chocolate milk whatsoever.

Strass and Tara have been enjoying a nice spike in sales, reported supermarkets.

"Over the past week, sales of Strauss cottage cheese grew 65% and of Tara's, 45%," reported Levi. "Less cottage cheese is being purchased in general, partially due to the lack of supply. Cottage cheese sales are down 25%. Sales of Tnuva's white cheese were up 7%, because people were looking for substitute products after not finding cottage cheese, but this in no way compensates for the lost cottage cheese sales," he said.

Tnuva generally controls 70% of the cottage cheese market, said Levi.

The impact on chocolate milk sales has not been as extreme, because Tnuva controls only 35% of that market, while Strauss's Yotvata is the leading seller, said Levi.

The problem for Tnuva is not merely lost sales, said a source at a grocery chain.

"The bigger problem is if people continue buying competitors' goods, they could get used to them and continue buying them even when Tnuva's products return to the shelves," said the source. "Letting their customers try competitors' goods is a horrible blow - it's worse than [last summer's] cottage cheese boycott, because despite the protest people had a hard time seeing the product on the shelves and not buying it. Now customers simply have no choice."

A senior source in the PR sector said Tnuva was coming off as being poorly managed.

"Tnuva is having problem after problem," he said. "It's coming off as mismanaging its relationship with its consumers, employees and business partners. The company is giving off negative energy."