Insights Industry Insights Refusing to Crumble; Production & Demand Increasing

       

Cheese: Refusing to Crumble; Production & Demand Increasing

In 2007, AccuVal published an insight on the anticipated Growth within the Fluid Milk Market. Like many industries, the dairy industry saw a lot of changes in 2008, particularly in cheese. Cheese is expected to be the leading product segment of the dairy industry through 2012. Growth will be driven by an increased demand for natural and artisan cheeses in addition to “prepared” convenience cheese products such as cubed, shredded and sliced.

SUPPLY

Production of specialty and artisan cheeses on the rise

The number of artisan and specialty cheese makers has increased in the past few years. According to the American Cheese Society, the number of cheese makers who have joined the organization increased from 426 members in 2001 to more than 1,346 by 2007. New product development by the larger producers including Sargento, Kraft and Tillamook has also increased the supply of specialty cheeses beginning in 2007 and expanding in 2008. The Wisconsin dairy industry alone manufactures more than 600 varieties of cheese.

The “Golden State” challenge of the “Dairy State” increasing supply

In a bid to become the largest cheese making state, pound for pound, California has increased production of cheese to 2.14 billion pounds – almost doubling production since 1997. In 2009, a new factory built by the Blue Ribbon Cheese Co. in Fresno County is expecting to produce an additional 680,000 pounds. However, Wisconsin still holds the title with the production of 2.4 billion pounds in 2008.

DEMAND

Tightening of economy will provide opportunity for growth in private label

Compared to prior years, the economic changes of 2008 caused consumer prices to rise significantly, resulting in a higher level of scrutiny of purchases by consumers. The demand for value-priced, private label products that can be easily prepared “at home” is on the rise. Of the 281 million units of sliced cheese sold by the top 10 brands in 2008, 40% was sold under a private label, Sargento and Kraft retained a combined 37%, and the remaining 23% was sold by four other brands. While the data above is specific to sliced cheese, the trend for private label was similar across all types.

A staple ingredient

Cheese is considered a “must have” ingredient for certain foods, such as pizza and sandwiches. More than 880 million units of shredded cheese were sold from September 2007 to September 2008. Sliced cheese remains a primary seller for both natural and processed cheese. Sliced cheese sales grew 3.8% (by volume) in the 52 weeks that ended September 7, 2008, according to Information Resources, Inc., a research firm focused on retail.

Demand at an individual level increasing

According to a year-end analysis completed by the Wisconsin Milk Marketing Board, Americans eat more than 32.5 pounds of cheese per person per year. Based on an historical average growth of 1.5% per year, it is anticipated that this rate of consumption will increase to 36.0 pounds by 2016. Individual consumption has increased, in part, due to the versatile and convenient options available: crumbled cheese for soups, salads and snacking; shredded cheeses for pizza and topping; and sliced cheeses for sandwiches and crackers.

AccuVal has expertise in more than 100 industries - including dairy. Having provided appraisals for many of the world’s largest dairy processors, AccuVal has the experience and market knowledge to attack complicated engagements with a complete understanding of the whole picture. View our representative food manufacturing client list.