Israel's Biggest Food Company Sees Its Share of Market for Dairy Goods Fall Below 50%

Decline comes after Tnuva drops discounting policy to focus on profitability

Tnuva dairy products
Ilan Assayag

The share of Israel’s dairy market held by Tnuva – Israel’s biggest food company – dropped below the 50% mark in August and took a further dip into September, data obtained by TheMarker from the market research firm Storenext show.

Tnuva’s share, which has been on the decline for the last several years, dropped to 49.1% last month from 50.1% a year earlier and 49.8% in August. The figures are collected by Storenext from checkouts at supermarket and minimarkets.

Tnuva’s losses have come as its No. 2 rival, Strauss Group, has seen its share grow to 25.5% last month from 24.6% in September 2016. The company has boosted sales from innovative new products like Donane Pro, a protein-rich yogurt. Shares of Strauss are up nearly 12% this year after adding 0.3% on Sunday to close at 66.75 shekels ($18.96).

However, Tara, the No. 3 company controlled by Central Bottling Company (Coca Cola Israel), has seen its market share slip to 13% from 13.4%.

Tara’s share has slipped even though it won the more stringent Badatz kashrut certificate at the start of August. The certificate pushed up its share of the Haredi dairy market sharply to 14.9% in September from 11.5% in July while Tnuva’s share dropped to 65.6% from 70.5%. Tara is still not offering Badatz products in all dairy categories.

Industry sources attributed the continuing decline in Tnuva’s market share to its decision not to discount its products as much as in the past as well as an absence of innovative new offerings. That has led shoppers to Strauss and to the tinier dairy Gad.

In an August interview with TheMarker, Tnuva CEO Eyal Malis said Tnuva was allowing its market share to drop as part of a wider strategy of improving profitability after a year of intensive sales and special failed to boost its market share. He said that even if Tnuva wasn’t raising its prices its policy of refraining from specials and sales effectively meant prices were higher than in the past.

“Market shares is a figure but it isn’t the holy of holies,” Milas said. “My job as CEO is ensure the company succeeds not just by the parameter of market share but other parameters. Tnuva has been contending in the past year an usually high increases in costs.”

Tnuva, which was acquired by China’s Bright Food in 2015, once controlled 60% of the dairy market. But Storenext data shows its share slid to 57.8% in 2013 and to 51.7% in the 2016. Strauss, meanwhile was losing market share, too, until recently, dropping from 26.1% in 2013 to 24.5% two years after before it began recovering. Tara enjoyed strong growth, climbing from a 9.8% share four years ago to 13.4% in 2016 before dropping this year, according to Storenext.