Friday, April 25, 2008

Ethnic Foods Memo: More on the Missing Passover Matzo: Shortage Spreads to More U.S. Regions; The Manischewitz Angle Explained

On Tuesday, April 22, we first reported on and wrote about a shortage of Passover matzo at San Francisco bay Area supermarkets and specialty food stores that specialize in kosher food and grocery products.

We followed that piece up on Wednesday, April 23, when we reported the Passover matzo shortage wasn't just limited to the San Francisco Bay Area. Rather, we reported that supermarkets in Los Angeles, the Reno and Las Vegas, Nevada Metropolitan regions and the Washington D.C/Baltimore Metro area also were near or completely out of the Passover leavened bread products.

Our analysis in that Wednesday piece was that the Passover 2008 matzo shortage looked to be near nationwide, with a few exceptions like New York City, which has the highest per-capita Jewish population in the U.S.

We can report today we've confirmed there are other regions in the U.S. in which supermarkets are out of Passover matzo. Those regions include Oregon and Washington in the Pacific Northwest, the Chicago, Illinois Metro region, Colorado and parts of New England.

In our Wednesday piece we also reported one of the reasons on the supply-side for the passover 2008 matzo shortage was because of a short production run at the Manischewitz food products factory. Manischewitz, which is owned by R.A.B. Foods Group, is one of the top producers of Passover matzo in the U.S.

We can now report further details of that situation.

Construction issues and problems with a new oven at Manischewitz's only U.S. plant in New Jersey caused the kosher foods' producer to announce in January it wouldn't produce various varieties of kosher-for-Passover matzo and other related Passover items like Tam Tams this year.

Among the kosher-for passover matzo items the company decided not to produce this year were it's flavored matzo products, which are very popular for the Passover religious holiday. Instead, Manischewitz only produced its unsalted, whole wheat and egg matzo varieties.

In January, the kosher foods' producer and marketer sent a memo to all of its U.S. retail and distributor customers informing them of the situation with the new oven and the decision to not produce the flavored matzo items.

The memo was issued by R.A.B. Foods Group, Manischewitz's parent company. Until late last year, R.A.B. Foods Group also owned specialty and ethnic foods' distributor Millbrook, which was sold in late 2007 to natural foods distributor United Natural Foods, Inc.

The January, 2008 memo also listed which kosher-for-passover items (and matzo varieties) Manischewitz would produce for passover 2008. The company added in the memo it was cranking up its production of the three types of matzo because it expected to sell more of them since it wouldn't be producing its popular flavored matzo varieties this year.

According to Manischewitz spokesperson Amy Stern, production for kosher-for Passover matzo ended in late March, and retailers and distributors had up until the week before passover to place orders with the company.

Other kosher food makers which produce kosher-for-passover matzo like Streits haven't reported any difficulties or reductions in their matzo production this year that we are aware of.

We believe many retailers and distributors didn't order enough extra Passover matzo from Manischewitz to compensate for the company's not producing the popular flavored matzo varieties this year. The company's flavored matzo varieties and all others tend to be the most popular and best selling brand of matzo among consumers nationally.

Therefore, since there wasn't any flavored matzo varieties on store shelves, it's likely consumers bought more of the whole wheat, unsalted and egg matzo varieties than they normally would, in order to compensate for the lack of the flavored varieties this year.

Of course, this alone isn't enough to explain the widespread shortage of the leavened bread products in our analysis. But it's a significant contributor to the out-of-stocks situation we believe.

Another reason for the shortage we believe is that many more Jews, especially younger members of the faith, are celebrating passover this year and as a result are buying more of the week-long holiday's traditional foods like Passover matzo. We've had two Rabbis based in large U.S. cities tell us this is the case this year.

Based on information from a number of sources, it also appears the matzo shortage is most serious at chain supermarkets rather than specialty kosher food stores. For example, we learned today that two kosher food stores in Los Angeles, Kosher Club and Glatt Mart, have plenty of Passover matzo on the shelves--at least they did this morning.

On the other hand, most Southern California supermarkets have shelves minus the passover matzo.

A store clerk at Glatt Mart said the matzo was flying off the shelves yesterday and today, as did Daryl Schwartz, the owner of Kosher Club. Both store representatives said shoppers had told them they tried a number of supermarkets like Safeway's Vons, Ralph's and Gelsons in Southern California but all were out of Passover matzo.

Based on personal experience, we know chain supermarkets order very carefully--and often times too tightly--when it comes to kosher-for Passover items. This is especially true for those chains which order directly from the manufacturer rather than obtain Passover items like matzo from a distributor.

The reason this is the case, is because there are no longer guaranteed sales on kosher-for-passover items. In other words, whatever a supermarket (or chain) has left over when Passover ends, they eat. Actually, they usually donate it to the food bank. But they eat the financial loss.

Since Passover is only a one week celebration, and there's only about a four week sales period (about 3 weeks before and the week of Passover), retailers are very careful not to order too much Passover matzo and other kosher-for-Passover items least they be stuck with a substantial loss.

We think this fact, coupled with the production limitations at Manischewitz, along with the increased matzo demand this year, is the likely combination of reasons or the primary cause for the Passover 2008 matzo shortage. A decreased supply and increased demand perfect storm if you will.

Passover 2008 ends Sunday.

Matzo isn't just a Passover item by the way. Many Jews buy and use the leavened bread year-round. Non-kosher-for-Passover matzo will be plentiful the rest of the year, according to David Rossi, Manischewitz's vice president of marketing.

The price of Manischewitz's everyday kosher matzo shouldn't increase much for the rest of the year either despite the soaring cost of wheat, according to Rossi. The reason for that he says is because the company already has its contract price for wheat locked-in for the remainder of this year.

However, he says the company will soon start negotiating for its new wheat contracts, and expects the price of matzo will increase like all wheat-based products are, in 2009. About the Passover 2008 situation, Rossi says Manischewitz is "biting the bullet" for Passover but "We'll get though it and come out better."

It seems the next story in the matzo chronicles might be similar to many other stories we're all reading of late. That story: The soaring cost of food due to the rapidly-rising commodity prices of wheat, corn, rice and other farm products.

Perhaps it's a good time to stock up on some pre-2009 matzo. But shoppers will have to wait until after Passover 2008 and the supermarket shelves are once again stocked with the leavened bread product to do so.

Related Stories in the Passover 2008 Matzo Chronicles:

April 22: "Matzo Shortage at San Francisco Bay Area Supermarkets For Passover Has Area's Jewish Consumers Fuming and Grocers Searching." [Click here to read.]

April 23: "More on Matzo: The Passover Matzo Shortage Isn't Limited Only to San Francisco Bay Area in California USA; Looks to Be Nationwide." [CLick here to read.]

No comments: