Dairy Market Trends:<br>Shredding in the Cheese Market
There may be a silver lining to lower cheese prices, at least in the robust shredded cheese category. The latest figures from Information Resources Inc. indicate that quarterly sales of shredded natural cheese are not growing like they once were, in terms of dollar sales. But unit growth has shown more staying power. Dollar sales grew rapidly throughout 2001 and reached double digits by the last quarter of that year, and the first quarter of 2002. But then what happened? In the most recent three periods reported, dollar sales have gone from nearly 7% to just under 1% growth. But now look at unit sales. No double-digit growth there, but nothing under 3% either. All these figures from IRI represent grocery, drugstores, and mass merchandisers, but do not include Wal-Mart.
Contrary to conventional consumer wisdom, the price at the stores may sometimes follow the drop in the price to farmers. Could it be that lower prices are helping to keep shredded cheese unit sales up? There's another possible explanation. More shredded cheese, complete with convenience packaging may be coming from a broader pool of vendors including private label and others offering a lower price. Consumers will pay for convenience, but they'll happily take a discount, too. Private label sales have grown at a brisk pace as more and more retailers see that consumers love the convenience of shredded cheese.