Cheese export markets expected to finish out strong this year, bouncing back from pandemic
The US international cheese market is expected to close out 2021 with good numbers compared to this time last year as the industry continues to recover from pandemic setbacks.
A panel of dairy industry professionals guest-starred on a Sept. 15 episode of Hoard's Dairyman livestream webcasts. That includes US Dairy Export Council economic analyst Stephen Cain, USDEC senior vice president of global cheese marketing Angélique Hollister, Tropical Foods LLC executive vice president William Linskey and Center for Dairy Profitability director Mark Stephenson. Managing editor of Hoard's Dairyman Corey Geiger moderated.
Cain said the global cheese trade is at an all-time high with 2.6 billion pounds sold so far this year, up 10% compared to last year, putting us on-pace for one of the cheese industry's best years on record. The international markets are more intensely demanding cheese recently due to some regions, like Eurasia and South America, domestic production not meeting consumer needs, leading to the US exporting 516 million pounds of cheese so far this year. And it's not just a few places either, but a big increase across the board, Cain said.
"The US is the largest single supplier of cheese to the world, so with that increasing demand, the US is really well-positioned to capitalize on that demand increase and really grow our export numbers in volume overall and capitalizing on increase in market share," Cain said.
The US's main trade partners are concentrated in east Asia and Latin America, with top trade partners being Japan, South Korea and Mexico. US cheese is becoming especially popular in Latin America, Cain said, due to affordable pricing and relative proximity compared to other major cheese exporters. Plus, Cain explained that COVID-19 vaccine progress is coming along in several Latin American countries which is leading to a return of tourism and a higher demand for cheese.
American dairy processing plants have also mostly recovered from pandemic setbacks as several major plants were forced to go offline or extremely limit capacity due to health concerns with COVID-19. With most plants back to normal and some having expanded, American cheese producers can begin to take advantage of global markets as European milk production has stagnated at only a 0.3% increase compared to last year while US milk production continues to rise.
"Despite those (concerns) though, I'm still optimistic for our cheese exports for the remainder of the year," Cain said. "I think we're in a good position globally with our product availability versus the other major competitors, and I think we'll be price-competitive. We'll really see a strong finish to the year here."
Hollister said the US cheese industry has grown exponentially in the past two decades and it's still on pace to continue that growth, with US cheese exports having grown seven times over in that timeframe. However, she said a major problem our industry still faces is a lack of recognition as the world's largest cheese supplier. She said most non-Americans still see US cheese as merely a piece of plasticky orange processed cheese, which is only a fraction of the market.
"When we really dig deeper into the market, and you talk to end users and chefs and consumers, you don't have an image or a perception of our industry. I guess you do have an image but not a good one," Hollister said. "There's a lot more in the export market to really ensure that our industry remains healthy and prospers for the long run ... to really help the market understand who we are."
While US exports are extremely strong within the food service and industrial sectors, Hollister said many consumers eat our cheese all the time but simply don't realize it due to a lack of branding and consumer awareness that doesn't exist for other well-known cheese producers. She said during a recent survey, the US ranked number six – after countries like New Zealand, France and The Netherlands – in terms of global leading cheese producers.
Part of the solution to this issue is creating educational programs not only for consumers, but also for culinary, supply chain and retail professionals, Hollister said. She also emphasized the need for more physical and digital "consumer facetime" with brands to create awareness and foster engagement with customers.
"We make some pretty damn good cheese. You know, we won the World Cheese Award in 2019," Hollister said. "We are creating all the digital assets that really help us remain in the face of people. So in a nutshell, that's what we do to really try to get to the next step of the journey. We've done great on the commodity side, but now it's time to reclaim our rightful place in the minds of people around the world."
Linskey said dairy exports were already difficult to manage before the pandemic, and now with the presence of COVID-19 they're "tremendously difficult." A whole host of issues stemming from this pandemic, including logistics crises, labor and equipment shortages, supply chain disruptions, port congestion and more, have made it difficult to not only get into the exports market, but to also stay in it. He said that having a good product at a good price isn't enough anymore to stay in the game.
"When you look at the global arena as a whole, to be able to add on to the quality and the value, you now need to be able to meet very strict compliance requirements and you need to be able to meet very specific customer needs," Linskey said. "It doesn't matter if you have a quality product at a fair value. (If) you can't meet the compliance needs, if you can't meet the customer needs, that cheddar has now just become a very tasty paperweight."
While innovations in cheese were recently all the rage, Linskey explained that markets are spread too thin right now to accommodate a large range of product choices, so it's more important than ever to focus on the core of your cheese products. Since supply at grocery stores has gotten thinner due to supply chain disruptions and other various issues, consumers are no longer looking for the next big thing, but merely for a basic quality product that can be used in anything, like cheddar, mozzarella or Parmesan.
Plus, transportation takes a lot longer now, which runs the risk of cheese going bad before it even hits the shelf. Dairy producers should be focusing on lengthening the shelf life of their cheese if possible and understanding the basic needs of consumers in each region. Plus, long-term marketing and community outreach programs are giving companies more success across the board by building more brand awareness, Linskey said.
"To any of the dairy suppliers and manufacturers out there ... try to have a different set of eyes when it comes to exports compared to domestic," Linskey said. "What everyone looks at is how we do it domestically is how we've done it for 100 years. If you just go apply the same to exports, you really pigeonhole yourself and you really limit what you can do. Where you can be flexible, try to be flexible."