End of an era: Chinese officials arrived in Israel today (Sunday) to complete the sale of Israel’s Tnuva dairy conglomerate to Chinese food giant Bright Food. The sale is expected to completed in the coming days, with a sale price of €1 billion (NIS 4.73 billion).
In some ways, Tnuva and Bright Food Group Ltd have similar histories. Tnuva has been a central part of Israel’s business and cultural tapestry since the company was founded in 1926, when dairy farmers in pre-state Israel banded together to increase sales. In short order, the conglomerate cornered the Israeli dairy market and enjoyed monopoly status.
Bright Foods, too, was founded before the emergence of the modern Chinese state: According to the Globes financial daily, Bright Food was founded in 1911. Today, it is owned by the Chinese government, with reported sales of $25 billion last year, and net profit of $500 million.
But in the case of Tnuva, conglomeration led quickly to protective measures first by the mainstream Zionist movement, and later by successive Israeli governments. The company’s familiar red, green, blue and white logo quickly became a part of Israel itself: By the 1940s, Israeli children sang of a big, green car that brought them Tnuva eggs and milk each afternoon. It remains one of the first nursery rhymes that every Hebrew-speaking child learns.
More recently, fiscal policies implemented by Binyamin Netanyahu, first as finance minister and later as prime minister, have liberalised the Israeli economy and opened markets to competition. But Tnuva has retained the lions share of Israel’s dairy industry, with a 67.7 percent of the market, according to a 2012 report in Haaretz. Unconfirmed reports suggest that the company’s share of the yellow cheese and cottage cheese markets are significantly higher than that, perhaps even topping 90 percent.
Three years ago, that near monopoly set off a series of social protest demonstrations when consumer groups used social media sites to declare a boycott of cottage cheese in order to bring prices down. That led to a summer-long protest movement that expanded to include demonstrations about housing costs and general cost-of-living challenges faced by the middle class.
In reaction to those protests, some public voices moved to “break” Tnuva’s monopoly on dairy prices. That process has met with only limited success. Now, some members of Israel’s economic establishment are critical of plans to sell the company to a Chinese group. They say the sale will set the company’s stranglehold on the Israeli market in stone.
“This is the last chance to clearly and publicly the government’s intentions to carry out structural changes in the food monopoly, especially at Tnuva, in terms of caveat emptor,” one unnamed source told the Globes business daily. “The main problem is that this is not just the sale to a foreign corporation, but the sale of an Israeli company, which politicians classify as strategic, to a Chinese government company.
“If someone imagines that, in the future, it will be possible to carry out structural changes through legislation, such as breaking up Tnuva, he will not face a company that is bound by Israeli law, but the government of a great power, whose political ties with it are a critical factor. This means confrontation with the Chinese government. If the sale goes ahead, it will probably be impossible to deal with Tnuva as a monopoly, which will damage the possibility of dealing with other food monopolies, the source continued.
Allaying Israeli Concerns
Upon arriving in Israel Sunday to finalize the sale, Chinese government and Bright Food officials moved to calm Israeli fears, praising Tnuva and predicting that the partnership would create a platform to introduce Tnuva cheeses to China.