Required Report - public distribution

**Date:** 9/13/2005

**GAIN Report Number:** BR5019

BR5019

**Brazil**

**Kosher Foods**

**.**

**2005**

**Approved by:**

![](media/image1.wmf)Morgan Perkins, Director

U.S.AGRICULTURAL TRADE OFFICER

**Prepared by:**

Fabiana Fonseca, Agricultural Marketing Specialist

**Report Highlights:**

In Brazil, the kosher segment still is underdeveloped and fragmented,
despite the significant growth registered in the last decade. ATO Sao
Paulo conducted a series of interviews with relevant players to
consolidate this report and bring to light opportunities and challenges
in this emerging market.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Sao Paulo \[BR3\]

\[BR\]

**I. Summary**

The Brazilian Institute of Geography and Statistics (IBGE) of 1991,
indicates that the Jewish population in Brazil totals 86,816. At the
time, 50 percent of Brazil's Jewish community lived in Sao Paulo, 33
percent lived in Rio de Janeiro, 9 percent in Rio Grande do Sul, and 8
percent in other states. Based on statistical trends, Professor Sergio
Della Pergola, Ph.D., from the Hebrew University of Jerusalem, states
that the Jewish population for 2002 is estimated at 97,300,
approximately 10 percent above the 1991 census figure, giving Brazil the
eleventh largest Jewish community in the world, following the United
States, Israel, France, Canada, the United Kingdom, Russia, Argentina,
Germany, Ukraine and Australia.

As population estimates suggest, the segment of kosher products in
Brazil is a niche market. The Jewish community is the major target
audience for kosher food companies. According to trade contacts,
Orthodox Jews who representing about 10 percent of Brazil's Jewish
community, are the largest consumers of kosher food, accounting for 90
percent of kosher product purchases. However, other groups including
non-Orthodox Jews, and other ethnic or religious groups such as Muslims
and Seventh Day Adventists, also purchase kosher food products. In
addition, vegetarians and lactose intolerants look for kosher products,
and account for 5 percent of total purchases**.**

The following table illustrates some of the strengths and challenges to
be faced when exporting to the Brazilian market.

  ----------------------------------- -----------------------------------
  **ADVANTAGES**                      **CHALLENGES**

  U.S. companies manufacture a wider  Any U.S. company planning to export
  variety of kosher products and      to Brazil should investigate
  enjoy mass-production benefits.     differences in the business climate
                                      and commercial relationships in
                                      Brazil.

  Local production of kosher products U.S. companies should identify the
  is increasing but currently         most marketable products for the
  restricted to basic products.       Brazilian market, especially in the
                                      high-end segment.

  U.S. companies usually have a       Usually, exporters must sell small
  shipping cost advantage compared    quantities and consolidate
  with other competitors in the       shipments of different kosher food
  market.                             products.

  Among many food-savvy consumers,    Suppliers should position kosher
  kosher products have a high-quality products among trade and mainstream
  image.                              consumers with an emphasis on
                                      quality, rather than religious
                                      aspects of kosher food.
  ----------------------------------- -----------------------------------

###### 

###### II. Kosher Certification Acceptance/Preference

The Brazilian Orthodox Jewish community is very strict regarding kosher
certification issues. Each congregation relies upon their rabbi to
identify companies that produce kosher food and to indicate the products
they should or should not purchase. Periodically, members of certain
congregations receive lists of kosher products (local and imported) that
are available in the market and deemed proper for consumption.

According to local contacts, costs to certify kosher production may
reach \$5,000. However, to make kosher products more affordable, to
increase the variety of products in the market and to bring families
closer to their Jewish roots, a non-profit institution called Beit Din
Kashurut (BDK) was recently created. BDK is supported by businessmen and
supervised by 6 rabbis in Brazil's Jewish community. Their main goal is
to make sure the kashurut laws are being observed in plants that have
modified operations for kosher production. In addition, BDK supervises
manufacturing of food products that are inherently kosher, but could
become un-kosher during processing and packaging. Recently, BDK created
2 lists of kosher products: the *Mehadrin* *(green list, for those who
adhere to a stricter interpretation)* and the *non-Mehadrin (yellow
list).*

Kosher supervision and certification in Brazil are the responsibility of
local rabbis, and are not overseen by any government agency. According
to kosher retail trade sources, the following are the seven kosher
certifications most frequently seen in the Brazil market.

![](media/image2.png){width="0.75in" height="0.675in"} \>Vaad Rabanei
Anash/Kaad Kasher

![](media/image3.png){width="1.5in" height="0.6034722222222222in"}
\>Rabbi I. Dichi/Mekor Haim Congregation

![](media/image4.png){width="0.8493055555555555in" height="1.11875in"}
\>Rabbi Y. D. Horowitz/Kehilas Hachassidim

![](media/image5.png){width="0.8333333333333334in"
height="0.8333333333333334in"} \>Rabbi M.A. Iliovits/Kehilas Hachareidim

![](media/image6.png){width="0.9145833333333333in"
height="0.6534722222222222in"}\>Rabbis E. Laniado and D. Weitman/Beit
Yaakov Congregation

![](media/image7.png){width="0.9173611111111111in"
height="0.7027777777777777in"} \>Rabbi Shamai Ende

![](media/image8.png){width="0.6666666666666666in"
height="0.6666666666666666in"} \>BDK/supervised by Rabbi Shmuel A.
Havlin, Rabbi Natan Silberstein, Rabbi Rony

Gurwicz, Rabbi Meir Tawil, Rabbi Daniel Touitou and Rabbi Zushe Blesh

U.S. kosher products are highly regarded by a large percentage of
Brazil's Jewish community. Most major U.S. kosher certifications are
accepted in Brazil. The Orthodox Union is the best known among the
Jewish community, although others such as Kof-K Kosher Supervision, The
Organized Kashrus Laboratories and Star-K Kosher Certification are also
well known and respected. While Orthodox Jews do buy many of the
imported kosher products available in stores, ultimately, their Rabbi's
word has the greatest influence on their purchase decisions. Frequently,
kosher-observant consumers contact local importers and demand a copy of
the kosher certificate for the product they are interested in
purchasing. As consumers may request the kosher certificate at any time,
the importer must be able to respond promptly.

###### III. Consumption and Market Sectors

A. Consumption

One of the most traditional specialty food stores in Sao Paulo, Casa
Santa Luzia, has had a section dedicated to kosher products for more
than 30 years. At Santa Luzia, Orthodox Jews are the primary consumers
of kosher products, as in other stores selling kosher products. For
most, price does not seem to be the most relevant factor and does not
drive purchases. According to the store manager, Carlos Morgado, the
kosher segment has grown for several years. In the last 6 years, the
number of kosher-certified products in the market grew from 175 to 800,
representing a 357% increase. Morgado also noted that an increasing
number of younger consumers purchase kosher products. In general, these
individuals have high buying power and are also considered high-end
consumers, in terms of taste and preferences. This target group demands
a wide range of products, well beyond the limited variety of foods once
available to their parents. A demand for trendy and sophisticated kosher
foods is expected to come from this upscale group. However, the
assortment of specialty products in the market is still limited, and
gourmet foods are mainly imported or produced locally on a small scale.

Although the selection of kosher foods remains small compared to
mainstream products, the situation has improved in recent years, driven
in part by demand from consumers with special dietary needs. For
example, there is increased buyer interest -- among vegetarians, lactose
intolerants and others -- in kosher pareve food products, as many
knowledgeable consumers are aware that pareve foods contain no meat or
dairy ingredients.

According to trade sources, kosher product purchases tend to double
during the Jewish holiday seasons, including Passover, Shavuot, Rosh
Hashana, Yom Kippur and Sukkoth, as well as celebratory occasions such
as bar mitzvahs, weddings and others.

Purchases of kosher products could be increased in the mainstream market
if non-Jewish consumers, especially, those with an interest in healthy
eating, learned more about the quality standards of kosher production.
In general, Brazilians have a perception of kosher food as "a kind of
food Jews have to eat to comply with religious matters". The combination
of "have to" with "religious obligation" does not sound attractive to
common consumers; therefore the quality benefits of the kosher
production and diet are discounted.

B. Market Sectors

The scenario for kosher foods has changed significantly since 1990 when
import tariffs declined in Brazil. This economic measure not only
promoted the entry of new products but also gave rise to the local
production. The food processing industry, for instance, became more
productive and was able to develop new segments, which also encouraged
kosher food production to a degree. Despite the increased number of
kosher foods available in the market, until that time, there was no
significant production of kosher foods in Brazil. When processing kosher
foods, large and medium size companies work on shifts. This requires
food producers to interrupt regular production, and change their
operations to meet kosher production requirements. This costly
arrangement and Brazil's limited number of kosher consumers have
constrained domestic production and market development in the kosher
sector. As a result of low availability, supermarket mark-ups for kosher
products are usually 30 to 100 percent higher than comparable mainstream
products.

In 2004, there were 150 medium size companies producing kosher-certified
products in Brazil. It seems that food processors are projecting a
positive trend for the future or at least are interested in diversifying
their production. According to one local supervisory agency, in some
cases, when companies realize there are no significant changes required
to convert their plants to kosher food production, they will choose
kosher and probably consider exporting as part of their marketing
strategy.

Food categories currently processed by the local industry are:

Rice, wheat flours, fibers, oat, seeds, salt, coffee
(raw/roasted/flavored), cappucino, cocoa (paste/butter), tea, vegetable
oil, vinegar, seeds, condiments, sauces, sugars, sweeteners, snack
foods, red meats, fish, cheese, dairy products, non-dairy products,
fruits (preserved, frozen, dehydrated, dry, glazed), vegetables (canned,
preserved, frozen), pickles, candies/ confectionery, cookies,
chocolates, chewing gum, desserts, ice cream, snacks, breakfast cereals,
cereal bars, olives, olive oils, tomato pulp, baby food, breads, soups,
pasta, diet products, honey, jam, fruit juices, chocolate drinks,
spirits, wine and alcoholic beverages.

In Sao Paulo, major retailers such as Pao de Acucar, Carrefour and Wal
Mart have stocked kosher food sections at stores where Jewish consumers
are most concentrated, such as the southern and western parts of the
city. Beginning in 2001, Pao de Acucar, the top Brazilian retailer,
established a group of 9 stores with kosher sections. This retailer now
has 21 stores with kosher sections and its product selection has nearly
tripled, as the number of kosher items increased 180 percent. The kosher
product line at Pao de Acucar mainly consists of imported products,
which represent 90 percent of its total kosher food line. Imported
kosher foods are sourced mainly from the United States and Israel, with
each country accounting for about half of the total.

According to Pao de Acucar, only 10 percent of the kosher products sold
in Brazil are produced locally. As a result, it is difficult for
Brazilian retailers to obtain the volumes and varieties of kosher foods
to meet demand.

At specialty food stores such as Casa Santa Luzia, the majority of
products in the kosher section are imported, with imports comprising
about 80 percent of total kosher products. The United States, which is
the number one supplier, accounts for 50 percent of the stores' kosher
product imports. Israel accounts for 30 percent of the stores' imports,
and other countries, including the European Union, account for 20
percent.

At stores that sell kosher food exclusively, the share of local products
has increased, but remains relatively small. In Higienopolis, a
traditional Jewish neighborhood in Sao Paulo, one small supermarket,
which only sells kosher products, carries about 900 items of which 70
percent are imports and 30 percent are domestic brands. In contrast,
large supermarkets carry a limited number and variety of
kosher-certified products.

In general, retailers do not import directly but rely on food importers
and distributors to supply imported products for their stores. According
to trade contacts, when prices of kosher and non-kosher products are
comparable, importers would be more inclined to procure kosher products,
as they meet the needs of both the kosher and mainstream markets.

###### IV. Promotional Activities

ATO Sao Paulo recommends that U.S. suppliers of kosher food explore
promotion possibilities with retail chains, focusing on holidays such as
Passover in the spring and Rosh Hashana in the fall. These activities
usually start 3-4 weeks before the holiday. In addition, rabbis and
Jewish congregations in Brazil are good sources of information, and may
have suggestions about promotions that could be conducted on a local
level.

###### V. Post Contact and Further Information

Please contact the offices below for questions or comments regarding
this report, or assistance exporting food products to Brazil. Potential
exporters who would like to be put in contact with Brazilian importers
should feel free to contact ATO Sao Paulo at:

U.S. Agricultural Trade Office (ATO)\
U.S. Consulate General

Rua Henri Dunant, 700\
04709-110 Sao Paulo - SP\
Tel: (55 11) 5186-7400\
Fax: (55 11) 5186-7499\
E-mail: <atosaopaulo@usda.gov>\
**or** <atobrazil@usdabrazil.org.br>

Office of Agricultural Affairs (OAA)

**U.S. Embassy\
**Av. das Nacoes, quadra 801, lote 3\
70403-900 Brasilia - DF\
Tel: (55 61) 3312-7000\
Fax: (55 61) 3312-7659\
E-mail: <agbrasilia@usda.gov>