The Specialty Cheese Market in the United States

1. The Specialty Cheese Market in the United States presented by Paul Savello, Ph.D. Ministerio de Ganadería, Agricultura y Pesca

2. ¡Gracias a los expertos en lácteos visitantespor su tiempo e interés en ayudarel sector lácteo del Uruguay!

3. Summary • Cheese consumption in U.S. increased during past 30 years • Specialty cheese market helping to drive the per capita consumption • Specialty cheese retail sales – U$S 2.4 billion in 2000 with growth to U$S 2.9 billion in 2005 • Four P’s (Product, Promotion, Place, Price) of marketing used to describe the specialty cheese market • Need to uncover a niche product

4. Summary • Most rapidly growing niche market is ethnic cheese market • Hispanic style cheese is fastest growing sector • “Farmstead”/”artisan” cheese market rapidly growing in specific geographic areas • Opportunities exist for international manufacturers of specialty cheeses in the U.S. market

8. Cheese Consumption Increase • Consumer desire for new cheese varieties in convenient forms and packages • Consumers willing to try new varieties of cheese • Consumer willing to pay premium for the new varieties • Dairy Management Inc. (Rosemont, Illinois): 74% of consumers “love the taste of cheese” and 78% want to try “new and different varieties”

9. Cheese Consumption Increase • Health conscious consumer – calcium and protein in cheese • New cheese varieties (imported or manufactured by artisan cheesemakers) turn non-cheese consumers into users or occasional cheese users • Farmstead/artisan cheeses represent small portion of total cheese market, but these cheeses show significant opportunity for market growth

10. Cheese Consumption Increase • Jim Path (University of Wisconsin Center for Dairy Research) defines “specialty cheese” as • “cheese that is low in production volume – • less than 40 million pounds annually…labor • intensive…perception of value added product… • may have ethnic background…special • manufacturing process or packaging”

11. Specialty Cheese – Market Overview • Nature of specialty cheese derived from one or more unique qualities: • Exotic origin • Particular processing • Design • Limited supply • Unusual application or use • Extraordinary packaging or channel of sale

12. Specialty Cheese – Market Overview • Why is specialty cheese market increasing? • Subtle variations in textures, flavors • Ethnic heritages • Perfect match for today’s adventurous and flavor-seeking consumer • Quality and variety of specialty cheeses advances due to: • innovation, research, global migrations of cheesemakers, craftsmanship programs

13. Specialty Cheese – Market Overview • Artisan cheeses have great reception in market • Goat cheese one of the most popular specialty cheeses • Retailers can carry as many as 50 varieties of goat cheese

14. Specialty Cheeses – Retail Growth • Fastest growing at retail – Asiago cheese • Next – Gorgonzola, Provolone, Muenster, Colby Jack, Brie, Goat, Blue, Havarti, Swiss • Ten years ago, consumers not even aware of cheeses such as Asiago, Gorgonzola, or Havarti

16. Specialty Cheeses – Retail Growth • Specialty cheeses sold in “deli” departments of supermarkets • Commodity cheeses sold in pre-packaged, set weight varieties in the dairy case • Research of Fromartharie (New Jersey): • “most shoppers purchase commodity cheese for cooking and baking, while they shop the deli case for entertaining”

17. Specialty Cheeses – Retail Growth • Packaged Facts report “U.S. Gourmet Specialty Foods Market:” • Supermarkets – 55% of specialty cheese sales • Specialty cheese stores – 30% of sales • Health/natural food stores – 5% of sales • Warehouse clubs – 4% of sales • Other retail outlets – 6% of sales

18. Specialty Cheeses – Retail Growth • Supermarket Business 2000 Expenditure Survey • Cheese category at 35.5% gross profit margin compared to 29.8% gross profit margin for entire dairy department • International Dairy-Deli-Bakery Association (IDDBA) 2001annual foodservice trend report • “Cheese has highest gross profit margin of any product sold in dairy department of grocery stores”

19. Specialty Cheeses – Retail Growth • Supermarket consumers choosing more farmstead/artisan and ethnic cheeses – due to rebirth of “cheese course” at restaurants • Greek feta cheese (including flavored feta cheeses) increased 30% in retail sales last year • “Other” Italian cheeses and Hispanic varieties significantly increasing in retail sales

20. Specialty Cheeses – Retail Growth • Consumer data important in specialty cheese market • Consumers with household income >$250,000 more than 4x likely to purchase Brie cheese over other cheeses • Professionals and consumers with incomes >$100,000 more likely to choose Camembert cheese • Havarti cheese has high appeal to middle income consumers earning $50,000 to $59,000

21. Specialty Cheeses – Retail Promotion • Gourmet Retailer report • 60% of retailers offer full-service cheese counter • 1/3 of supermarkets offer up to 300 individual specialty cheeses • 60% said that artisan cheese makes up more than 50% of the cheese case • Most effective ways to promote specialty cheese are sampling/demonstrations and staff recommendations

22. Specialty Cheeses – Retail Promotion • Gourmet Retailer report • Educational “signage” important • Type, age, taste profile, country of origin, serving suggestions, care instructions • A cheese-wine pairing guide helps promote cheese sales

23. Specialty Cheeses – Education • University of Wisconsin Center for Dairy Research • Dutch Cheese Artisan Course • Wisconsin Cheese Grading Short Course • Applied Dairy Chemistry Short Course • Quality Assurance Short Course • Wisconsin Cheese Technology Short Course • Wisconsin Master Cheesemaker® Program

24. Specialty Cheeses – Education • American Cheese Society • Special attention to specialty and farmstead cheeses from cow’s, goat’s, sheep milk • “Farmstead” cheese – handmade in small quantities produced on the farm using only milk from the herd located on that farm • Farmstead producer can direct cheesemaking process from determining the animal’s feed through the final aging of the cheese

25. Ethnic/Niche Markets • By 2010 ethnic food sales in U.S. will reach U$S75 billion per year • Fastest growing ethnic market is Hispanic community • U$S 421 billion spending power • Hispanic food sales to grow 5.5% per year over the next 50 years • U.S. is world’s fifth largest Hispanic marketplace

29. Ethnic/Niche Markets • Other ethnic/niche cheese markets • Greek feta cheese • Kosher cheeses • English style cheeses • Farmstead cheeses

30. Farmstead/Artisan Cheeses • Wisconsin’s Full Circle Farm – current interest in naturally-occurring fatty acid found in dairy products that may have cancer-fighting abilities • Introduced artisan cheese produced from milk of grass-fed cows to promote these health benefits • Takes advantage of the higher than normal level of “conjugated linoleic acid (CLA)” in the milk/cheese • Web site (www.fullcirclefarm.net) provides detailed description of farm including quietness, humane treatment of animals, fresh grass and clove, farm’s family history

31. Special “niche” markets (with “sub-niches”) for Specialty Cheeses • Supermarket chain “Whole Foods Market” of United States and Canada provides an interesting and opportunistic example/possibility for Uruguay’s dairy industry in the “niche” and “sub-niche” markets • Uruguay’s cheese sector (industry and artisan) can provide value-added cheese varieties to the Whole Foods Market chain for the chain’s local, regional, and national markets

32. Summary • Cheese consumption in U.S. increased during past 30 years • Specialty cheese market helping to drive the per capita consumption • Specialty cheese retail sales – U$S 2.4 billion in 2000 • Four P’s (Product, Promotion, Place, Price) of marketing used to describe the specialty cheese market • Need to uncover a niche product

33. Summary • Most rapidly growing niche market is ethnic cheese market • Hispanic style cheese is fastest growing sector • “Farmstead” cheese market rapidly growing in specific geographic areas • Opportunities exist for international manufacturers of specialty cheeses in the U.S. market