Lucknow Farms: The US Beef Industry, 2: Kosher Beef

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Much less public information is available about the kosher beef market, than is available about the regular beef industry and market, because the USDA does not keep statistics on kosher slaughter specifically. Moreover, most of the kosher packers, processors, and distributors are privately held companies, which do not publish their business information into the public domain. As a result, we must estimate the size and nature of the kosher beef market based on nonsystematic and opportunistic data. The following estimations are derived from a model that meets the few publicly available items of information about the market.

The total US kosher food market in 2008, including non-meat products, as well as meat products, was estimated by Lubicom Marketing Consulting to be $12.5 billion in total retail sales. This market grew 15% annually from 1997 to 2002; it is assumed to be growing at that rate today.

In 2008, about 11.5 million consumers regularly ate kosher food products. More than half of these consumers were not Jewish. Consumers who do not keep kosher are attracted to kosher food, because they believe it is likely to be safer than non-kosher foods. This consideration became especially important after the discovery of BSE in 2003.

The attraction of kosher beef to non-kosher consumers indicates that, for them, kosher beef is a niche product, similar in status to organic beef.

Kosher beef is a small portion of the total kosher food market. It is not even the largest selling kosher meat, which is poultry. Total U.S. retail sales of kosher beef (cuts and ground meat) is estimated to have been about $611 million in 2007.

Kosher beef is, therefore, a tiny portion of the market for all beef in the U.S.—less than one percent of all beef sales for the year.

Only 42% of regular kosher consumers are occasional purchasers of kosher cut and ground meats (mostly poultry). Twenty per cent of kosher meat consumers are Muslim consumers who follow halal, Islamic religious law regarding meat slaughter and consumption.

The small size of the kosher beef market is due directly to the high price of kosher beef. The average retail market price of kosher beef, averaging and weighting all cuts and ground beef, is $11.32 a pound. (This price compares to the similarly computed average price of regular beef of $4.15 a pound.)

I make two estimations for the average per capita consumption of kosher beef in 2007 in the U.S. As kosher beef is a niche product, its consumption cannot be directly compared to consumption of commodity beef, which has, as a base of consumers, the entire U.S. population. Rather, for the niche market, we estimate average consumption only by the consumers who buy in the niche market.

With this guideline, here are two estimations. The first, based on all the consumers in the niche market, yields the lowest average consumption; the second, based on the consumers dedicated to keeping kosher, yields the highest average consumption.

1. Based 11.5 million consumers of kosher foods, including beef, the average, per capita, consumption of beef (in 2007) would have been 4.7 lbs, costing $53.
2. Based on (conservatively estimated) 600,000 Jewish persons who keep kosher, the average, per capita, consumption of kosher beef (in 2007) was 90 lbs., costing $1000.18.

What may we infer from these estimations?

First, the estimations make clear that consumption of kosher beef is not a regular habit for all kosher consumers, in the same way that commodity beef is a regular menu item for most Americans. Given the prices of kosher beef, the amount of kosher beef consumed by group 1 (above) would be limited to a few meals a year for a family.

If kosher-keeping Jews are considered the overwhelming majority of kosher beef consumers, their estimated consumption would be sufficient for a family to eat a kosher-beef every week.

These inferences are supported by other considerations. Beef consumers who are not Jews keeping kosher are discouraged from regular consumption of kosher beef, not only by its high price, but also by the reputation that kosher beef is inferior in taste and texture to regular beef.

The suspicion that most kosher beef is consumed mainly by Jews who keep kosher is supported by several considerations.

First, the retail marketing of kosher beef is concentrated. Fresh cut and ground kosher beef are available at markets only in geographical areas with high populations of Jews. These areas are New York City, Chicago, Baltimore, south Florida, and Los Angeles-Orange County (California). Metro New York City has the highest concentration of Jews who keep kosher in the country; it also has the most convenient retail marketing of fresh cut and ground kosher beef in the country.

Second, caterers are important purveyors of kosher beef. (We could find no public data on the proportions of kosher beef eaten at home, at catered events, and in restaurants.) By contrast, in commodity beef marketing, caterers are not significant, while restaurants account for nearly half of the consumption of regular beef. Caterers are obviously special occasion sources of kosher beef consumption.

The high price of kosher beef can be attributed to five factors:

* The small number of kosher slaughter houses and processing (kashering and traybering) plants;
* The high labor cost of kosher slaughter and high cost of kosher certification;
* The method of kosher slaughter, which limits the number of cattle that can be slaughtered daily;
* The regulation that only the front section of the steer, from the tenth rib forward, can be consumed as kosher, which limits the amount of meat to market; and
* The small demand for kosher beef.

The small size of consumer demand for kosher beef explains the size and concentration of the kosher beef packing and processing industry.

There are nine major packers and processors of kosher beef; but only five of them provide kosher slaughter. One company, which does both kosher slaughter and processing, Agriprocessors of Postville, Iowa, accounted for 50%-60% of the wholesale kosher meat trade before its bankruptcy. Agriprocessors also sold some of its products, under several labels, in the direct-to-consumer retail trade.

I estimate that 834 steers are kosher slaughtered daily (in a six-day work week). This small number of head contrasts to the conventional beef market, which slaughters over 93,000 head a day (seven-days a week).

Consumers living outside the few major metropolitan areas where kosher beef is sold retail in meat markets must purchase their beef (usually frozen) by package shipment from processors, distributors, or retailers. Though some buyers have experimented with buying clubs and cooperatives, such purchases are, impressionistically, a tiny portion of all kosher meat purchases.

Note. This discussion builds on and corrects an earlier article on the kosher beef market.

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