The U.S. cheese market, as it turns out, is the wheel deal. Or maybe it reflects a slice of today’s lifestyles as manufacturers shred tradition to create building blocks to the future.

All cheesy puns aside, the reality is that consumer demand for cheese in all of its varieties and formats remains strong, as cheesemakers large and small continue the age-old tradition of fashioning raw milk into a favorite foodstuff.

That cheese is popular among a wide swath of the market — domestically and internationally, young and mature, male and female, health-conscious and indulgence-prone — isn’t surprising. One survey from the Madison, Wis.-based Wisconsin Milk Marketing Board (WMMB), in fact, showed 80 percent of consumers say they “love” cheese.

What is new, though, is the ongoing splintering within the category, through which different types of cheeses are available to a greater number of buyers. That means a host of new retail products and new applications on the foodservice side. Greater diversification also has resulted in enhanced competition among manufacturers and a subsequent investment in their respective businesses.

One reason that an ongoing market expansion is possible is the versatility of the product itself. Rusty Bishop, director of the dairy center at the University of Wisconsin–Madison that is supported by the Rosemont, Ill.-based Dairy Management Inc. (DMI), touched on that point in an address to a recent industry forum: “Technology and innovation can take ideas and turn them into marketable products.”

Rick Naczi, executive vice president of U.S. sales and marketing for DMI, agrees that the market is there for existing cheese favorites as well as new cheeses made by forward-thinking manufacturers. “We are fortunate in that our product has a very broad base,” he says. “That is part of innovation, too, that you are bringing products that meet a lot of needs.”

Market research bears out the broad appeal of cheese and the general invigoration in the category. Recent data from the U.S. Department of Agriculture (USDA) shows that per capita cheese consumption in this country grew by 0.8 pounds to 31.24 last year, the largest annual increase in five years. At this point, cheese consumption has grown threefold since 1970.

A more in-depth look at consumption trends reveals that variety is helping fuel growth. Tracking USDA figures, back in 1970, 61 percent of the cheese eaten in the United States was American-style cheese; today, that figure has dipped to 41 percent, as consumption of Italian-type cheeses has grown tremendously. Meanwhile, consumption of cheeses other than American or Italian-style is increasing too, with per capita consumption of cheese products like Swiss, blue and Hispanic-style cheeses rising to 5.46 pounds in 2004.

Research published in the 2006 “What’s in Store” report from the International Dairy- Deli-Bakery Association (IDDBA), Madison, Wis., underscores this “more-is-more” trend. One IDDBA report indicates the fastest-growing types of cheese at retail include gruyere, growing 72.7 percent in sales, followed by havarti at 30.9 percent growth, oaxaca at 24.9 percent, gouda at 24.4 percent, asiago at 21.4 percent and pepperjack at 22.3 percent.

If there is a true dynamic at work in the category, there may be a widening gap on the processed cheese side. According to information provided by the Washington, D.C.-based International Dairy Food Association (IDFA), per capita consumption of processed cheese and cheese spreads has dipped from 8.76 pounds 10 years ago to 7.67 pounds today.

If processed cheeses are declining, specialty cheeses are generating quite a lot of buzz. The National Association for the Specialty Food Trade found that sales of specialty cheese stood at $905 million in 2004, a 29.1 percent jump since 2002. “In our review of the dairy case, we are seeing those types of specialty cheeses showing increases,” Naczi says. “They also generate a lot of publicity, which is good news for the whole cheese category.”

Interest in specialty cheeses seems to be translating to the point of sale. “Speaking from a retail perspective, specialty cheeses represent a smaller percentage of sales. However, they are growing at an accelerated rate compared to other traditional commodity-style cheeses, like cheddar and Swiss,” says Nick De Rose, director of sales, retail grocery channel for WMMB, adding that specialty cheese production in Wisconsin rose 9 percent in 2004 to 331 million pounds.

Stan Andre, chief executive officer of the Modesto, Calif.-based California Milk Advisory Board (CMAB), concurs that specialty cheeses have made true gains in recent years. “In California, we seem to be able to sell whatever quality specialty cheese there is,” he says, adding that California’s record 2.14 billion-pound annual cheese production includes commodity cheeses as well as a growing number of specialty cheese products.

DeRose credits the surge in specialty cheeses to the often-discussed trend of a savvy, more worldly consumer. “For the most part, people are leaving the safe haven of traditional cheese and letting their palates run,” he says. “They are trying different things with less fear than before because they are being exposed to it on so many different fronts — it’s on TV, in print and in grocery stores and restaurants. They see a lot of different ways to use it and once they do, they love it.”

Marilyn Wilkinson, WMMB’s national product communications director, agrees that specialty cheeses fit well into today’s trendy food items, which often start out in restaurants. “Sandwiches are a big trend, for instance. Paninis [hot pressed Italian sandwiches] have given sandwiches a big boost and artisan breads have added to that,” she says, adding that the popularity of cheese courses has also had an impact. “Cheese courses may have been happening in fine European-style restaurants for a lot of years, but we are now seeing an American cheese course and it’s related to the renaissance of artisan cheesemaking here. It probably will trickle down to the casual restaurant to supermarkets with upscale cheese departments.”

To be sure, specialty cheeses found in both fine dining establishments and common American kitchens span a range of products, including artisan, farmstead organic and ethnic cheeses. In all of those subcategories, new products continue to emerge and inject a new energy into the retail cheese case and foodservice menu.

Ethnic cheeses, for instance, have been one factor in squeezing out traditional varieties to boost the specialty segment. While mozzarella in blocks and shreds was considered ethnic not so long ago, today’s hot-selling Italian cheeses include fresh, water-packed mozzarella as well as asiago, gorgonzola and mascarpone, among others.

The Hispanic cheese market continues to grow by leaps and bounds as well. Authentic Hispanic cheeses are available in many stores and restaurants, as are ethnically inspired varieties like pepper-infused cheeses and cheese blends married with Latino-style seasonings. “We have national distribution of our Hispanic cheeses and it’s across the board,” Andre says. “The Hispanic population is interested in the whole fresh cheese concept and they buy a lot of it fresh. But even within the Hispanic community, there is crossover into regular commodity type cheeses, whether it’s cheddar or jack.”

One company that is branching out in terms of both product line and distribution is Denver-based Queso Campesino, which recently launched new varieties including Mexican frying cheese, Muenster Enchilado and Queso Blanco.

According to R.H. “Sonny” Dickinson, Eastern region vice president of sales, strong consumer response has fueled the company’s R&D efforts. “We have had growth rates that average between 20 to 30 percent a year,” he says, noting that this year, Queso Campesino is looking at additional new products, including new flavors and formats.

Likewise, Sargento Foods, which last year expanded distribution of its Bistro Blends™ line of flavored shredded cheeses with varieties like Mozzarella with Sun-Dried Tomatoes and Cheddar and Monterey Jack with Tomato and Jalapeño Peppers, has found solid interest for ethnic-inspired flavors. “I think the demographics of the U.S. play right into that. Plus, you have the baby boomers getting older and they are looking for things with strong flavor,” says Barbara Gannon, vice president of corporate and marketing communications for the Plymouth, Wis.-based company. “I think it also speaks to the fact that people are more adventuresome in their cooking.”

Although cheese is by nature a nutrient-dense food, health concerns in this country have long impacted how the industry markets and develops its products. According to Naczi, one area garnering attention again is the development of better-tasting lower-fat and lower-salt cheeses, which first emerged in the late 1980s and early 1990s. “There is a lot of research going on, and people are still struggling with coming out with cheeses with lower-fat profiles that meet the taste need,” he says. “But there are some out now that are good.”

Although many Americans are still counting fat grams, sodium levels and carbohydrates, more consumers seem to be taking a macro approach to health. “What is coming out of our research now is the idea of well-being. It is less about micronutrients, and there is more of a balanced approach,” Wilkinson says, adding that the notion of wholesomeness extends from the product to the processor. “Well-being includes how food is produced — is this from a company that cares, that takes time with it?”

Jay Allison, vice president of sales and marketing for Tillamook County Creamery Association (TCCA), Tillamook, Ore., reports similar rumblings among consumers. “We have seen through various research studies, and by listening to our customers, that consumers are growing increasingly interested in the guiding principles of companies,” he says. “To address this, we at TCCA have established an outline of guiding principles that we call the Tillamook Tradition, which we intend to include on our Web site in the near future.”

Tied into health and well-being is the concept of natural and organic food products. “We continue to see interest from people that our cheese is a natural cheese,” Gannon says. “Even though everyone doesn’t understand the difference between processed and natural cheese, I think it’s a hot-button issue, where people are saying they want an emphasis on natural.”

Organic cheeses remain a niche product, given the expense of production, but that said, there are more varieties available in retail and foodservice venues today. Pleasanton, Calif.-based supermarket giant Safeway, for example, recently created its own private label organic program, O Organics™, which includes a series of cheeses. Meanwhile, cheese is part of Kraft’s Back to Nature line of organic and natural foods. Organic cheeses are also produced by a range of regional cheesemakers, including those in Wisconsin and California.

Industry leaders, for their part, report that organic cheeses have a definite fan base. “I don’t have a breakout of total dollars, but we do know it’s growing and it’s been going on for quite a while,” Andre says, noting that the economics of producing such cheeses ultimately affect the expansion of that segment. “The supply of organic milk seems to be the big issue. I think demand is probably already outpacing supply.”

WMMB’s DeRose agrees. “Sections of organic products overall are expanding and there is strong demand for organic cheese,” he says. “The frustration with organic is the supply of milk available.”

Form doesn’t always follow function when it comes to cheese; sometimes form leads product development.

Indeed, several years after shreds and cubes literally broke up the bulk cheese market, the notion of making things easier for users continues to gain ground.  Late in 2005, food industry behemoth Kraft Foods North America rolled out Kraft Crumbles. The Crumbles product line — which includes Natural Three Cheese Crumbles in Monterey Jack, Colby and Cheddar; Natural Sharp Cheddar; Natural Mozzarella; and Natural 2% Milk Reduced Fat Colby and Monterey Jack — are designed to top salads, soups and other dishes and are sold in 8-ounce stand-up zippered pouches.

Tillamook also reports the convenience trend was hardly a brief blip. “Our fastest-growing SKUs continue to be sliced and shredded products, so from that we understand that convenience is still a top priority for consumers,’ Allison says. In 2005, Tillamook introduced its first mozzarella cheese in 2-pound blocks, 8-ounce shingle slices, 16-ounce shreds and 2-pound shred varieties. Earlier in 2006, Tillamook launched a 9-ounce shingle-sliced vintage white medium cheddar.

In the meantime, as specialty cheeses move beyond niche markets, manufacturers of such products are following the lead of traditional cheesemakers and delving into convenience-oriented features. One example is Mozzarella Fresca, Concord, Calif., which is expanding its line of fresh mozzarella cheese to include new shapes and sizes, from 4-gram balls of fresh mozzarella to 2-pound pound logs for retail and 3-pound logs for foodservice users.

“This year, we are launching 1-gram balls of perlini and pre-sliced fresh mozzarella medallions,” says Jason Knight, vice president of marketing, adding that such products can be used for easy toppings for salads, pasta dishes and other entrees.

In addition to offering portioned cheeses for ease of preparation, another recent trend is to make snacking more convenient by pairing cheeses with items like crackers and lunchmeats. In 2005, Kraft unveiled Kraft to Go! — kits that contain miniature slices of Kraft Natural Cheese and miniature Nabisco crackers in a dual-compartment container. Hillshire Farm, a brand of Chicago-based Sara Lee Corp., has found a willing audience for its new Deli Select™ Combos, which pairs its Ultra Thin™ meats with cheeses like colby and provolone in one package.

While products may be convenience-oriented in their format, ease of use also has extended to packaging since the first press-to-close packages were introduced. Zippers, pull tabs and other features have become somewhat ubiquitous on cheese packages, moving from large manufacturer to regional brands to private label cheeses.

Beyond convenience-driven closure features, graphics are a critical component of packaging. Tillamook, for example, recently completed upgrade of its packaging, including more integrated and eye-catching designs.

Over the past year, Sargento also has been working on across-the-board design changes. “Before, we were similar to some other companies in that we had color designated for different flavors,” Gannon explains. “Now, we’ve decided that Sargento should have a color, so there is a burgundy border on all of our packages and we have also added a small graphics to each package on the front that evokes a sense of place. We have a message from our chairman, too, which ties into our storytelling and marketing.” The overhaul was two years in the making, with shipments of new packages beginning last November.

Whether reflected in packaging or products, industry leaders say that creative, strategic thinking will continue to ensure the success of the cheese category. “There is a lot of pressure on the innovation side,” Naczi says. “We want to work with people who can bring volume into the marketplace and with smaller manufacturers, who because of their size, can go more quickly and get to the market.”

As a result of a focus on innovation, many plants are turning within to improve their operations. Mozzarella Fresca is one company that has expanded its state-of-the-art facilities. “We invested a lot of money to make it superior in technology and quality production,” Knight says.

Big players are investing on a grand scale as well. Recent projects include last October’s launch of a $200 million mega plant by Southwest Cheese Co. in Clovis, N.M., a joint venture of Idaho’s Glanbia Foods and the Greater Southwest Agency producer group, expected to process 2.3 billion pounds of milk annually into 250 million pounds of American-style cheese. Around the same time, Gossner Foods opened a new Swiss cheese plant in Idaho’s Magic Valley (see this month’s cover story). California’s Hilmar Cheese Co. will build a new plant in Texas, while Denver-based Leprino Foods Co. is expanding its mozzarella plant in Michigan.

Naczi says such efforts speak well to the future of the cheese industry. “We’re seeing a lot of new plants recently and we are really excited about that,” he says, “because you have to have that investment to keep the business fresh.”

Lynn Petrak is a freelance journalist based in the Chicago area.