Guest Columns

Perspective:
Dairy Marketing

Formula for the future: Understanding the growing specialty cheese market

James Robson

James Robson is CEO of the Wisconsin Milk Marketing Board, Madison, Wis. He is a guest columnist for this week’s issue of Cheese Market News®.

While total U.S. cheese volume sales have remained flat in the last five years, specialty cheese growth has been in high gear, reporting an increase of 3 percent per year from 2007-2011. While welcome, the news comes as no surprise to the Wisconsin cheese industry, which remains strongly committed to its leadership in specialty cheese production. But there is still a lot to learn.

Wisconsin produces nearly half of the specialty cheese made in the United States. Four-fifths of the state’s growth in total cheese production for the past decade has come from specialty varieties, which comprise 21 percent of the state’s total production. Among the leaders in growth are specialty Cheddars and Monterey Jacks, Hispanic varieties, Fontina, Provolone, Asiago and Feta. Existing Wisconsin plants are incorporating specialty cheeses into their product offerings, and artisan cheesemakers have joined the scene, bringing more small batch, hand-crafted choices as well as many one-of-a-kind originals.

Specialty cheeses are the right fit for Wisconsin and for the times. Although Wisconsin is proud to continue to be the home of both large and small operations and to produce more cheese than any other state, high volume cheeses do not completely dominate our output. Virtually all of the dairy farms in Wisconsin are family owned and operated and they represent a diverse group, reflecting versatility, variety and flexibility, factors that facilitate the production of the more than 600 Wisconsin Cheese varieties, types and styles. Wisconsin cheesemakers use about 90 percent of the milk our dairy cows produce.

At the same time, consumer trends are encouraging; specialty cheeses in all the traditional channels — retail, foodservice and food processing — are using increasing amounts of specialty cheese. According to recent figures from Mintel International, a marketing research firm, 28 percent of consumers, skewing strongly to the 25-34 age group, buy specialty cheese. Other consumer food and eating trends also encourage specialty cheese growth.

These include increased snacking, more in-home meal preparation, a spurt in the ever present American devotion to cheeseburgers (albeit a segment still dominated by processed cheese), a preference for bold and ethnic flavors, a desire for quality foods, growth of prepared foods in grocery establishments and the casualization of restaurants as many white table cloth chefs have changed menus or opened restaurants that feature homey, affordable items such as grilled cheese and macaroni and cheese.

One of the most vibrant trends — an adamant consumer demand for sustainable, more local and natural foods with minimal processing — is also having a positive effect on these high-quality cheeses since many of them are produced in smaller volumes which do not support widespread distribution.

The Wisconsin Milk Marketing Board recently updated an in-depth analysis and report that examines trends driving the interest in specialty foods and specialty cheese production (nationally and within Wisconsin), along with estimates on specialty cheese usage in retail, foodservice and food processing channels. The analysis draws from a number of WMMB custom studies as well as published reports and articles, data from USDA, Wisconsin Agricultural Statistics Service and syndicated retail sales data bases.

U.S. specialty cheese usage totaled more than 1.8 billion pounds in 2010 and accounted for 16.9 percent of the total market for cheese, up from 1.6 billion pounds and 15.4 percent share in 2009. Specialty cheese usage is increasing across retail, foodservice and food processing.

At retail (traditional grocery, supercenters and specialty stores), specialty cheese accounted for 17 percent of total cheese volume sales in 2010. However, specialty cheese drove the growth at retail as total cheese sales declined in 2010 while specialty cheese volume sales increased 3.2 percent, nearly 729 million pounds. Some of the fastest-growing varieties included cheese blends; Italian varieties such as Fresh Mozzarella, Parmesan and Mascarpone; Blue; Gouda; and Hispanic varieties, including Queso Fresco, Cotija and Queso Quesadilla.

Looking at foodservice, specialty cheese accounted for 18 percent of total cheese usage in 2010, greater than the percentage at retail or in food processing. Specialty cheese volume in foodservice grew 20.4 percent from 2009 to 2010 to more than 745 million pounds. Although nonspecialty cheese in foodservice also gained volume in 2010, it lost share as specialty cheese grew at a faster rate. Within foodservice, the greatest opportunities for specialty cheeses are in fine dining, casual dining, pizza, sandwich and prepared foods in grocery stores.

Specialty cheese has the smallest share of total cheese usage in the food processing channel at 15 percent. Specialty cheese volume in this channel grew 13.3 percent from 2009 to 2010 to 341 million pounds. Even though specialty cheese usage is less prevalent in food processing, it drove over half of the growth in total cheese usage in this channel. Food processors are turning to varieties such as Gorgonzola, Romano, Parmesan and aged cheeses to deliver stronger flavor profiles.

Experimentation in pizza continues with diverse varieties that include Provel (a blended white processed cheese), Fontina, Romano, Monterey Jack, Cheddar and Feta.

Fontina and Gorgonzola appeal to consumers seeking an “authentic” taste experience while Feta is used in a wide variety of applications that mix and match ethnic culinary boundaries.

There is still much to be learned about the specialty cheese market, but establishing the current size and growth rates of the market in the three channels is the prerequisite for formulating more targeted marketing programs. What is abundantly clear is that strategists can build on a foundation of present usage and trends that predicts continued growth. The outlook for specialty foods in general and specialty cheese in particular is bright, even in these unpredictable economic times as consumers increasingly seek higher quality food experiences.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.

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