"The cottage cheese crisis is on the scale of the silicon crisis, and it could have an even more dramatic affect unless it is properly handled," a Tnuva Food Industries Ltd. official told "Globes" yesterday.
The silicon crisis in 1995 was Tnuva's worst crisis, when it was found guilty of putting silicon in long-life milk in violation of health regulations. The company paid with a large class-action lawsuit.
"Globes" has obtained figures that sales of Tnuva cottage cheese have fallen 25% in quantitative terms. A former Tnuva manager said, "Tnuva has never had such a precipitous drop in cottage cheese sales in its history. There is no such animal. Cottage cheese is subject to inelastic demand and Tnuva's production line works round-the-clock to produce it. This isn't a game."
Tnuva has been trying in the past few days to estimate demand for cottage cheese in response to the consumer boycott, in order to minimize damage. Cottage cheese is a very sensitive product is an especially sensitive product with a much shorter shelf life than some other dairy products, such as white cheese. Any change in consumer behavior requires advance planning.
The sources also said that Tnuva was considering lowering prices on some products, on the assumption that a prolonged protest could have severe consequences, especially if the government reimposes price controls on products. Granot Farms chairman Itzik Badar said that if Tnuva did not lower prices, the regulator would have to step in.
In an attempt to halt falling cottage cheese sales, there have been reports that Tnuva has approached yeshivot offering to sell them cottage cheese at half the regular price.
Published by Globes [online], Israel business news - www.globes-online.com - on June 23, 2011
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