Best Kosher Foods Corporation

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Best Kosher Foods Corporation

3944 West Morgan Street
Chicago, Illinois 60609-2511
U.S.A.
Telephone: (773) 650-5900
Fax: (773) 650-5968
Web site: http://www.bests-kosher.com

Wholly Owned Subsidiary of Sara Lee Corporation
Founded: 1886
Employees: 400
Sales: $55 million (2005 est.)
NAIC: 311612 Meat Processed From Carcasses

Based in Chicago, Best Kosher Foods Corporation is a subsidiary of Sara Lee Corporation, specializing in the preparation of kosher meats, including all-beef frankfurters and sausage links, bagel dogs, deli meats, low-fat meats, meat snacks, and pickles. In order to meet Jewish dietary laws, kosher (meaning clean, fit, or proper) meat can come only from healthy split-hooved animals, including cattle, goats, sheep, and deer. They must be killed humanely and the blood drained from the forequarters of the animal (chuck, rib, navel, brisket, and shank)—the only section suitable for kosher processing. In addition, the main arteries and fats deemed unacceptable are removed. At this stage the actual koshering process begins. All traces of blood are removed by soaking the meat in water for 30 minutes, then thoroughly salting and allowing it to drain another hour before a complete rinsing. Because dairy products may not come in contact with kosher meat products, the use of milk powder as a sausage filler is forbidden. Every step of the way, from inspection of the living animal to packaging, requires full-time rabbinical supervision. Moreover, all food ingredients and manufacturing equipment must be certified as kosher. At one time, Best Kosher catered almost exclusively to Jewish customers, but the high quality of kosher meats has attracted an increasing number of non-Jewish customers.

The company's brands include Best's Kosher and Sinai 48; Oscherwitz, offering a higher standard of glatt kosher meats; and the Shofar and Sinai Kosher labels for meats that are double inspected. All Best Kosher products are made at the company's Chicago USDA-inspected plant. In addition to grocery stores and warehouse clubs, Best Kosher sells to the food service channels. Its hot dogs are especially popular in Chicago, a city known for its distinctive style of serving frankfurters. Best Kosher is, or has been, the official Kosher Hot Dog of local professional sports teams: Major League Baseball's White Sox and Cubs, the National Basketball Association's Chicago Bulls, the National Hockey League's Black-hawks, and Soldier Field, home of the National Football League's Bears. Best Kosher also exports its products to Canada and Mexico, as well as to Venezuela, Panama, Aruba, Hong Kong, and Taiwan.

COMPANY FOUNDED: 1886

Best Kosher was founded in Cincinnati in 1886 by a Jewish German immigrant named Isaac Oscherwitz, who opened a small butcher shop and began making kosher sausage. His five sons—Sam, Max B., Israel W., Phillip, and Harry (from eldest to youngest)—joined him as they came of age in the early years of the 1900s. Together they expanded the sausage business and sold their products throughout the Midwest. The family outgrew the small plant Isaac had established on West Sixth street in Cincinnati, and in 1909 the operations were moved four doors down the street to a newly constructed plant. Also in 1909 a partnership was established: I. Oscherwitz & Sons Co.

Isaac Oscherwitz died in 1925, the same year that his youngest sons, Harry and Philip, moved to Chicago to establish a sister company called Best's Kosher Sausage Company. The two family companies operated separately for the next 40 years, successfully negotiating the Great Depression of the 1930s and the food rationing of World War II in the early 1940s that led to meat shortages. Sam Oscherwitz died in 1925, followed by Israel in 1959. Max remained active with I. Oscherwitz & Sons until 1973 when at the age of 81 he retired. By this point a third generation was in charge, but most of Isaac Oscherwitz's grandsons sought livelihoods unconnected to meat processing. Israel's two sons, for example, became doctors, one shortening his name to Dr. Stanley Osher, and moving to Oakland, California. Harry Oscherwitz's only son also became a doctor and assumed the Osher name, Dr. Eugene Osher, as did one of Max's sons, Dr. Daniel Osher. Another of Max's sons, Millard S. Oscherwitz, followed him into the family meat business and eventually became president. He would be joined by his cousin, Philip's son, Jerry Oscherwitz.

The Cincinnati and Chicago companies mostly catered to Jewish customers, who, according to Best Kosher marketing research, accounted for three-quarters of all sales in the 1950s. In the first decades of operation in Chicago, Best Kosher focused on making hot dogs, salami, and knackwurst, but a second generation of management would change that. Millard Oscherwitz assumed the presidency, while his cousin, Jerry, nine years younger, headed the company's marketing department after earning a degree in marketing from the University of Illinois. It was the younger Oscherwitz who, in the 1950s, was responsible for pushing Best Kosher into lunch meat packaging. Also of note, he was later responsible for McDonald's decision to add Best's hot dogs to the menu of its Japanese restaurants.

NEW HIGHWAY FORCES CINCINNATI CLOSURE: 1962

The Cincinnati and Chicago companies were forced by circumstance to join forces in 1962 when the Cincinnati meat processing plant found itself in the path of a new highway, The Mill Creek Expressway, I-75. As a result, I. Oscherwitz and Sons merged with Chicago's Best Kosher, where all meat production took place. A distribution plant was subsequently opened in Cincinnati to supply that community with the Oscherwitz products. The consolidated business operated under the Best Kosher name and continued to grow and expand its product lines. With Jerry Oscherwitz serving as the driving force, in 1972 Best Kosher, according to Crain's Chicago Business, "took the hot dog industry by surprise when it introduced a lower-fat frankfurter. It took that idea one step further in 1984 when it began marketing a low-fat brand with no sugar and less salt than in regular hot dogs."

Best Kosher also grew through expansion. In 1983 it merged with another Chicago business, Sinai Kosher Sausage Co. The combined company took the name of Bessin Corp. Harry Oscherwitz, well into his 80s, stayed on as chairman with nephews Millard remaining as president and Jerry serving as director. They continued the effort to introduce products that were not traditionally Jewish as a way to appeal to an increasingly non-Jewish customer base. By this point less than 40 percent of Bessin's customers were Jewish, as a growing number of non-Jewish consumers were willing to pay a higher price for kosher products because of their careful production and the use of few additives. The company introduced Italian and Polish sausages, and in 1986 went far afield to introduce kosher chili and corn beef hash. Nevertheless, hot dogs remained the company's best selling product, accounting for 30 percent of sales. Chicago, famous for its love of hot dogs, provided about 20 percent of the company's revenues. Bessin also did well with its kosher salami, trailing only Hebrew National as the top seller in this category across the country. Bessin's growth as a purveyor of national kosher brands was enhanced in the late 1980s and early 1990s by its ability to successfully sell into the growing warehouse club channels.

COMPANY PERSPECTIVES

Today, as it has been for over 100 years, Best Kosher Foods Corporation is committed to producing the highest quality kosher meat products.

There were changes in the family composition of Bessin during this period. Harry Oscherwitz died at the age of 87 in 1987, followed two years later by 68-year-old Millard. Then, in November 1993, Jerry Oscherwitz died at the age of 63. By the time of Jerry's death, however, ownership of Bessin had passed out of the family's hands. In February 1993 Chicago's Sara Lee Corp. acquired Bessin, and its $85 million in annual sales. The reported purchase price was in the $70 million to $100 million range. The Oscherwitz family remained involved in the running of the business, however, as William S. Oscherwitz served as Bessin's chief operating officer.

The move into processed kosher meat was hardly a surprise for Sara Lee. In the 1980s, according to Crain's Chicago Business, the processed meats industry was growing at a rate of less than 3 percent while Best Kosher was enjoying sales increases that exceeded 15 percent. In addition to growing sales, kosher meats also commanded a higher price, providing greater profits. At the same time Sara Lee was wooing Bessin, ConAgra Inc. and its Armour Swift-Eckrich unit announced that it was acquiring New York's National Foods Inc., the parent company of America's leading kosher meat processor, Hebrew National. With two corporate giants backing the top two kosher meat processors, the kosher category was expected to enjoy even greater growth as Sara Lee and ConAgra exerted their hefty marketing prowess to elevate kosher meats beyond niche status. Instead of being strong in urban markets with high concentrations of Jewish consumers, kosher meats began to gain acceptance with a broader range of consumers across the country.

Its new corporate parent folded Bessin into the Sara Lee Meat Group, which included such packaged meat brands as Ball Park, Bryan, Hillshire Farm, and Jimmy Dean. Bessin got off to a poor start under its new ownership, as the Chicago Rabbinical Council withdrew its approval and Bessin products were removed from supermarkets until the problem could be rectified.

With Sara Lee's backing, Bessin expanded on a number of fronts in the 1990s. The Shofar Kosher trademark was acquired in 1995 and Bessin began offering products under that label and built up distribution for Shofar Kosher on both the East Coast and West Coast. A year later Bessin launched a line of 97-percent fat-free products. While kosher meats were regarded as healthier because of their careful preparation and lack of additives, they did not necessarily contain less fat, a factor of concern for many dieters and health-conscious consumers. This new line of products was intended to appeal to these potential customers and take advantage of a national trend toward low-fat, healthier eating. The new low-fat hot dogs, salami, and bologna were packed under the Best's Kosher, Sinai Kosher, and Shofar Kosher labels.

To expand its product offerings, Bessin reintroduced the Oscherwitz brand name in 1997 for a line of fresh and cooked glatt kosher meats, including a line of sausage products. Bessin looked to take advantage of another trend with consumers: a renewed interest in meat snacks. From 1993 to 1996, the category enjoyed double-digit sales increases, according to the Snack Food Association, while food sales in general had been relatively flat since the start of the 1990s. In August 1997 Bessin introduced, under the Best's Kosher brand, Beef Salami Sticks. It enjoyed strong sales, and in February 1998 Best's Kosher added a second product, Lean Beef Jerky, a low-fat, low calorie, high in protein snack, available in both original and Teriyaki flavors. Furthermore, Bessin looked to take advantage of the long-time presence of its hot dogs at Chicago sporting events held at Comiskey Park, Wrigley Field, the United Center, and Soldier Field. The company developed a grocery-store version of these popular franks, christened Best's Kosher Sports Dogs. It became available in Chicago grocery stores in the early months of 1997.

KEY DATES

1886:: Company is founded in Cincinnati by Isaac Oscherwitz.
1909:: I. Oscherwitz & Sons Co. is formed.
1925:: Oscherwitz family launches Best's Kosher Sausage Company in Chicago.
1962:: Sister companies merge as Chicago business.
1983:: Company becomes Bessin Corp. after a merger with Sinai Kosher Sausage Co.
1993:: The Sara Lee Corporation acquires Bessin.
1999:: Bessin is renamed as Best Kosher Foods Corporation.

NEW CENTURY, OLD NAME

Bessin ended the 1990s by changing its name to Best Kosher Foods Corporation. The Oscherwitz family remained very much involved, with William Oscherwitz taking over the chief executive officer position. As the new century began, the meat industry underwent changes that had the potential to impact the future of Best Kosher. Companies such as Sara Lee relied on meat packers—Tyson Foods Inc, Smithfield Foods Inc., Swift & Co., and Cargill Inc.—to supply them with raw material. The slaughtering facilities of Best Kosher were about the extent of Sara Lee's holdings in this area. The packers, meanwhile, had been consolidating, growing larger, and starting to process and market their own brands of packaged meats, which produced greater profits than raw meat. In effect, the packers were becoming competitors to the likes of Sara Lee and Kraft, which were strong on branding but lacked meat-packing assets.

As a result, it appeared that these companies would either have to sell out to a meat-packer or align themselves with one. Crain's Chicago Business in a 2004 article quoted industry analyst Timothy Ramey, who commented, "What has historically been a 10% margin business for Sara Lee could easily start to erode." He added, "Every pound of meat Smithfield processes themselves is a pound Sara Lee can't sell." Nevertheless, Sara Lee indicated that it had no intention of exiting the meat business, which was continuing to grow and accounted for 21 percent of the company's $19.6 billion in sales in fiscal 2004. But in November 2004, Sara Lee executives were telling the press that while they planned to remain in the packaged meat business they might concentrate their efforts on a select number of brands, in particular Jimmy Dean, Ball Park, and Hillshire Farm. According to Crain's Chicago Business, this left uncertain the future of Best Kosher.

Best Kosher was still in the Sara Lee fold in 2005 when Hebrew National encountered problems with a new processing plant that resulted in curtailed production and shortages of kosher meats on the market. Best Kosher and other rivals rushed in to take advantage of the situation and gain market share at their rival's expense. In 2006 Sara Lee was pursuing a strategy of building its packaged meats business, looking to grow sales by about 5 percent by 2010, part of a greater effort to grow Sara Lee. Where Best Kosher fit into those plans was uncertain, but there was no indication that Sara Lee planned to sell the business.