Dairy Market Concentration Fuels Cottage Cheese Shortage and Cost of Living Debate in Israel

A recent shortage of cottage cheese in Israeli supermarkets has reignited public debate over the high cost of living. Industry insiders argue that beyond a mere supply chain disruption, the core issue lies in the dairy market's high concentration and dependence on a single dominant producer. According to reports, Tnuva controls approximately 75% of cottage cheese sales in Israel, along with significant shares in milk and cream categories. This market dominance means that any production or distribution hiccup at Tnuva quickly escalates into a widespread consumer shortage, as other producers cannot compensate for the gap.

Critics also highlight that this concentration enables producers to influence consumer habits by altering packaging, discontinuing basic low-cost products, and raising prices. In recent years, some cheaper dairy products have been phased out, pushing consumers toward more expensive alternatives. The issue recalls the 2011 "cottage cheese protest," when the product became a symbol of the fight against rising living costs.

Government efforts to address market competition, including committees formed after the 2011 protests and the Food Law, have not significantly reduced concentration. A reform proposed earlier this year by Finance Minister Bezalel Smotrich aimed to increase competition by adjusting production quotas and target pricing, but faced strong opposition from dairy farmers concerned about their livelihoods and was ultimately not implemented.

Industry experts warn that without expanding competition and reducing reliance on a single dominant producer, future crises, whether shortages or price hikes, are likely inevitable. The current shortage underscores the vulnerabilities inherent in the concentrated structure of Israel's dairy market.