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.]

Ethnic Foods Memo: More On Matzo: The Passover Matzo Shortage Isn't Limited Only to San Francisco Bay Area in California USA; Looks to Be Nationwide

Yesterday we reported on and wrote about a widespread shortage of Passover matzo in the San Francisco Bay Area in the United States. Certified "Kosher for Passover" matzo, which is a leavened bread, is a key food product observant Jewish consumers use during the religious holiday of Passover, which started last Saturday at sundown and runs until the end of this week.

Essentially, all of the supermarkets and those specialty stores that specialize in kosher foods in the nine-county Bay Area are currently out of Passover matzo. Among the region's grocery retailer's without passover matzo on its store shelves are Safeway Stores, Inc. and Lucky (owned by Save Mart, Inc.), the number one and two market share leading supermarkets in the Bay Area.

Since publishing our piece yesterday, we've heard from readers in Los Angeles, the Reno and Las Vegas Metropolitan regions in Nevada, and the Baltimore/Washington Metro area in the Northeast, all saying nearly many of the supermarkets in those regions also are out of Passover matzo.

We did some research today and have discovered the majority of supermarkets in the Boston, Massachusetts Metropolitan region, many in New York City, which has the highest per-capita Jewish population in the U.S. (Los Angeles is second), also have store shelves minus the Passover matzo.

Based on the information our correspondents provided us after yesterday's piece ran in Natural~Specialty Foods Memo, along with the research we did today, it looks to us like we're seeing a nationwide Passover matzo shortage just four full days into the religious holiday, with five more days to go before the end of Passover.

As part of that research today, we talked to a spokesperson from Manischewitz, the largest maker and marketer of kosher and "kosher for passover" grocery products in the USA, including matzo.

One thing we learned from the spokesperson is that Manischewitz had some problems this year in its factory which produces its Passover matzo. As a result, production of the Passover matzo was smaller this year than in past years.

Of course, even though Manishchewitz is a major matzo producer and marketer, there are other companies that produce the leavened bread product for the religious holiday. As such, the smaller production run at Manischewitz isn't enough on its own to cause the matzo shortage, although its a significant contributor to the problem in our analysis.

Another key factor in the matzo out-of-stock situation is the shortage of wheat.

Passover matzo is produced in five grain-based varieties: wheat, rye, barley, oats and spelt. Wheat-based matzo however is the most popular of the five grain-based varieties. Additionally, on Saturday evening the first day of Passover, Jewish dietary laws require that observers eat matzo as part of their meal--and that matzo must be made with wheat rather than any of the other varieties. After that first night Jews may eat the other grain-based varieties of matzo in addition to the wheat-based variety.

Stockpiles of wheat in the U.S. and globally are at their lowest levels in over 30 years. As a result, the commodity price of wheat is up about 25% in the last year. Items made with wheat as a primary ingredient such as bread and breakfast cereals have increased by double-dig-t amounts in the last year as well.

The wheat shortage and dramatic price increase has had an effect on the production of all bread items, including matzo. Wheat supplies have been less consistent than normal even in the U.S., and the commodity price to manufacturers has been increasing at times on a weekly basis.

The Costco Wholesale and Trader Joe's factor also seems to be in part to blame for the matzo shortage in the rest of the U.S. as well as it is in the Bay Area, as we wrote about yesterday.

Costco decided not to sell passover matzo in its San Francisco Bay Area stores this year--and that appears to be the case in other parts of the U.S. where it has stores as well.

Trader Joe's decided not to sell Passover matzo at any of its 300-plus specialty grocery stores in the U.S. this year, as we reported yesterday, because the grocer is re-evaluating the category completely. Trader Joe's offers a wide-variety of kosher food and grocery products and normally the stores are popular shopping venues during Passover.

It appears that what has happened--although we are only just beginning to connect the various dots of the Passover 2008 matzo shortage together--is that a perfect storm of increased demand for and reduced supply of Passover matzo has resulted in what is beginning to look like a nationwide shortage of the leavened bread product in the U.S.

The wheat shortage, combined with the reduction in matzo production at Manischewitz made less Passover matzo available in supermarkets and kosher specialty stores. Other producers like Streits and a few others produced about as much as they did last year, but do to the wheat shortage and escalating prices they didn't make much more. As a result, supply is down this year.

On the increased demand side, it appears many more Jews are observing Passover this year, compared to last year.

Passover is historically the number one celebrated Jewish holiday among the many the religion has each year. For example, we've been told by two knowledgeable Rabbi's that there's a cultural ground-swell especially among younger Jews who aren't regularly observant but want to celebrate Passover as a way to better get in touch with at least the cultural traditions of Judaism if not the more religious aspects.

Further, many older Jews who haven't celebrated Passover in the past seem to be observing Passover this year, according to our sources who said they are seeing increased foot traffic in their synagogues and at passover-related events.

At the distribution and retail end of the supply chain, kosher foods' category distributors generally require their food and grocery retail customers to pre-order "Kosher for Passover" items like matzo at least two months before the holiday. Most retailers base their orders on the previous year, perhaps adding a little extra depending on certain circumstances. The distributors' then place their orders to the kosher products' manufacturers based on these pre-orders from the supermarkets.

Because "Kosher for passover" grocery products essentially have about a 4 week shelf-life (they are stocked in the stores about 3 weeks before Passover begins), in the main the distributors only order the amounts pre-ordered by the retailers from the manufacturers. As a result, there seldom is extra stock on hand in distributor or manufacturer warehouses to deal with shortages like the one we are seeing presently.

Therefore, based on the supply and demand factors detailed above, we think a perfect Passover matzo increased demand and reduced supply storm has occurred: More Jews are observing Passover than did last year, meaning more matzo is needed.

Additionally, on the supply-side the reduction in supply because of the wheat shortage and price hikes, plus the smaller matzo product run at Manischewitz, means their are essentially more matzo consumers chasing less available matzo.

Add to this perfect storm the fact that regular Costco Wholesale and Trader Joe's customers found out the stores wouldn't be selling matzo this year well before Passover, so they rushed to other supermarkets and stores and probably each bought a few extra packages of matzo, fearing others would do the same. The result: Matzo-less shelves in the supermarkets with five days of Passover remaining.

This theory is shared in part by Dave Bennett, the co-owner and president of the eight-store Mollie Stone's upscale supermarket chain in the San Francisco Bay Area, which is well-known for its extensive selection of kosher foods and "Kosher for Passover" product offerings.

Bennett said today that all eight of the supermarkets are currently out of Passover matzo, and that the main reason is because many of the grocer's competitors didn't sell the items this year for Passover. As a result, Bennett said his stores got mobbed by matzo shoppers, which put lots of pressure on what normally is an ample supply of the leavened bread items in the stores. In fact, he said "We never run out (of matzo)," referring to the many previous years in which the grocer has had more than enough matzo in its stores throughout the week-long Passover observance.

It's only the fourth full day of Passover and Jewish consumers not only in the San Francisco Bay Area but in the other regions of the U.S. we reported on above are not happy. Grocery store managers and employees aren't happy either. In person and over the phone they're having to tell dozens of customers daily that the stores are out of matzo.

We were told today by a reader in Los Angeles that she knows fellow Jews who are driving down to San Diego today to pick up as much matzo as they can in a number of stores there. They plan to bring it back to their Los Angeles synagogue for fellow matzo-less Passover observers.

Some people have asked, "Why don't these folks just make their own matzo at home?" That's easier said then done however. In order for matzo to be "Kosher for Passover" there are numerous ritual requirements for the kitchen, preparation process and even how the grains such as wheat, rye, barley, oats and spelt are obtained, including having a certified Rabbi inspect the home kitchen, bread-making equipment, source of the grains--and more.

It's just too difficult to make matzo at home for Passover, which is something supermarket and specialty store retailers have loved for decades, as the one-week holiday brings them strong added sales.

But added sales aren't what's on these food and grocery retailers' minds right now. Far from it. They just want to obtain as much Passover matzo as they can so they can satisfy the pent-up demand among their customers. With five days of Passover still remaining, that demand is only going to grow stronger.