While the economy struggles toward recovery, U.S. cheesemakers continue to conduct business as usual. Whether it’s introducing a tasty new block of cheese or launching a user-friendly package, cheese companies are raking in the sales.

While the economy struggles toward recovery, U.S. cheesemakers continue to conduct business as usual. Whether it’s introducing a tasty new block of cheese or launching a user-friendly package, cheese companies are raking in the sales.

According to a cheese market research project conducted by Chicago-based Information Resources Inc., overall cheese sales for the second quarter of 2009 are up by 7.1% even as manufacturers faced new challenges.

The shredded cheese category, for example, rose 10.4% over quarterly year-ago levels, says the report, and earned a 26.5% share. Meanwhile, chunk and loaf cheese gained 9.4% with a 27.2% share and sliced cheese raked in a 27.9% share even though it increased by 1.5%.

In fact, “the past three months marked the longest period of sustained positive growth in total retail sales volume since September-November 2006,” the report says.

That’s welcoming news, especially in light of the recent report by the USDA’s Economic Research Service that per-capita cheese consumption last year was down almost three-quarters of a pound to about 32.5 pounds versus 2007.

Rising sales in the cheese category should give thanks to shoppers, who are becoming more and more educated about what’s in their cheese.

“People are looking for natural and organic cheeses produced with milk from cows that are humanely raised and haven’t been injected with rBGH,” says Gina Asoudegan, manager of communications and outreach for Applegate Farms. “In addition, consumers are interested in functional foods, such as cheese containing probiotics.”

Consumers also are raising their standards when it comes to the food they eat outside of the home, Asoudegan says.

As a result, the Bridgewater, N.J.-based cheese manufacturer makes its natural and organic cheeses available at the deli counter in addition to pre-sliced packages in the cheese aisle. “The natural and organic consumer is no longer in the fringe,” Asoudegan says. “These consumers cross all demographics and shop for natural/organic products in conventional supermarkets, big-box stores and club stores.”

That being said, the IRI study also says that natural cheese sales consume most of the category’s profits, earning a 74.5% share of supermarket sales, a 69.6% rate in mass outlets and 52.4% in drug stores.

Nonetheless, processed cheese grabs a cool 47% share in drug stores, while imitation cheese wins out in supermarkets with a 1.5% share.

Plus, as consumers’ wallets have tightened, so have their eating-out habits, says Mark Korsmeyer, president of Dairy Food Products at Dairy Farmers of America, Kansas City, Mo., which can provide another solution to skyrocketing cheese sales.

“Families are looking for variety and something new to try when cooking at home,” says Korsmeyer, whose company sells Borden-brand cheese products. “It has to be convenient without a lot of extra cost. This is a great opportunity for cheese and an opportunity to introduce innovation to the category since it adds flavor and texture to lunch and dinnertime meals.”

Opportunity keeps knocking

Many cheese processors are taking advantage of the plethora of opportunities that today’s grim circumstances are bringing to the table.

“We see category growth coming from innovative products,” Korsmeyer says. “Flavor and variety are critical to providing consumers new choices with cheeses.”

Health and wellness products, he adds, will have its place in the market. Healthier ingredients such as probiotics and omega-3 fatty acids, and milk from “rBST/rBGH-free” cows provide buzzwords for an alternative sub-category for cheese.

“Outside of the volatility of commodity pricing, which can always be a challenge, it comes down to what your name brand has to offer,” Korsmeyer says.

Additionally, school systems are taking on more proactive roles in which types of cheeses they offer children. “For example, parents who feed their children healthy food at home expect to have access to the same type of food at school, ball games and amusement parks,” Asoudegan says.

Cheeses that are reduced fat and part skim, Korsmeyer says, are widely used in schools and are well accepted by kids and parents alike. “Schools feed over 30 million children each day, and cheese consumption within schools equates to about 200 million pounds a year,” he says, “so it is important that we take an active role in providing solutions for these schools. We view dairy consumption in schools as a formative experience whereby lifelong nutrition habits are formed.”

Single-wrapped cheese slices, Korsmeyer says, are leading his company’s sales. “As consumers look to comfort foods in this depressed economy, we are seeing not only the regular Borden American slices, but Borden Grilled Cheese Melts and Borden Singles Sensations turning very well in the market,” he says.

Meanwhile, the top seller at Oregon’s Tillamook County Creamery Association is its line of cheddar cheeses in chunk, sliced and shredded forms.

“The biggest change we have seen is consumers looking for more convenient ways to purchase our cheese, like pre-sliced or pre-shredded,” says Jay Allison, Tillamook’s vice president of sales and marketing. “Both these categories have shown good growth over the past two to three years.”

For its part, Applegate Farms’ pre-sliced provolone, Swiss and cheddar varieties are the company’s top-selling products, status that, according to Asoudegan, hasn’t changed since it started producing these varieties.

Cheese challenges

Despite the cheese market’s rising sales, the average retail price in Q2 2009 resulted in the largest decline in at least six years, according to the IRI study.

That’s because many consumers are forced to scale back their spending and opt for reduced-price items.

“Our customers are working very hard to convince consumers that their control brands are as good as, if not better than, branded products and at a lower price,” Allison says. “[They] are working very hard to compete in a very difficult economy and differentiate their shopping experience from that of their competitors.”

Additionally, it’s a challenge to gain, and in some cases maintain, a consumer’s share of stomach, Korsmeyer says. “Driving innovation and launching new products can also help grow the category and that is an advantage for name brands versus store brands,” he says. “As a dairy foods manufacturer, we need to maintain a low cost of goods to remain competitive with our customers.”

Then there’s the “natural” challenge, which has created confusion in terms of what it means and how it’s used.

For example, the U.S. Court of Appeals for the Third Circuit is questioning the Food and Drug Administration’s position on the term “natural.”

According to a legal news alert, the FDA says “natural” products may high-fructose corn syrup. But an informal policy begun in 1993 deems natural products as those for which “nothing artificial or synthetic has been included in, or has been added to, a food that would not normally be expected to be in the food.” The argument over whether HFCS is natural continues.

“Compounding the challenge is the fact that the USDA’s definition of ‘natural’ is very loose, and every brand defines it differently,” Asoudegan says. “It’s difficult to convey through a deli case what ‘natural’ means.”

The future for cheese

While the economy rights itself amid remarks from the fed chairman that the recession has technically ended, cheese sales maintain a positive place on the shelf.

“The highs and lows of the markets have caused very difficult times for cheese manufacturers,” Allison says. “[But] we are optimistic about the future. We are hopeful the factors that contribute to dairy pricing will level off a bit in the near future in order to allow our farmer-owners to make a living as well as us to manufacture cheese at a competitive price.”

Likewise, Korsmeyer sees the U.S. demand for dairy continue to slowly increase, but more of the rise in sales will come from international consumers. “Worldwide milk production will be tighter as dairy farmers globally are in the same ‘margin squeeze’ situation as here in the U.S.,” he says. “As world economies recover, dairy demand will pick up.”

Overall, rising cheese sales certainly take the stench out of the economic situation as today’s cheesemakers continue trekking the uphill battle to success.

Sidebar: Cheesemakers nab ACS awards

Several cheese processors rounded together for the American Cheese Society’s annual Festival of Cheese, which took place Aug. 5-8 in Austin, Texas.

Some 1,200 members – including specialty cheesemakers, retailers, marketers, foodies and cheese enthusiasts – attended the cheese competition, which received a record-breaking 1,327 entries from the United States, Mexico and Canada.

Central Point, Ore.-based Rogue Creamery was crowned Best in Show for its Rogue River Blue cheese, which is made from raw cow’s milk cheese and is often referred to as the “Super Bowl of Cheese.”

Meanwhile, Wisconsin cheesemakers scored nearly one third of the competition’s awards, including 24 first-place, 34 second-place and 34 third-place prizes.

Among them, Plymouth, Wis.-based Sartori Foods, won top honors in such categories as hard Italian cheese, international style, flavored cheese and marinated cheese, and repeated as a two-time Blue Ribbon winner for its Sartori Reserve Dolcina Gorgonzola blue cheese.

Roth Käse USA, Monroe, Wis., captured five awards including three blue ribbons for Valfino, St. Otho and GranQueso; a second-place ribbon for Petite Swiss in the American-made/International-style category; and third in the flavored cheese category for Peppadew Havarti.

Furthermore, Richfield, Wis.-based DCI Cheese Co. captured two first-place awards in the fat-free/low-fat cheeses and cheeses flavored with pepper categories. It also placed second for its made-from-cow’s-milk Henning’s Colby cheese and landed two third-place ribbons.

California cheese companies also made an impressive showing at the competition with cow’s milk cheeses snagging five first-place, five second-place, 12 third-place awards and a second-place Best in Show award, which was given to Petaluma, Calif.-based Cowgirl Creamery.

Additionally, Cowgirl Creamery won first in the washed-rind cheese category, along with other first-place California companies such as Cantaré Foods for fresh unripened cheese; Rumiano Cheese Co. for its Old Fashioned Monterey Jack cheese in the American original category; Arthur Schuman for its Messana String Cheese in the Italian-type cheese category; and Karoun Dairies in the cultured milk products segment.

Beehive Cheese Co. of Ogden, Utah, won a Blue Ribbon for the third consecutive year for its Barely Buzzed cheese, while Barely Buzzed-Espresso and Lavender placed first in the flavored cheddar category.

Westport Point, Mass.-based Shy Brothers Farm tied for third place in the flavor-added category for its shallot cheese, alongside Marin French Cheese Co., Petaluma, Calif.

Grafton Village Cheese of Grafton, Vt., was awarded a blue ribbon for its Grafton Duet cheese, which is the second award taken home this summer after winning a silver “sofi” award at the 2009 National Association for the Specialty Food Trade judging competition in New York City in July.

For more information, visitwww.cheesesociety.org.

Sidebar: Cheese's Gene Pool

Lactococcus lactis may be difficult to pronounce, but it’s easy to remember. That’s because it’s a highly important bacterium necessary for creating lactic acid in buttermilk and cheese.

But analyzing its gene expression in a certain environment can lead to the development of fast-screening tools for new and improved cheeses, according to Herwig Bachmann of Nizo, a Netherlands-based food research firm with offices in the United States and other countries.

“Specific enzyme activities were measured during the fermentation of milk with mixed dairy starter cultures,” a Nizo press release explains. “The work included short-term regulation of lactococcal genes during cheese manufacturing and cheese ripening as well as lactococcal adaptations to growth in milk occurring over longer periods, using various molecular biological and functional genomics techniques.”

As a result, Nizo created a patented protocol named MicroCheese, which allows the simultaneous manufacturing of 600 individual miniature cheeses of about 0.2 grams each. Its key properties mimic those of industrially produced cheeses and create a new path in cheese research, such as improving starter cultures and cheese ingredients and developing low-fat and low-salt cheeses.

“This tool allows massive parallel testing and optimization of cultures, enzymes and process conditions,” Bachmann says.

Bachmann’s findings can be found in his thesis, “Regulatory and Adaptive Responses of Lactococcus lactis in situ,” at the Kluyver Centre for Genomics of Industrial Fermentation.

Dairy Research Center Helps Artisan Cheese Company Find Success

Contributed by Donald McMahon

In the competitive dairy and food processing industries, access to product research and technical resources can impact a company’s business model and bottom line. One small cheese-making company discovered the knowledge and tools it needed for a smooth and successful startup by utilizing the resources and facilities available through the National Dairy Foods Research Center Program.

Beehive Cheese Co., an artisan company based in Uintah, Utah, turned to the Western Dairy Center at Utah State University in Logan for help developing the company from the bottom up. The WDC is part of the National Dairy Foods Research Center Program, which is coordinated through Dairy Management Inc. Beehive’s use of the WDC’s facilities and expert counsel has been instrumental in the young business’ growth and continued success. 

Providing the dairy, food and beverage industries with leading-edge dairy product research, along with technical resources for product development, the WDC focuses a great deal of research on cheesemaking and cheese flavor and functionality, which caught the attention of Beehive Cheese.

Over the last 35 years, the WDC has played a vital role in educating mass-market cheesemakers. In 2003, as the industry saw a trend in locally based niche cheeses, the WDC launched an artisan cheesemaking course to provide opportunities for aspiring cheesemakers. The research center offers its facilities and expert counsel to support the development of these companies, their industry goals and their product innovations. 

“There are now four successful companies in Utah that have participated in our artisan cheesemaking course,” says Carl Brothersen, associate director of the WDC.

Beehive credits the WDC’s artisan cheesemaking course, facilities and expert counsel as instrumental in its early beginnings and growth as a successful cheesemaking business. “The WDC helped us from the first week that we made cheese,” says Tim Welsh, who co-founded the company in 2005. “The course gave us a foundation of the microbiology of cheesemaking and the technical aspects of making good cheese. They also assisted with formulation development and provided technical assistance in our plant setup.”

Beehive Cheese has been recognized with several industry honors, including multiple awards for its aged cheddar and other flavored cheeses, made through processes originally learned at the WDC. Over the last three consecutive years, the company’s espresso and lavender-rubbed Barely Buzzed variety cheese earned first-place finishes at the American Cheese Society’s annual cheese competition. As the company continues to grow, the WDC will remain an integral part of Beehive Cheese’s development.

“When we have a technical question that requires more expertise,” Welsh says, “the WDC is our first phone call.”

Aspiring cheesemakers and other dairy businesses can find answers and assistance through the WDC and other dairy foods research centers. These centers provide companies and existing operations with the tools, resources and expertise needed to thrive in today’s competitive dairy industry. 

Donald McMahon is director of the Western Dairy Center and a professor of dairy chemistry and processing at Utah State University in the Department of Nutrition, Dietetics and Food Sciences. McMahon co-leads the DMI Expert Cheese Group that, through national cooperation between the National Dairy Foods Research Centers, is providing a focus on cheese innovations.

An extended version of this article is available at www.dairyfoods.com.