Why Matzo Makers Love Regulation
Adam Davidson • NPR
The matzo business may be the most heavily regulated business in the world.
The regulators are rabbis, who stand on the factory floor and make sure that everything adheres to kosher law. The rules may sound burdensome, but I learned on a recent visit to a matzo factory that they can also be great for business.
My guide through the factory is one of the world's leading authorities on making matzo. He's not a rabbi, or even a Jew.
"I was raised Southern Baptist and my wife is Roman Catholic and I'm running operations for the country's largest Jewish food company," says Randall Copeland. "Only in America."
He manages the matzo production line at Manischewitz, the biggest kosher food manufacturer in the country. His job is to keep the line running fast and cheap.
But he has to answer to an on-site regulator: Rabbi Yaakov Horowitz. You can think of him as the guy who makes sure all of the rules of matzo are followed. And there are a lot of rules.
"We have talmudic commentaries," Horowitz says, pointing to a bookshelf in his office. "Obviously, [there are] a large amount of traditional law texts behind you."
Matzo bread must be unleavened. But what, precisely, does it mean to be unleavened? Rabbis debated this for centuries and gave a very precise time limit for how long dough can be left uncooked: 18 minutes.
If there's some kind of glitch, and dough sits uncooked for more than 18 minutes, "we have to stop, clean those lines, strip off all that dough, throw it away," Copeland says. "Now that's expensive. You don't want to do that."
There are tons of other rules. Matzo dough can't include all the additives that make modern bread production more efficient. The dough also can't be folded or misshapen. The oven temperature can't drop below 600 degrees.
Horowitz has five kosher law experts stationed throughout the factory, toting clipboards and wearing white smocks over their traditional black jackets. I saw one guy in a hardhat with the word "rabbi" printed across the front.
If something does not look kosher, they can pull a lever that stops the conveyor belt and diverts the matzo into a waste bin.
Rabbi Horowitz says all the rules are hard to follow. Of course they're hard to follow. The whole point of eating matzo is to remind Jews that we were once slaves, suffering in Egypt.
"If there wouldn't be difficulties, it wouldn't be a matzo," Horowitz said.
Copeland estimates that kosher laws add about 20 to 30 percent to the cost of production. That might sound bad for business. In fact, the owners of Manischewitz told me that kosher law could be the best thing they have going for them.
Alain Bankier, co-president of Manischewitz, said that the capital investment in the company's state-of-the-art matzo machinery poses a huge barrier to entry for potential competitors.
So rather than being bad for business, all those kosher rules mean Manischwitz won't have much competition.
Adam Davidson, the NPR reporter on this story, also blogs for the New York Times, and it is the Times' Magazine where the bulk of his reporting on this story is actually posted, and where he concludes his piece this way:
The matzo business offers a lesson for how companies can succeed in an increasingly competitive, global marketplace: do something that’s really, really hard. If your business is easy to replicate, then someone, somewhere (probably China) is going to undercut you. But these days many are succeeding by following the matzo principle: fashion houses are scouring the latest microtrends for inimitable looks; industrial manufacturers are making hugely difficult custom products like aircraft engines. If your business is really easy to do, don’t gloat. You might be out of a job soon.
What's most interesting about Davidson's report on the economics of matzo baking is its failure to report that Manischewitz was forced to pay a $1 million dollar fine for price fixing in the early 1990s, the maximum possible penalty at the time, and that it purchased smaller competitors, including Horowitz Brothers & Margareten and Goodman's, during the time the US Department of Justice was investigating Manischewitz but before charges were filed against it, using those brands to deceitfully raise prices industry wide. And Davidson failed to mention this even though the $1 million fine was reported (inadequately, to be sure) by the New York Times in May 1991.
Davidson also fails to mention the vast market penetration of Israeli matzoh here in the US or the impact that has had in holding down prices. And Davidson apparently has no idea that something called shmurah matzoh exists.
He also does not report the competition between various kosher supervisors, the US Department of Justice's (apparently ongoing) investigation into alleged misconduct by these rabbis and alleged price fixing by kosher food suppliers, and the ugly attempt by big kosher supervisors to force the Soleveichik rabbinic dynasty out of its position as Streit's kosher supervisor.
Everything Davidson left out is integral to the story he was reporting.
On top of this, he reports Manischewitz's claim that its matzoh is "low carb" without any comment or word from experts, even though the easy to find facts show that Manischewitz is lying.
A one ounce piece of Manischewitz matzoh has 28 grams of carb.
One ounce of wheat bread, white bread or pita bread has 15 grams of carb.
Davidson's story could have been great. All he had to do to make it so was to include the actual facts. But he and his editors at the Times and NPR did not do that.