[INTERVIEW] Why more K-food brands need ‘OU’ for global markets

Companies seeking to expand into global markets like North America and Europe should consider applying for OU certification, a kosher label approved by the Orthodox Union, according to an associate of the oldest Orthodox Jewish organization in the United States.

Steve Hong, certification sales agent for the New York City-based group operating OU Kosher worldwide, said that to get mainstream distribution in the U.S., Canada and Europe, Korean food firms should seek to certify their products with OU, the most widespread kosher certification label in those regions.

He said over 1.3 million kosher products manufactured at 15,000 plants in 105 countries have been certified with OU. That is over 70 percent of all kosher products being distributed worldwide.

Hong said the majority of kosher food products at Costco and Walmart stores in the U.S. are OU-labeled. According to OU Kosher, 71 percent of kosher products at 190 Ralph’s Supermarkets stores in California and 66 percent of kosher products at Stop & Shop stores in the northeastern U.S. have been certified by OU Kosher, while the remainders are labeled with other kosher certifications like OK, Kof-K or Star-K.

OU’s presence goes beyond consumers who need to adhere to traditional Jewish dietary laws. According to a WAC Survey and Strategic Consulting’s report from 2016, nearly 80 percent of all kosher food sales worldwide were to non-kosher shoppers.

“Kosher products draw over 12 million shoppers in the U.S. each year and their sales are over $150 billion per year. Major distributors in the U.S. are recognizing OU as the de facto quality standard. That’s why OU-labelled products are directly connected to the American customers with strong consumption,” Hong said in his interview with The Korea Times.

The problem is that the majority of small- and medium-size firms (SMEs) in Korea, which constitute the bulk of the Korean food industry, do not know about OU, according to Hong. While large firms like Daesang, Nongshim, CJ, Pulmuone, Samyang Foods, Dongsuh Foods and Dongwon Systems have already had their manufacturing plants pass certification standards for the label, SMEs without enough production capacity for global markets have not yet prepared for it. As of this year, 87 companies in Korea passed standards for OU Kosher. That accounts for just 0.27 percent of the Korean food manufacturing industry.

“Many Korean firms misunderstand OU or other kosher labels as a Jewish requirement and don’t realize the labels’ market power. They also don’t know how critical the labels are to the local distributors like Costco or Walmart. Korean SMEs, unlike the large firms, mostly operate domestically. Lastly, OU Kosher hasn’t invested enough in reaching out to Korean firms,” Hong said.

Hong compared kosher labels to those for halal foods, breaking down the global markets for both certifications. He concluded products with halal labels have access to a worldwide market estimated between $1.6 trillion to $2.5 trillion, which overshadows kosher’s $22 billion market, but have higher hurdles to reach local consumer bases than kosher.

“We must understand that even K-food products with halal labels can only reach a portion of local consumers. They are the top-percentile consumer groups who can afford premium imports. Furthermore, not many Muslim nations have advanced retail chain systems like major cities in the U.S.,” Hong said.

“Many Korean firms began learning about halal certifications in 2016, but started with wrong information. They found their halal products exported to major economies around the world didn’t rack up as much as they anticipated in sales. They in turn learned about kosher certifications from local consultants and started gearing toward the kosher labels instead in 2020.”

OU Kosher, established by the Orthodox Union in 1923, dispatches a rabbinical field inspector to facilities of companies interested in OU certification. What each inspection focuses on is assessing sources of ingredients used, checking whether meat and dairy are properly separated and how long each pipeline has been in operation.

The six-step assessment procedure, whether the facilities’ export target countries are in North America or Europe, is the same. This is different from halal labels, which are issued by different authorities across more than 50 countries and have varying standards. The field inspector sends reports to the Orthodox Union’s headquarters which later issues a self-printable OU label online.

“The field inspector for Korea also covers India and Southeast Asian nations. Companies here, meanwhile, get subsidized by the government and pay just 30 percent of the administration fee for the certification,” Hong said.

“My goal is to list and manage K-food firms here and introduce them the OU certification and help them expand to broader markets outside Korea.”