Wednesday, February 16, 2011

OSEM USA, Largest Kosher Good Manufacturer in the World, Changes the Matzah Market

For most American Jews, selecting matzah for Passover was a pretty straight forward exercise. There were few choices and little to differentiate between the major brands.

That’s now beginning to change, as Osem USA, the U.S. subsidiary of Osem-NestlĂ© Israel, the largest kosher grocery food manufacturer in the world, has started to shake things up in a category that has long been about as exciting as, well, flour and water.

Matzah and Passover

The matzah season for American Jews is focused almost exclusively around Passover (which this year begins at sundown on April 18th). This is the time of the year when non-kosher keeping Jews typically make their one and only purchase of matzah – and they purchase plenty of it.. Osem USA, for example, sells 2 million tons of matzah annually to American consumers, more than any other Israeli company.

Matzah, or unleavened bread, is eaten by Jews worldwide to celebrate the holiday of Passover, as a remembrance of the Exodus from slavery in Egypt. The Israelites had no time to bake bread and so only took with them unleavened bread, which could be prepared quickly. As such, the Bible (beginning of Exodus) commands Jews to eat no leavened bread – bread baked with yeast or leavening agents (e.g. baking powder) – during the week of Passover.

Historically, until the 1980s, two domestic companies owned the matzah category in the U.S. This, however, began to change when Israeli companies began to offer a much more affordable product to American Jews – about half the domestic matzah’s price – even though they imported the flour from the U.S. to make the matzah in Israel and then exported it back to America.

“Most supermarkets would typically sell three or four brands, the domestic brands and one or two Israeli matzahs,” said Izzet Ozdogan, President of Osem USA. “It was a category that had little innovation and didn’t make either the supermarket nor the importer any money.”

Osem, a leading importer of kosher Israeli foods to the U.S., then decided to shake things up in the matzah category. Partnering with the Jewish National Fund (JNF), Osem USA began to differentiate itself in the matzah market by offering a one-of-a-kind offer to consumers: for every five-pound box of matzah sold, it would contribute $2 to the JNF to plant trees in Israel (up to $400,000 a year). Since beginning the program in 2006 – with Osem reaching the ceiling every year – it has donated more than $2,000,000 to the JNF, resulting in the planting of an estimated 400,000 trees in Israel.

“It’s a good deed to plant a tree in Israel,” said Ozdogan. “American Jews are supportive of good deeds and care deeply about the nation of Israel. We are very happy that consumers overwhelmingly supported our program, which enabled us to plant over 400,000 trees in Israel.”

In addition, Osem USA broadened its matzah offerings to include a 5-lb whole wheat matzah bundle, at the same price and size of its regular matzah counterpart, even though the whole wheat product is 40% higher in cost. The decision to offer whole wheat was based on the increased popularity of whole wheat breads in America.
Osem USA also added a premium chocolate coated matzah (plain, orange or raspberry flavored), rye, egg, egg & onion, and others.

The company soon made other changes to set its matzah apart. Two years ago, in contrast to the often plain packaging of its competitors, the company commissioned two talented young Israeli artists to illustrate important events in the Haggadah (the Passover prayer book) on the boxes of the different matzah products. There are presently 13 different renderings on the boxes of its various varieties of matzah depicting among other scenes the Red Sea crossing, the delivery of the 10 commandments, and the burning bush. Together with a quote from the Haggadah and short stories from Exodus, it makes for a great collectible for children and helps explain the event of the Exodus.

‘Freshness’ Pouch Offered

To add to the value, last year, the 5-lb matzah package started to include discount coupons for other Osem products. Beginning this year, a unique freshness pouch has been added to each 5-lb package, free of charge.

“After opening a box of matzah, it’s a problem to keep it fresh and air tight,” said Ozdogan. “The complimentary pouch that we now include solves that problem. Aside from buying a matzah box in a Judaica store, there is nothing else out there.”
As a result of these efforts, Osem USA has dramatically increased its market share of matzah in the U.S. Perhaps even more importantly, the growth in matzah sales has increased the company’s visibility and brought attention to its other products – like Bamba, a nutritional peanut butter snack that is the best-selling snack and the strongest children’s brand name in Israel; and Bissli, an almost equally iconic brand.

“Israeli matzah still sells for considerably less than domestic brands,” said Ozdogan, who came to America 21 years ago after working as Osem’s export manager in Israel. “Matzah brings people into stores during Passover and, as a result, has been well worth the effort strategically in helping make Osem and its line of products better known here.”

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