A customer from New Rochelle, New York pointed us toward a boutique leather maker here in Israel called Mor & Sinai. Taking a glance at their website, I see that they have some nice looking products. At this point we're not going to work with them because their price point is probably way beyond what most of our customers are looking for.
Instead, our main supplier for genuine leather tallit and tefillin bags is a company called Jerusalem Leathers. Their Israel distributors have brought their products to our attention for several years and they were groundbreakers in introducing genuine leather Judaica.
Although most of our products are made in Israel, we're making an exception in this case, because there aren't a lot of tanneries out that. Beyond the dairy industry, you won't see cows roaming the hills of Israel much. On the other hand, Argentina is renown for its tanneries, and indeed Jerusalem Leathers is based not in Jerusalem, but rather Argentina.
I've been impressed with their product line for quite a while. In fact, when my wife wanted to get me a gift for my birthday, I told her I want a leather tallit/tefillin set. I've been using it for close to two years now, and it still looks good as new. So it's the type of purchase that costs a pretty penny, but lasts, so you're not going to have to go out and replace it after a few years.
I know that for a fact, because previously I had PU leather tallit/tefillin bags, and they didn't last long. Also, I didn't like the grip handle. Walking back and forth to Shacharit is about 10 minutes' walk for me. I've never liked clutching bags under my arm for that long, so the grip handle is important. And the thing is most companies make grip handles that lay flat and are quite uncomfortable to grip. The Jerusalem Leathers handles are another story; they're ergonomical and quite comfortable to grip.
Note that most Jerusalem Leathers bags are available with the hand-grips as an add-on, as well as a clip-on shoulder strap option.
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