Tnuva to sell cottage cheese in US
Food maker attempting to increase its penetration of American market by exporting most popular soft white cheese in Israel
Yedioth Ahronoth has learned that the company is working on a plan to penetrate the American market with the Israeli soft white cheese through a local dairy farm that will be trained by Tnuva as a subcontractor.
The US doesn't have a product similar to the Israeli cottage cheese. The most popular white cheese in the country is still Philadelphia cream cheese with 30% fat, which introduced a low-fat version only several years ago.
Tnuva's plan to "conquer America" was announced recently in a board of directors meeting, which decided that a thorough research of the issue would be submitted to the board's approval.
The board members were informed that in light of Tnuva's bitter experience with the dairy farm it built in Romania, which was shut down and cost the company NIS 10 million ($2.75 million) in losses, this time the penetration would be gradual. Therefore, in the first stage, the company will not set up a dairy farm in the US but will have a local manufacturer produce the cottage cheese and other products for Tnuva.
Today Tnuva exports to the US products worth just $8 million a year, which are designated for the kosher market. The volume of the kosher dairy products in the US is valued at $300 million a year, and it holds a huge potential growth for Tnuva. In addition, entering the US will provide the company with added value in terms of a public offering, by finally fulfilling the company's dream of making it abroad.
So far, Tnuva has not exported its flagship product – cottage cheese – due to its short shelf life. While the shelf life of soft white cheese is 35 days, the shelf life of cottage cheese – which does not contain preservatives – is only 14 days, and so it is not worthwhile flying it abroad, and the company would need a local manufacturer to produce it.
Small growth potential in Israel
The new initiative is part of efforts made by Apax, Tnuva's controlling shareholder, to find new growth engines for a company with a huge market share. According to the StoreNext rating company, Tnuva's market share of all dairy products in Israel rose from 57.1% in the first quarter of 2012 to 58.9% in the first quarter of 2013. Such a large market share essentially stops the company from making any significant growth in Israel.
Strauss, according to this ranking, had a market share of 21.4% in the first quarter of 2013, while Tara captured only 9%.
Tnuva's growth potential is even smaller when it comes to cottage cheese. In the first quarter of 2013, the public resumed its consumption of Tnuva's cottage cheese following the social protest in Israel, and its share in the total sales of cottage cheese in Israel rose from 65.9% in the first quarter of 2012 to 71.7% in the current quarter – a market share considered unprecedented in other products.
The company's activity in the US is overseen by Tnuva USA CEO Yoram Behiri. A year ago, the company began advertising its products in the US for the first time, including on the Fox network and the Food Channel, in a bid to expose the American consumer to the Tnuva brand and to the wide variety of hard cheese it exports to the US market.
However, while Strauss is highly active in North America in general and in the US in particular, with the Sabra and Max Brenner brands, Tnuva's activity in the US is relatively undeveloped.
Behiri has said in the past that "Tnuva USA has excellent business results and positive feedback from our consumers, and it is growing by dozens of percentage points every year. Tnuva is the leading company in Israel, and that obligates us to make Tnuva USA the leading company in the kosher market in North America."
