Kingpins of kosher


August 6, 2019

Today, hoverboards hit the channel, and newspapers have officially lost their handle, but first…
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As Kayco buys Manischewitz, some wonder: ‘Is the rise of a matzo-poly really kosher?’

Earlier this week, the kosher food company Kayco (full name: Kenover Marketing Corporation) bought its rival, the Manischewitz Company, in a deal that will have far-reaching impact on gefilte fish sales across the US.

According to The New York Times, the kosher community saw the deal “as the equivalent of General Motors acquiring Ford.” 

But not everyone’s saying mazel tov: Some critics fear the merger will make a matzo monopoly that drives prices of kosher food even higher.

Manischewitz is still an iconic kosher company…

But, although Manischewitz has set the standard for kosher food — which must adhere to Jewish dietary regulations — since 1888, the business has stumbled its way into this century.

After selling off its iconic wine brand in 1987, Manischewitz was forced to sell to a private equity company in 1990 (and has since changed hands several more times). 

But as one kosher kingpin falls, another rises

Unlike Manischewitz, Kayco — which has been family-owned since 1848 and made wine for the Emperor Franz Joseph of the Austro-Hungarian Empire — has grown by catering to the Orthodox community.

Kayco’s success started out with its Kedem wine label, but it has since expanded to encompass more than 150 brands.

By buying the Manischewitz brand, Kayco positions itself to dominate the $24B market for kosher food, which is expected to grow 11.5% by 2025.

But is the business a matzo-poly?

Since Kayco and Manischewitz are believed to control an estimated 50% of the kosher market, the merger has left some consumers worried the cost of certain kosher foods may rise.

Kosher customers have reason for concern: In 1991, Manischewitz was fined $1m by a federal judge for illegally fixing matzo prices (the company also paid out hundreds of thousands in consumer settlements).

That’s how the matzo crumbles
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As newspapers downsize, private-equity owners print money

Yesterday, GateHouse Media’s parent company announced plans to buy rival newspaper chain Gannett in a $1.4B deal. 

The merger, which unites the country’s 2 largest newspaper chains, will likely result in job cuts for local newspapers across the US — and profits for the investors who own GateHouse.

Consolidation NATION continues

When the purchase is complete, GateHouse will operate 667 newspapers — more than 4x as many as the nearest competitor, Digital First Media (which operates 158 newspapers).

For local newspapers, consolidation has often been a survival mechanism: Since 2004, 1 in 4 newspapers have shut down (and nearly 1 in 2 newspaper jobs disappeared). 

But, for newspapers that evaded digitally driven demise, something strange is happening…

Profits are actually UP for newspaper survivors…

Why? The private equity companies that own newspaper chains like GateHouse cut costs enough to outpace declining revenue — often by simply cutting newsrooms in half and pulling in the same ad dollars.

That consolidation creates a tall corporate ladder… 

The Des Moines Register is owned by Gannett, which is now owned by GateHouse Media, which is owned by private-equity firm Fortress Investment Group, which is owned by Japanese telecom giant SoftBank.

So much for a LOCAL paper

Predictably, GateHouse plans to eliminate $275m – $300m in expenses, likely from layoffs.

» Print some, lose some

New age Evel Knievel successfully travels across the English channel on his hoverboard

OK, so he’s more an Evel Knievel/Tony Stark combo, really… 

But whomever you compare him to, French inventor and former elite jet skier Franky Zapata made history as the first person to cross the English Channel by jet-powered hoverboard.

It took Zapata a total of 20 minutes to travel the 22-mile channel between Sangatte on France’s northern coast and St. Margaret’s Bay, England.

2nd time’s a charm

Zapata attempted the feat for the first time last month, only to fall into the water attempting to land on a boat-mounted platform in order to refuel.

He was forced to refuel midway again on Sunday, but this time he did so successfully.

What does this mean? 

A report from TechCrunch shows that airways are already overcrowded in the ever-evolving airspace, with commercial and private airliners as well as new technology such as cargo drones.

But, while Japan aims to have people driving flying cars by the 2030s, hoverboards still represent a novelty more than they do a future utility. 

But, according to Zapata, that’s not to say it won’t change in the future. When asked how to measure the historic importance of this feat, Zapata told Reuters, “Time will tell.”

» Flyin’ high

China responds to Trump’s tariff threat with an unprecedented drop in the yuan

The Chinese yuan has weakened past 7 per US dollar on the global currency rating scale for the first time since 2008.

By letting the currency slide, China aims to make its exports cheaper and gain a trade advantage, which is seen as a response to the White House’s threat to add 10% tariffs to $300B worth of different Chinese imports.

China is really not messing around

Chinese politicians have long taken pride in preventing the yuan from ever dropping below 7 to the US dollar. But now, 2 years after the trade war began, desperate times call for desperate, uh, re-measuring.

The country also asked state-owned companies to suspend imports of US agricultural products. 

Spiteful or not, the move has certainly sent the US markets skidding. 

It’s a war within a war

Yesterday, the Dow plunged to its lowest depth of 2019. And, according to CNBC, former Fed Vice Chairman Alan Blinder said he would not be surprised if the US were to retaliate against China in the currency markets.

Many have speculated since last year that the US could also begin weakening the dollar, which would throw 2 global superpowers right smack dab in the middle or a currency war… within a trade war.

» Oh brother
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