Tempest in a Tub: Israel’s Cottage-Cheese Wars

Israeli_Dairy_Products_in_SupermarketImage Via

Price of breakfast staple prompts boycott call

TEL AVIV (MarketWatch) — It all started with a tub of cottage cheese — more specifically, an 8-shekel tub of cottage cheese, and, yet more specifically, the 8-shekel tub of cottage cheese that got the Israel public, well, curdled.

This is an expensive country and a small economy, and Israelis are used to paying more for both imports and domestically produced goods. But the near-doubling of the price of cottage cheese in recent months prompted someone to open a Facebook site calling on Israelis to boycott cottage cheese in July.

The outrage speaks to a number of things here: worldwide commodity-price increases, Israeli consumers’ lack of choice, and the touch-and-go relationship that many people here still have with the concept of commercial competition.

“Cottage cheese is such a basic consumer product. The price has reached 8 shekels. Don’t buy it for a month,” the Facebook site’s heading says. That’s about $2.32 for a 250-gram (or 8.8-ounce) tub. The Facebook page’s mission, the owner says, is to ensure that, for the month of July, cottage cheese “stays in the stores and spoils until they lower the price.

“If we don’t get past our desire for and momentary satisfaction of buying cottage cheese, we will never succeed in lowering the price to a realistic price. Please include [the effort] on your [Facebook walls] so that everyone joins and won’t buy cottage cheese in July.” At this writing, more than 71,000 people had joined that Facebook page.

Israel has opened a number of aspects of its economy over the past decade or so. One particularly thorny issue is that of government price controls. The government has lifted price controls over the years; the Israel Consumer Council says the authorities stopped setting the price of 5%-fat cottage cheese about five years ago. But a major problem here is the industry’s structure, which is dominated by three major dairies: Strauss, Tara and Tnuva.

In the narrow financial sense, analysts say, the strong local currency should have kept prices in check. Israelis “expect, justifiably so, that the continued rise of the shekel would cause prices to drop,” writes Sever Plocker, a prominent financial writer for Israel’s biggest daily, Yediot Achronot.

“So it has happened in the past. The devaluation of the shekel caused inflation. The strengthening of the shekel caused the opposite of inflation. But in 2010 and 2011, everything went wrong. The shekel stayed strong and inflation stayed relatively high.” Applied to cottage cheese, the price rises hit a nerve.

Israelis say cottage cheese is kind of an iconic food. It’s served at practically every breakfast. And its marketing here evokes home and family. A commercial for the cottage cheese of Israel’s largest producer, Tnuva shows a little girl running away from home. (Her house is painted suspiciously like the one on the Tnuva package.) She tries different foods in different homes, realizes that she misses what she had, and runs back into her mother’s arms.

The imagery then has her dipping her spoon into a tub of Tnuva’s cheese while the voiceover ends with this phrase: “There’s one taste you always feel at home with. Tnuva cheese. The cheese with the home.”

Israeli consumers probably have a right to grump. A spokesman for the Israel Manufacturers Association said the organization is still developing a response to the public furor.

“I compare prices” for similar products “and they’re all the same, with a 20 agorot difference,” says Hanna Issler, a nanny from Herzliya, another Tel Aviv suburb, speaking generally about food shopping in Israel. A shekel, valued at about 29 U.S. cents, is equal to 100 agorot. Regarding cottage cheese, she says, “prices crawled up. A few more agorot, a few more. They didn’t think anyone would notice.”

Until someone started a Facebook page.

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