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As Kosher Food Becomes Big Business Transformation Not Always Smooth

Kosher food is going big business, and the industry may be transformed as a result.

Groups of investors and large corporations have been buying up kosher food producers over the last five years, taking over what had been relatively small businesses.

The kosher market itself is no small potatoes: Some $30 billion worth of food sold in the United States each year has kosher certification.

And the market is growing — it is now estimated to be one-third larger today than it was just a few years ago.

So corporate America has been buying itself a piece of the burgeoning pie.

Hebrew National was bought last February by the $21 billion processed-food conglomerate ConAgra Inc.

Empire Kosher Poultry was bought by a group of investors in 1992 and B. Manischewitz & Co. was taken private by a different investment group in 1990.

Another national brand, Bessin Corp., which manufactures Sinai 48 and Best Kosher deli products, was acquired by international giant Sara Lee Corp. earlier this year.

While Sara Lee representatives would not disclose how much they paid for Bessin, they did say that Bessin had 1992 sales of $85 million.

And Sara Lee, which also owns the Hillshire Farm, Jimmy Dean and Ball Park Frank brands of sausage, had $13.2 billion in sales for the year ending June 30, 1992.

These changes in ownership have not been without problems.

In the case of Sara Lee and Bessin, for example, a conflict over the company’s kashrut supervision illustrates what can happen when corporate America meets up with a religious community long set in its ways of doing business.

Still, conglomerates and investors have persisted in buying into the kosher market for several reasons, say observers.

They are buying well-known brands with loyal customers. According to Alan Abbey, a consultant to the kosher food industry, the big-business buying spree is a result of the nichemarketing trend.

‘EVERYONE’ WANTS A KOSHER FOOD COMPANY

“Everyone wants to have a kosher food company as part of their mix, just like they are getting into the Hispanic market, the African-American market, the diet market, the elderly market,” he said.

Actually, only a fraction of the kosher market — $2 billion worth — is food specifically produced and marketed for the kosher community.

There are far more non-Jewish than Jewish consumers who look specifically for kosher products these days, according to Abbey.

By his estimate, 1.5 million Jews keep kosher all or part of the time, and between 3 and 4.5 million non-Jews shop regularly for food marked with the symbol of kosher certification.

Some non-Jews, like Muslims, buy kosher food for religious reasons of their own. Others do it because they perceive kosher food to be healthier or cleaner than non-kosher food.

With all these valuable consumers, the kosher companies are worthwhile acquisitions because “they come with valuable brand names,” said Abbey.

A Sara Lee representative agreed that purchasing Bessin provided the conglomerate with “a strong entry into premium-priced kosher meats.”

Since the company already owned several other meat brands, “it was a natural category for us to move into,” said Theresa Herlevsen, a spokesperson for the conglomerate.

According to Rabbi Mayer Bendet, a spokesperson for OK Laboratories, a kosher-certifying agency based in Brooklyn, having the symbol of rabbinic acceptance on packaging has become so valuable to manufacturers that brands are getting squeezed out of their markets without it.

The business of being kosher is expanding geometrically, said Bendet, whose lab has had more requests in the last six months than it had in the previous two or three years.

“It’s becoming that a company cannot compete if they’re not kosher,” said Bendet.

In time, the corporate takeover of kosher brands may benefit consumers, say observers.

Distribution is improved, bringing kosher food to consumers in more parts of the country, said Rabbi Yisroel HaLevi Belsky, a senior authority on kashrut at the Union of Orthodox Jewish Congregations of America.

And as more brands become certified and the market becomes more competitive, prices are forced down, said Bendet.

SOME ROUGH SPOTS

But thus far the courtship of big, secular corporations and the kosher food industry, which has its own universe of respected personalities and long-established business practices, has not been without its rough spots.

The two very different business cultures have proved difficult to bridge in at least one recent case.

A group of prominent rabbis have questioned the kashrut supervision of two meat brands owned by Bessin, which is now owned by Sara Lee.

Their fight has been unusually public.

Both sides have faxed press releases to the media and Bessin took out advertisements in 10 Jewish newspapers around the country to make its case. That is rare for the kosher food industry, which has historically worked out its problems within the community.

A statement by the challenging rabbis — Gedalia Dov Schwartz of Chicago, Nota Greenblatt of Memphis and Sholom Rivkin of St. Louis — warned kosher consumers that there were “serious irregularities” in procedures at the slaughterhouse supplying Bessing with its meat.

The statement prompted kosher butchers and delis across the country to pull Best and Sinai meat products off their shelves.

Then the rabbis who had been supervising the butchering at the slaughterhouses used by Bessin sent out a public statement declaring that the meat was in fact strictly kosher.

The two sides are conducting discussions and say the problems should be resolved soon.

But the episode underlines the changes in the industry.

“It’s very rare that this private linen-washing and name-calling makes it into the public eye,” said Abbey. “This is the kind of business that has always been conducted behind closed doors and whispered in the backs of synagogues.

“It’s a symbol of the changing times. The stakes are a lot higher than they used to be.”

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