Cottage Cheese Crisis Ends as Tnuva's Automated Warehouse Finally Yields to Manual Labor

Shelves Full Again After Two-Month Dairy Drought

For the first time since before Shavuot, Israelis walking into their local supermarket in Tel Aviv, Jerusalem, or Haifa are finding cottage cheese and white cheese on the shelves well into the evening hours. After two months of frustrating shortages that saw dairy products vanish within hours of arrival, Tnuva has returned to supplying retail chains with normal quantities over the past two weeks.

Market sources told Walla that the process of rebuilding inventory and filling the vacuum created during the shortage took considerable time. The change on the ground has only been felt in recent days, with goods remaining on shelves throughout the day and still available in the evening—a stark contrast to the scenes of empty dairy coolers that became familiar to shoppers across the country.

The Great Cottage Cheese Vanishing Act

The ordeal began with cottage cheese, which disappeared from shelves even before the Shavuot holiday. For long weeks, retail chains struggled to receive the quantities they ordered from Tnuva, and in some branches, the product disappeared shortly after arrival. The timing could not have been worse, as Shavuot is traditionally one of the biggest dairy consumption periods in Israel, with families stocking up on cheesecakes, quiches, and fresh dairy products for holiday meals.

As the shortage persisted, consumers adapted in a predictable way: they turned to white cheese. This caused demand for white cheese to surge rapidly, creating a secondary shortage. Within a short time, the shelves usually filled with tubs of cottage and white cheese were stocked instead with labneh, sour cream, and other dairy products—a temporary substitution that did little to satisfy consumers looking for their familiar staples.

Root Cause: A Malfunction at Alon Tavor

The root of the crisis lay in a malfunction in the automated warehouse system at Tnuva's Alon Tavor dairy, located in the Lower Galilee near Afula. As revealed by Walla, the issue was not on the production line. The cottage cheese was produced, packaged, and ready for distribution, but some of it could not leave the dairy and reach distribution trucks due to disruptions in the system managing pallet movement in the warehouse.

This distinction is crucial: Tnuva was making the product, but the high-tech logistics backbone that moves pallets from the production floor to the loading docks had failed. The result was a bottleneck that rippled through the entire Israeli dairy supply chain, affecting millions of consumers who rely on these everyday staples.

German Tech Meets Israeli Reality

The automated warehouse system is operated by the German company Dematic, a global leader in intralogistics and warehouse automation. A visit by the Dematic team scheduled to arrive at Tnuva during Operation Roaring Lion was canceled due to the war, leaving the dairy to cope with a sophisticated German system without its engineers on the ground.

The company's staff attempted to assist Tnuva teams remotely via phone and Zoom calls, while Tnuva employees operated part of the system manually. The solution allowed goods to be dispatched, though not at the usual supply pace. This hybrid approach—part automated, part manual—kept products moving but at a reduced rate that could not keep up with normal demand.

War, Travel, and the 4% Demand Surge

Compounding the logistical problem was a roughly 4% increase in demand for dairy products since the beginning of the year. This surge was driven in part by a drop in the number of Israelis traveling abroad due to the security situation. With fewer Israelis flying to Europe, the United States, or Asia for vacations, more people remained in the country, eating at home, and consuming local dairy products.

High demand and gaps created since Shavuot made restocking difficult, and any additional delay was felt immediately in retail stores. The combination of a technical malfunction, a canceled service visit due to wartime conditions, and rising domestic consumption created a perfect storm that emptied dairy shelves across the country.

The White Cheese Spillover Effect

The disruption in cottage cheese supply eventually spilled over to white cheese. Consumers unable to find cottage cheese switched to white cheese, and the growing demand began clearing those shelves as well. This substitution effect is a classic pattern in Israeli food retail: when one staple disappears, consumers shift to the closest alternative, creating pressure on adjacent categories.

The shortage was especially noticeable due to the market structure. Tnuva is Israel's largest producer in the white cheese category, while Strauss holds about 30% of the market. With the dominant player unable to deliver, the entire category suffered, and competitors could not fill the gap quickly enough to meet demand.

Market Structure and Competitive Dynamics

Israel's dairy market has long been characterized by a concentrated structure, with Tnuva and Strauss dominating the white cheese and cottage cheese categories. This concentration means that when one major player experiences a supply disruption, the impact is felt across the entire market. Smaller producers and private-label brands exist but lack the production capacity to absorb a sudden surge in demand.

The crisis also highlighted the vulnerability of relying on automated systems operated by foreign companies. When the security situation prevents service visits, Israeli companies must find ways to maintain operations with remote support and manual intervention—a lesson that extends beyond the dairy sector to other industries that depend on imported technology.

Lessons for Israel's Food Supply Chain

The cottage and white cheese shortage offers several lessons for Israel's food supply chain. First, the reliance on automated warehouse systems, while efficient in normal times, creates single points of failure that can disrupt entire product categories. Second, the cancellation of service visits due to wartime conditions demonstrates how security situations can have unexpected economic consequences.

Third, the 4% increase in demand driven by reduced foreign travel shows how shifts in consumer behavior—even those caused by security concerns—can strain supply chains that are calibrated for predictable demand patterns. Israeli food producers and retailers will need to build more resilience into their systems to handle such shocks in the future.

Restocking Complete, But Questions Remain

Now, after two weeks of supply at normal levels, the gaps finally appear to be closed. Consumers can once again find cottage cheese and white cheese on shelves throughout the day, and the crisis that began before Shavuot appears to be over. Tnuva has returned to its normal supply schedule, and retail chains have rebuilt their inventories.

However, questions remain about how the company will prevent similar disruptions in the future. Will Tnuva invest in backup systems for its automated warehouse? Will Dematic's remote support capabilities be enhanced to handle wartime conditions? And will Israeli food companies reconsider their reliance on foreign-operated automation?

For now, Israeli consumers can breathe a sigh of relief as they fill their carts with cottage cheese and white cheese once again. But the memory of empty shelves and the frustration of searching store after store for a simple tub of cottage cheese will not fade quickly. The crisis served as a reminder of how fragile the food supply chain can be—and how quickly a technical glitch in a warehouse in the Lower Galilee can affect dinner tables from Metula to Eilat.

This article was produced with AI-assisted research and editorial support. Sources: The Jerusalem Post, Walla.

By Hannah Berg, Staff Writer