Matzah Makes the World Go Round
Passover is the Jewish holiday of freedom, family, and Matzah. Matzah, also known as the main character of Pesach after Moses and Pharoah is an eternal humble member of the holiday. Ever since the Israelites ran out of Egypt with these crackers, Jews have treasured Matzah. The industry surrounding this unleavened bread requirement on the holiday is fascinating. We are talking about an entire product designed for a tiny population whose whole season is eight days out of the year. And yet, Matzah manufacturers make enough profit for their businesses to last all year. The two main players in the Matzah industry, Manischewitz and Streit’s make upwards of $25 million and $500 million respectively. As long as Jews continue their religious traditions, they will turn to the Matzah industry to fulfill the sacred commandment stating that for “seven days shall you eat Matzah.”
Despite its simplicity and basic ingredients, Matzah often commands a premium price. One of this year's factors contributing to the high price tag was the rising rates of inflation across all markets. Flour went up 16.3% in price, and other Pesach staples such as potatoes and eggs, increased by 13.5% and 55% respectively. But the most prominent factor causing hefty prices stems from industry-specific roots. The root of the high Matzah prices is the extensive Jewish regulations that make Matzah production more expensive. Matzah must be cooked under the strict supervision of trained employees within 18 minutes, at above 600 degrees, baked without additives that aid cooking efficiency, and completely separate from any leavened product. If any of these requirements are not fulfilled, all of the state-of-the-art machinery must be shut down, cleaned, and started from scratch. In the Manischewitz factory guide, Randall Copeland, states that “kosher laws add about 20 to 30 percent to the cost of production”. Surprisingly, the expenses and strict regulation greatly benefit the companies; they are one of the strongest strategies Matzah companies employ as it poses a barrier to entry for competitors. To enter this market, competitors must invest in new machinery, be extremely learned in Jewish law, and extensively train all workers, making it extremely unattractive and difficult. Matzah companies leverage the stringent Jewish laws and specifications to their advantage, allowing them to charge a premium price and adopt a robust business strategy.
Matzah is a sacred food that carries great significance and familiarity amongst all Jews–but it can get even more sacred… and more expensive. Shmurah Matzah, which translates to “guarded” in Hebrew, is Matzah that is circle-shaped, handmade, extra guarded, and costs up to $60 per pound. Its significance and increased pricing are due to the fact that it is cooked under an even more labor-intensive process and guarded under extra scrutiny even before the wheat is harvested! The creme dela creme of Matzah. Who are the main customers of this delicacy? Many religious Jews will only buy Shmurah Matzah since they want to observe and beautify the commandment to the highest level, known as “hiddur mitzvah” in Judaism. Specifically, Shmura Matzah which is baked after midday on the day before Pesach is viewed as “matzot mitzvah”, especially holy to eat by religious Jews. Thus attached with an even higher price tag, Matzah bakeries charge $60 and up for this cream of the crop. But the main customer segment for Shmura Matzah was created in 1954 when The Rebbe, Rabbi Menachem M. Schneerson of righteous memory, began encouraging his followers to eat authentic Shmurah Matzah. Not only did he promote Shmurah, but he also encouraged his followers to make Matzah bakeries to ensure a quality supply of it. Ever since then, countless Chabad Jews have flocked to buy and consume only Shmurah. Shmura Matzah is preferred and dear to many Jews for their Pesach purchases so despite the costs, demand remains strong with an estimate of over one million pounds to be produced in the US alone. The largest player in the Matzah game, with 40% control of the market, is the beloved Manischewitz. Rabbi Dov Behr Abramson, renamed Rabbi Manischewitz when he moved to America from Lithuania, founded Manischewitz Matzah in 1888 in a small bakery. Since then, the Manischewitz brand grew into dozens of products and is a household name for Jews all over the world. The name is so popular that Apollo 17 astronaut Gene Carnan even sang the Manischewitz ad slogan “Man, oh, Manischewitz,'' as he walked on the moon. The cause of the strong success is a robust and broadly-focused strategy. Manischewitz recognized that they could expand the consumer group beyond Jews for three reasons. The first is that kosher food was becoming popular among non-Jews since two-thirds of people believe kosher products are made with better quality ingredients according to a Mintel study, and Manischewitz is a house kosher name. The second reason, according to the 50% population of Matzah buyers, is that Manischewitz marketed Matzah as a vegan, low-carb, nonfat, and low-sodium healthy bread substitute. They design their product labels to market nutritious value to target health-conscious buyers. And thirdly, Manischewitz improved Matzah’s machinery and systems in so many ways that they have 50 patents for refinements! One of their big machinery improvements is the “electric eye” which “automatically counts the number of matzos in a box at a rate of 600 a minute.” Manischewitz, with its unique strategies and advanced technology, is a successful Matzah company, selling over 77 million Matzot annually to loyal, diverse, and satisfied customers.
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Photo Caption: Matzah
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