Creating the Kosher Brand: Orthodox Judaism as Business Strategy.

Author:Horowitz, Roger
 
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In 1990, industry journals reported that Dannon had moved kosher certification of its yogurts from an individual rabbi to the Union of Orthodox Jewish Congregations of America (UOJCA, generally known as the Orthodox Union), permitting it to place the well-known U in a circle trademark on its packages. Visibly displaying the UOJCA's endorsement would, the company believed, measurably improve its sales to consumers who wanted to purchase kosher yogurt, even though the OU symbol would be added to products that already were kosher. Dannon's bottom line quickly validated this decision; an internal company report concluded that the UOJCA's endorsement increased sales by $2 million annually. The impact of kosher certification on Dannon received broad attention in the food industry, securing laudatory coverage in staid trade journals--and likely conversation among their readers whether they could emulate Dannon's success through a similar strategy. (2)

By the end of the 1990s, a remarkable range of new products were certified by the UOJCA. Gatorade, Tootsie rolls, Oreo cookies, and Miller and Coors beer all decided to carry its U in a circle symbol on their products, having concluded the costs of securing UOJCA endorsement were minor compared to anticipated increases in sales revenue. Since then, consistently 25-30% of all new consumer food products introduced each year are kosher certified, whether by the UOJCA or one of the other Orthodox certification agencies. Kosher requirements are now fully integrated into the operations of the American food system.'

The dramatic expansion of kosher food options reflects the emergence of kosher as a brand. Much as well-known product brands function to generate revenue through greater appeal in the marketplace, over the last third of the twentieth century kosher trademarks gradually took on brand-like qualities to augment the sales of products on whose labels they appeared. Kosher was not the primary brand in these instances; obviously the large Gatorade name on the label attracted more purchasers than the small OU symbol. Nonetheless, kosher certification augmented the principle brand's appeal, both for observant Jews and, remarkably, as a signifier containing information desired by a far larger market of non-observant food consumers.

Used loosely in popular terminology, the term "brand" often functions as a synonym for image and reputation, without reference to marketplace consequences. While such usage can operate as an effective rhetorical device, it lacks analytic rigor and fails to define what constitutes a brand. Drawing on conceptualizations developed in the extensive literature on brands in economic and business history scholarship, I consider brands an economic category whose existence can be determined through quantifiable measures of marketplace impact and revenue. In this frame, if kosher is indeed a brand, there should be a way to measure the value of the kosher designation both to the products that the carry the appropriate information, and the institutions that place the kosher designations on foods that meet their standards. Moreover, my claim is that kosher as a brand encompasses the discrete trademarks of the varied certification organizations; collectively, these symbols communicate to consumers which products meet kosher standards.

The UOJCA was the principal organization creating a kosher brand, with its efforts embedded in a broad effort by Orthodox partisans to expand kosher options available to observant Jews. The OUJCA's activities, generally in concert with other certification agencies, made kosher designations financially valuable to food producers. The extra profits for the firms that decided to make their products comply with kosher requirements generated sufficient revenue to create a new and robust income stream for Orthodox certification organizations. The substantial monetary benefits that they accrued as a result are quantifiable measures of their successful branding efforts. These revenues, in turn, generated significant resources for Orthodox Judaism. Certification revenues paid the salaries of hundreds of clergy and laity engaged in kosher supervision activities, with significant surpluses funding Orthodox educational and promotional initiatives.

This article begins by framing the emergence of kosher as a brand within central concepts developed by business and economic history scholarship. It then analyzes the long history of pre-agency kosher certification as a form of product endorsement not dissimilar in many respects to the use of secular claims of expertise to help sell goods. In doing so, it historically traces the developments that permitted kosher trademarks to assume two key qualities of brands identified in the scholarly literature: reducing "consumer search costs" for locating desired products and regulating supply chains that generate inputs for the end product. The paper closes by mapping the revenue implications of the success of kosher certification on the UOJCA, and, with that, the embedding of kosher practices within the American food system.

Trademarks and Brands

Trademarks are a ubiquitous feature of modern commercial society. While distinctive producer marks on products can found as early as ancient Greece, the legal protections accorded to marks only emerged in the nineteenth century with the growth of large firms whose reputation rested on privileged use of its name and the names of its products. Prior to this point, the close connection between seller and buyer protected the firm's reputation and mitigated against its theft or misuse by other parties. But when a separation emerged between a producer and its customers, "name and reputation become intangible property rights," Mira Wilkins argued in an influential 1992 article. Firms sought passage of trademark legislation on a national, and in time, and international basis. In the United States, federal trademark registration commenced in 1879; Coca Cola and Philadelphia Cream Cheese were among the first companies to avail themselves of its protections. (4)

Brands and trademarks are intimately related. Because trademarks can be renewed in perpetuity, they are an attractive legal vehicle for firms seeking to develop brands. In contrast, patents have expiration dates. Once their legal protection ends, the publicly available information about their composition and technical features encourage generic copying. Brands, though, are not covalent with trademarks as not all trademarks operate as brands. Functionally, a trademark holder has to intervene in the market place to turn its mark into a brand. Hence brands must have an economic element--visibility and value in a market--as well as the legal protections against copying or unauthorized use that allow the trademark holder to profit from it. (5) The marketplace power of brands gives them considerable economic value. Indeed, brands created by many firms have outlived the corporate entities from which they originated, but retain marketplace value through a collection of words and symbols that continue to influence consumers' choices.

Two features of brands stand out as particularly relevant to kosher food. First, trademarks that operate as brands reduce "consumer search costs" by making it easier for consumers to act on their preferences. The trademarked features of product identification--the Coca Cola logo, the Tide detergent package design--help consumers locate the products that have the features (taste, durability, effectiveness) that they desire. The additional revenues so generated results in recovery of the extra costs for such brand maintenance due to the legal monopoly on the use of a particular name or symbol. The value of such trademarks, in turn, motivates the owner to maintain the quality of its branded products so as to induce consumer loyalty and repeat business. In legal terms, maintenance of brand quality and facilitation of consumer choice thus justify trademark monopolies. (6)

Maintenance of quality, a key benefit for consumers, generates a second distinctive feature of brands: control over supply chains. With products generated from a variety of inputs made by widely dispersed manufacturers (e.g. chemicals in foods, components in computers), firms seeking to maintain a brand's quality need to control the various elements incorporated in manufacturing. Hence, the power of the brand over the other trademark holders that contribute to the final product is hidden from consumers but critical for a brand's durability. Consumers rely on the dominant brand to ensure that its components--electrical, mechanical, or edible--are obtained in such a manner as to ensure reliable and stable characteristics of the final product. (7)

Brands can thus function as a means to regulate a product's composition--a particularly valuable asset to making modern food kosher. To the extent that kosher trademarks influence consumer choice and control supply chains, they would achieve the functions performed by commercial brands.

Until the mid-1940s, however, the symbols adopted by the UOJCA and other kosher certifiers could not be registered as trademarks. Unusually among industrial nations in the early twentieth century, US trademark law did not recognize marks by anything other than a goods-producing firm. Much of this resistance was an outgrowth of the anti-unionism of the late nineteenth and early twentieth century. (8) As a way to generate consumer support for trade unions, unions sought to make the union label a trademark to place on products from firms that accorded unions' collective bargaining rights. But a series of Supreme Court decisions severely constricted use of a union label to support a consumer boycott as leverage on firms. In Loewe v. Lawlor (1908), also referred to as the Danbury Hatters' Case, the hatters' union was held liable for enormous damages incurred by firms due to a consumer boycott...

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