One emerging group is Jews, who are obligated to eat only Kosher foods according to religious beliefs.
Market segmentation is a fundamental concept in marketing planning. Market segments, by definition, are unique from other segments such that a unique marketing mix is necessary to reach them. Yet identifying market segments and developing a marketing mix to reach these segments is often difficult. Many value-added producers are finding that segments defined by purchases of ethnic foods represent important potential markets.
The United States' population, which surpassed 300 million in 2006, is very diverse. Many different cultures or ethnic groups exist in large numbers, particularly in larger cities where they are often geographically concentrated. In the past, individuals with different cultural or national heritages often found it difficult to obtain many of the food products that they preferred. More recently, sellers have begun to recognize many ethnic groups as important market segments. This publication identifies a potentially important market segment, buyers of kosher products, and provides some tips on how to reach these individuals.
What Does it Mean to be "Kosher?"
Kosher foods are those prepared according to the rules of Kashrut, the dietary laws of Judaism. These foods are considered to be ritually pure, genuine, clean, and authentic. Contrary to popular belief, certified kosher food products are not blessed by a rabbi. Instead, the certification process involves an examination of the food ingredients as well as the production or preparation process. In addition, kosher food production facilities must be inspected periodically to ensure that approved production procedures are being maintained.
Any farmer, co-op, LLC, grower's group or small scale food processor can obtain kosher certification from one of many certifying organizations. (A simple web search for "kosher certification" yields many results.) Select the certifier that best complements your business values, goals, and mission as well as your budget. Each certifier provides a label that producers may use to indicate a product's kosher status. This is a clear signal to consumers that a product meets the certified kosher requirements.
Why Consider Kosher Markets?
The U.S. market for kosher food products is estimated to be approximately $100 billion. The product categories that accompany the word kosher may be unknown to many, however. 'Mainstream and Kosher' and 'Ethnic Kosher' are used by the food processing industry to separate two very different categories that have two very different impacts in the market. Products dubbed 'Mainstream and Kosher' are found in the majority of American homes despite the fact that they were not purchased for their kosher status. Examples include many potato and corn chip varieties, breakfast cereals, and frozen dinners.
Many food products sold to each consumer are considered kosher due to their preparation, ingredients, and quality control standards. A value-added producer may meet certification requirements under the 'Mainstream and Kosher' umbrella. In most cases, very little processing and ingredient changes may have to be made.
However, the certification may be warranted for the sake of serving this market segment. "Ethnic Kosher" foods are those that are kosher-by-design. Market research has shown that sales of grocery items in this segment have proven difficult to track due to extremely low sales. Such grocery items include gefilte fish, matzo, as well as most other Jewish food products like those produced by the Manischewitz Company.
Producing quality products through safe means is an important step in the kosher certification process. Often, producers do not know that their products may already meet certification standards, and thus they fail to enter the $100 billion dollar annual market. Fruits and vegetables that are insect-free, for example, are naturally kosher. So, products made with fruits and/or vegetables are often kosher, requiring only a nationally-recognized certification to reach that market. There is clear evidence of a growth trend in the kosher foods category.
Chemical & Engineering News reported that the availability of Kosher products has increased greatly in the past 40 or so years from an estimated 3,000 in 1970, 10,000 in 1985, and more than 70,000 in 2010 (Halford). Kosher products are emerging in just about every corner of the grocery store, with the exception of the meat department due to stricter kosher laws and guidelines.
Who Buys Kosher Products?
Kosher foods, long regarded as ingredients and dishes for only those of the Jewish denomination who follow Orthodox practices, are finding their way into the mainstream customer's shopping cart. Though Jewish customers are still purchasing kosher foods, they no longer represent the majority of buyers in this segment. According to a 2013 Mintel research study, only about 15% of the shoppers who are purchasing kosher foods are doing so for religious reasons. "Of the 11.2 million Americans who do purchase kosher items, most who seek out kosher products buy the items for food quality (62%), general healthfulness (51%), and food safety (34%)" (Faw).
The declining Jewish population worries some market researchers who foresee a possible decline in the $100 billion dollar industry. Fewer people are following traditional kosher laws in their households and some are relaxing their practices within the context of mixed-religion families.
However, a steadily increasing group of younger, affluent consumers, both Jewish and non-Jewish, are opting to spend more money on specialty foods to guarantee themselves quality products and healthy eating. Because kosher foods have these attributes, some millennials (people born after 1980) are increasing their purchases of kosher products (Goren). Additionally, some consumers worried about purchases that may affect their food allergies are turning to kosher certified foods to alleviate the confusion. The kosher label provides those with food allergies and sensitivities with key information to help them identify dairy- or meat-free products.
What Products Should Value-Added Producers Consider?
Most traditional agricultural products have the ability to be kosher certified since agricultural practices often fall in line with what certifying agencies require. This section provides some examples of agricultural products that may be offered as certified kosher. We also brie fly discuss food preparation issues. These are applicable for preparation in the home as well as processing while adding value to the products. In all cases, discuss your products with your certifier and perform market research to be sure that customers will want your products.
Fruits, Vegetables, and Grains
All fruits, vegetables, and grains are certifiable as kosher but should be inspected thoroughly to remove insects and worms which are not kosher.
Some meats are allowed under kosher dietary laws. Producers must be very careful about how the animals are raised and how the meat is processed to maintain the integrity of the kosher production process. Work closely with a certifier to monitor the process. The following meats are allowed:
- Livestock - beef, veal, venison, mutton, lamb.
- Fowl - chicken, turkey, quail, Cornish hen, dove/pigeon, goose, duck, pheasant.
- Fish - must have "kaskeses", meaning scales that can easily be removed without tearing the skin.
Dairy products may be kosher if milk is from a kosher animal. Your certifier will help to identify which products may be kosher and which ones cannot be certified.
Processed Food Products
Kosher dietary laws are very strict about mixing certain product groups. For example, meat and dairy ingredients may not be mixed together throughout the process of preparing a dish or meal. These laws relate both to food preparation within the home as well as any processing that a producer may wish to perform. Again, a certifier will help distinguish which processes are consistent with kosher certification and which ones are not.
How Can You Reach Kosher Buyers?
For smaller-scale food processors and farmers, entering into smaller farmers' markets, specialty stores, wineries, and even using mail order/ internet sales are key ways to boost business. When assessing market outlets such as specialty stores or farmers' markets, ask lots of questions to help you decide if those are the right outlets for your business. Have customers purchased kosher products from that establishment? Have customers requested kosher products? Getting answers to these and other questions will help you to make an informed decision.
Specialty stores are possible retail outlets for producers. For many of the same reasons that grocery stores are making room for kosher certified products - namely their selling potential in today's health-conscious, quality-driven market - some specialty stores and farmers' markets are allowing space for kosher products as well. Although Jewish buyers may be a small percentage of farmers' market customers, perhaps some education is necessary to allow all customers to understand the benefits of kosher products.
As you search for possible markets, you may want to contact Jewish organizations within your geographic target market. You may learn a lot about where the local Jewish population purchases kosher foods. You may also develop a direct-marketing relationship with the organization or some of its members. Of course, the product you wish to sell, your location, and many other factors will affect your target market selection. Follow the market research process to identify profitable and lasting market outlets.
There is no doubt that kosher product buyers represent an attractive market segment for many value-added producers. To be successful, you must understand your kosher-buying customers, who are increasingly unlikely to be Jewish, and provide products to meet their needs. As with any market segment, spend time gathering feedback from your kosher-buying customers and work hard to meet their needs. If you are successful, you may realize a profitable and long-lasting market outlet for your value-added products.
Prepared by Jeffrey Hyde, Dana Ollendyke, and Sherri Morisco