Guest Columns

guest editorial/opinion
Perspective: Export Expertise

Marc A.H. Beck is senior vice president of marketing for the U.S. Dairy Export Council. He contributes this column exclusively for Cheese Market News®.

The spice of life

The United States is the world’s largest single cheese-producing country, but in many ways we’re still the land of Cheddar and Mozzarella. Those two varieties make up two-thirds of our production — a proportion that hasn’t changed over the last decade.

And why not? One of the strengths of the American dairy industry is its tremendous economies of scale. Our Cheddar and Mozzarella plants are some of the biggest and most efficient in the world. Moreover, our industry mindset has always been very much production/supply-oriented. Our de facto “growth model” (as well as our historical pricing and regulatory structure) is focused on quantity — converting as much milk as we can, as efficiently as we can.

I’d argue, though, that it makes good business sense to broaden our portfolio.
Consider six increasingly popular cheese varieties. In 2005, Americans ate 74 million pounds of Blue, Brie, Camembert, Edam, Feta and Gouda, according to research by United Kingdom-based Zenith International. But of this volume, more than 80 percent was supplied by imports, Zenith says. In other words, we’ve ceded our home market for these varieties — primarily to Europe — choosing to focus on Cheddar and Mozzarella instead. We are virtually ignoring a veritable cheese board of other types in demand.

It’s not that we can’t make these cheeses in the United States. Just last month at the World Cheese Awards in London, U.S. manufacturers won medals for their excellence in several of these categories. But we don’t make much of them.

Look beyond our home market, and you’ll see global consumption of these varieties is significantly larger, and on the rise. Even removing the European Union (EU) and the United States from the equation, Zenith projects consumption of these six in the top 23 world markets will reach 927 million pounds in 2010, up 21 percent from 2005. Imports are forecast to rise 27 percent, to 499 million pounds.

The variety with the most potential for U.S. export growth is Gouda. Though not consumed widely in our home market, mild-flavored Gouda is the third-most popular cheese in the world, after Cheddar and Mozzarella. It is the No. 1 cheese imported in Russia and Mexico, and No. 2 in Japan. Gouda consumption in these three countries was 269 million pounds in 2005, and imports were 188 million pounds. By 2010, consumption is forecast to reach 341 million pounds and imports 242 million pounds.

Mexico is the biggest import market for Gouda, with 2005 purchases of 81 million pounds, Zenith says. Nearly all the Gouda on the market is imported, primarily from Chile, New Zealand, the EU, Argentina and Uruguay. Russia imported 55 million pounds, mostly from the EU but also a growing volume from Argentina and Uruguay. Japan imported 53 million pounds, nearly all from Europe and New Zealand. In Russia and Japan, close to 60 percent of the consumption is served by imports.

The United States, unfortunately, has limited production of Gouda (about 2 million pounds annually, according to Zenith), and so is not currently positioned to take advantage of the growing global demand.

Gouda’s close relative, Edam, also is projected to see a rise in consumption and imports. Russia is the world’s largest Edam importer at 35 million pounds, mostly from the EU, Argentina and Ukraine. Mexico and Japan each bring in 7 million pounds.

Consumption of Feta is projected to increase 14 percent in the 23 selected markets. A staple in Middle Eastern diets, Feta consumption reached 187 million pounds in 2005 in Egypt and Saudi Arabia alone. Another 25 million pounds was consumed in Lebanon, Jordan, Kuwait and the United Arab Emirates.

Most of this demand, however, will be served by domestic production. Just 12 percent of Feta consumption in these six countries is served by imports, and the vast majority of the imports come from Europe. In Egypt, which has the greatest consumption in the region, high import duties on cheese for retail sale keep imports out of the market.

Though starting from smaller bases, consumption of Blue is projected to increase 48 percent between 2005 and 2010, and use of Brie/Camembert is expected to grow 29 percent, according to Zenith. Because production of these varieties is nearly non-existent outside of Europe, almost all the consumption growth is expected to come from imports. On Blue, strong growth is projected for Russia. On Brie/Camembert, increases are expected for Mexico, Russia and Algeria.

Of course, we can’t serve every market in the world with every variety. We have to pick our battles strategically.

But with consumption of Gouda, Edam, Feta, Blue, Brie and Camembert on the rise, it’s a good time to start targeting some of these growing markets. This will enable us to take back some of our home market, and capture blossoming overseas markets as well.

Variety is, after all, the spice of life.

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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