Bethel Finance: Protests fail to dent Tnuva's market share

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Bethel Finance news:
In the wake of the severe shocks that the cottage cheese boycott dealt the dairy market in 2011, it turns out that the market power of Tnuva Food Industries Ltd. was only marginally affected. Moreover, as the cottage cheese boycott fades into history, its impact on Tnuva has waned, while Strauss Group Ltd. (TASE:STRS) has become vulnerable. Tara Dairy is an exception; it was the big winner from the boycott, strengthening its market share.

Israel's dairy market grew by 3.2% in financial terms in 2011, mainly because of price hikes. Dairy sales rose to NIS 7.6 billion in 2011 from NIS 7.36 billion in 2010, according to figures from Storenext.

Tnuva's market share in financial terms fell from 56.9% in 2010 to 56.8% in 2011. Israeli consumers spent NIS 4.13 billion (in retail prices) on Tnuva brands in 2011, 3% more than in 2010.

Tnuva's market power means that it has no replacement for now, and Strauss and Tara Dairy cannot meet demand instead of Tnuva, because of their limited production capacity.

It seems that the focus of the social protest, which has moved from Tnuva to Strauss, ultimately harmed Strauss, whose market share actually rose at the start of the protest. However, its market share fell to 22.9% in 2011 from 23% in 2010.

The drop in Strauss's market share was due to the consumer boycott, which targeted the company's core products where prices and margins were relatively high. Another reason was the increase in cheese sales at deli counters, where Strauss has no business.

Sales of Strauss brands grew by 2.7% in 2011, less than the growth rate of the market as a whole, to NIS 1.74 billion in retail prices.

Tara Dairy, although it is owned by the country's fourth largest food company, Central Bottling Company (Coca-Cola Israel) Ltd., emerged strengthened from the price protests, and its market share rose to 10.3% in 2011 from 9.8% in 2010. The company also achieved the largest growth in sales of its brands - up 8.5% to NIS 782 million in 2011.