August 22, 2011

Keeping ÒEye on the BallÓ Has Industry Looking in Different Directions

New York…The kosher industry has become so diverse that purveyors and distributors are often juggling to keep up with demand. In discussions with a number of key distributors and purveyors, there was a consensus that the market no longer consisted of two major segments: supermarket and independents. Some of the manufacturers and distributors have added sales staff not only to cope with rising demand from the “core” (defined as supermarkets and independents) but also from the growing interest by the discounters, convenience stores, and, of course, foodservice. Interestingly enough, there is a sense that the kosher independents are the fastest growing sector in the kosher retail business. One distributor said: “We all salivated at the idea of selling the supermarkets until we realized that the independents were a steady source of business even if we had some collection issues.” He professed surprise at the sheer number of independents that have opened in just the last three years. Remarkably, say the sources, the multiple sectors have been able to coexist because of growth in demand. Clearly, the sense was that the independents are serving growing Jewish neighborhoods, while the supermarkets “went beyond,” meaning that in addition to a core base they were also catering to a crossover market. Some of the estimated numbers of growth were also surprising as one distributor said that he “guessed” a 20% increase from independents and 5%-8% from the supermarkets. While others disagreed and one even flipping the numbers, the varied experience shows just how the industry has been coping with the rising demand for kosher. But what was most revealing was just how many in the industry have to divide their attention between the various sectors. One distributor said: “The supermarkets and the independents are totally different worlds which is why I have a dedicated person to the supermarkets.” In the early ‘90’s, there was a sense in the industry that the emerging focus of kosher in supermarkets would all but dilute the independents, but as the data now clearly shows, the independents have emerged as major players in kosher. The distributor said: “When I look up in the air, I see Gourmet Glatt, Shoprite, Costco, a few gas stations in New Jersey, and nursing homes and that is a lot of balloons to watch.”