The cheese industry continues to suffer from a number of key challenges. The impact of rising prices, added to what were already falling milk volumes, has led to a dramatic increase in the price of cheese on the supermarket shelf.
The cheese market was valued at £2.1 billion in 2008. Continued price rises and modest increases in volumes are set to raise its value to nearer £2.2 billion in 2009.
Rising prices, especially since 2007, as well as growing health awareness are having some detrimental impact on volume growth as consumers trade down to cheaper options and buy smaller pack sizes of higher-priced cheeses.
Health concerns in particular have already prompted many to seek out low- or reduced-fat alternatives. Equally, a growing number of consumers are seeking greater quality and innovation when purchasing cheese. This has helped stimulate demand for mature styles as well as UK territorial and continental cheeses.
Manufacturers and retailers are responding to changes in the market by focusing on adding value while also maintaining volumes.
The former has seen the launch of a greater number of specialist cheeses, such as those with different flavours, or those claiming provenance from a particular region.
Equally there is an emerging interest in organic cheese, although this will be dampened during the recession as budgets are squeezed.
The growing preference towards the consumption of packaged cheese is seeing many more brands being offered, a large number of these being imported.
Own-label accounts for just over 60% of value sales and represents an established market sector.
Despite this, manufacturers have been very active in developing their branded presence with a number of major names now increasing their shares in the market.
Despite some evidence of consolidation, there is also evidence that new brands are beginning to become established at the margins of the market as emerging sectors, such as UK territorial and continental, challenge the dominance of Cheddar.
Supermarkets are by far the most important channel for purchasing cheese, with over 90% of sales. Although there is no evidence that supermarkets’ role is increasing in value terms, they are likely to be growing their volume share. Independent grocers are facing increased competition from larger supermarkets and co-operatives.
Other outlets, although capturing only just over 3% of the market, have been benefiting from increased interest in speciality cheeses in recent years.
The likes of small delicatessens as well as farm shops and farmers’ markets have, as a result, been able to perform somewhat better than independent grocers, which have been losing sales to supermarkets. Nevertheless, farmers’ markets have been hit by the recession since 2008 and by rising petrol prices.
Cheese is a popular food with almost nine in ten adults (89%) eating cheese in block form while over six in ten (62%) eat packeted cheese (ie processed, grated, sliced, mini-cheeses and so on).
Snacking and lunches are considered major uses for cheese, with sandwiches and to accompany biscuits being the two most popular ways to eat it.
Families are especially important purchasers of cheese for children’s lunchboxes. For this type of use, mild and inexpensive (eg retailer own-label) cheeses are preferred. Mature and specialist cheeses tend to be eaten after a main meal or with crackers.
Possibly because of the ethnic diversity of urban areas such as London, and consequently preferences towards different cuisine, cheese is less popular here than in most other parts of the country. There may be potential for promoting Continental or international cheeses for use in cooking rather than in sandwiches or eating after a meal.
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