Israeli supermarket Shufersal rejects foodmaker Tnuva's price hikes

Tnuva said that it plans to raise prices on mostly dairy products by an average of 4.7% starting next Tuesday.

 The logo of dairy firm Tnuva is seen at the company's logistic centre in the southern town of Kiryat Malachi May 22, 2014 (photo credit: AMIR COHEN/REUTERS)
The logo of dairy firm Tnuva is seen at the company's logistic centre in the southern town of Kiryat Malachi May 22, 2014
(photo credit: AMIR COHEN/REUTERS)

Israel's biggest supermarket chain Shufersal has rejected price increases proposed by the country's largest food maker Tnuva at a time when both raw materials and consumer costs are soaring.

Tnuva, owned by China's Bright Food and Dairy Co 600597.SS, said it plans to raise prices on mostly dairy products by an average of 4.7% from next Tuesday.

The move comes after a general election last week in which nearly half of those polled said they considered the cost of living the most important issue.

Shufersal, whose hundreds of stores across Israel and large online presence give it significant market clout, has already rejected price hikes by smaller dairy rival Tara and Unilever's ULVR.L Israel unit, leading to their products being taken off its shelves.

What are they saying?

 INSTEAD OF an abundance of foods like meat, chicken, eggs and dairy, try trading most of that for more fruits, vegetables, whole grains and legumes, says the writer. (credit: YONATAN SINDEL/FLASH90) INSTEAD OF an abundance of foods like meat, chicken, eggs and dairy, try trading most of that for more fruits, vegetables, whole grains and legumes, says the writer. (credit: YONATAN SINDEL/FLASH90)

"We know the consequences, that we are not going to get their supply," said a Shufersal official who asked not to be named.

Tnuva blames a 24% rise in state-controlled raw milk prices since 2019, most of which hit in July, that has raised its costs by 400 million shekels ($117 million), as well as higher costs for soy, energy, water, electricity and property taxes.

"The company has waited and waited and tried to absorb all these costs but couldn't wait anymore," Anat Gross Schon, CEO of Tnuva's dairy division, told Reuters, saying the planned hikes would still not cover all of its additional costs.

Tnuva said it was not raising the price of some basic products like cottage cheese, plain yogurt and soy milk.

The official from Shufersal - which has been expanding its own private label brand in recent years - said the supermarket already balked at price hikes by nine suppliers and those firms had relented.

Shufersal's shares rose 0.5% in Tel Aviv.

Rival supermarket chains Rami Levi and Victory declined to comment on whether they intend to raise prices of Tnuva products.

Tnuva's main rivals, Osem - a unit of Nestle - and Strauss Group have not raised prices. Osem in February cancelled plans to do so after public outrage.