WCMA Perspectives | Contributing Columnist

Cheese Markets Robust in Unsettled Times

John Umhoefer executive director of the Wisconsin Cheese Makers Association

October 1, 2021


 

Cheese manufacturers are bullish on sales even as tight labor conditions challenge the industry’s ability to make and deliver dairy products at optimal capacity. WCMA discovered positive trends in recent sales data and in discussions with leading cheese producers and processors.

Foodservice Sales
Cheese sales into foodservice vary by channel, but overall, demand is good.

At the high end of the market, sit-down and fine dining restaurants have seen customers return in recent months, but fewer restaurants are open and for many locations, hours are reduced. The app Open Table offers sophisticated data on the sit-down dining sector. As of September 22, about 84 percent of US restaurants using Open Table were accepting reservations, and looking at data for recent Saturday evenings, restaurants were seating as many patrons as the same day in 2019.

Drilling down, however, the data reveals regional trends that cheese makers also find in their ordering patterns. For example, cheese makers cite weaker sales to distributors in the Northeast US and New York state seating through Open Table is at 93 percent compared to the same days in 2019, and only 70 percent of restaurants are accepting reservations vs. 2019.

A loss of restaurant properties, reduced hours and even reduced days open are affecting Feta sales and hard Italian styles, which manufacturers describe as down slightly from pre-pandemic levels.
These makers say the foodservice sector’s struggle to find labor is the key deterrent to restaurant growth – a larger factor than diners’ COVID concerns.

Manufacturers uniformly report sales to quick service restaurant chains are robust, reflecting this sector’s adoption of takeout and delivery to supplement in-store dining. Natural cheese, process cheese and butter manufacturers all cite solid sales in this sector.

The restaurant arena continues to innovate, driven as much by tightness in the labor market as a consumer base now used to buying restaurant meals to eat at home. In August, Brinker International announced a second virtual brand, Maggiano’s Italian Classics, will be available at an initial rollout of 250 of its Chili’s Grill & Bar restaurants around the US. Virtual brands – food lines targeted only for delivery and takeout from restaurant sites – are one wave of change in channels that use both commodity and value-added cheese types.

More than one manufacturer emphasized that foodservice accounts are exploring value-added, specialty cheeses to differentiate their takeout and delivery entrees from competition. Manufacturers are hearing that chains are locking in carryout and delivery as long-term trends with menus and formulations tailored to optimize the quality of the traveling product.

Pizza restaurants, both chain and independent, continue to boom, according to multiple cheese manufacturers contacted by WCMA. These cheese makers describe the Mozzarella market as “solid” and “hot” at this time, and data from the largest chains support their observations.

In July, Domino’s reported US store sales up 13.4 percent in their first quarter (ending March 2021) and up 3.5 percent in the second quarter – even higher than strong second quarter growth a year earlier. Papa John’s announced 5.2 percent growth for North American stores in the second quarter – April through June 2021.

Cheese manufacturers note that distributors – key links in the foodservice chain – continue to order on a less-than-orderly basis as differences in regional foodservice markets present challenges in forecasting inventories.

Another WCMA member reports some broadline distributors are shorting orders to restaurants, impacting restaurant hours and menu offerings. An anecdote on the bright side: One cheese manufacturer learned that key distributors are rehiring regional staff – a sign of restaurant markets returning to normal.

Temporary school closures, upsetting a uniform return to in-class education this fall, are a wild card on the foodservice side, one cheese maker cautioned.

Retail Sales
Manufacturers report solid sales into retail channels. Data available through Innova (supported by Dairy Management Inc.) finds retail cheese sales volume up a solid 10.3 percent vs. two years ago (through August 8). Compared to one year ago – amid the consumer buying surge – sales are off 2.6 percent.

Mozzarella sales volume at retail is up 16 percent vs. two years ago – pre-pandemic, but down 6.8 percent from a year ago. Cheddar is 3.9 percent higher vs. two years ago, but off 9.3 percent from last year’s buying boom. Parmesan has held strong – up 27.5 percent vs. two years ago and volume this year to date is nearly equal to last year.
Hispanic cheese styles are selling at 25.5 percent higher than two years ago and even 2.2 percent higher than last year to date.

Overall, cheese sales opportunities appear strong in markets and channels buffeted by labor shortages, changing eating patterns and a foodservice industry reinventing itself in real time

. JU.


The views, thoughts and opinions expressed by Cheese Reporter columnists are theirs alone, and do not necessarily reflect the views of the Cheese Reporter.

 

 

John Umhoefer

John Umhoefer has served as executive director of the Wisconsin Cheese Makers Association since 1992. You can phone John at (608) 286-1001 or e-mail John Umhoefer at jumhoefer@wischeesemakers.org


Recent Columns

Specialty Growth Brings a Parmesan Partnership
August 6, 2021

Help Wanted!
June 4, 2021

Avoid the Quick Fix for Federal Orders
May 7, 2021

Resilient Artisan Makers Press On
March 5, 2021

Vaccination Varies in Dairy States
February 5, 2021

More Lemonade in this Lemon of a Year
December 4, 2020

Lemonade in this Lemon of a Year
November 6, 2020

A Processor Perspective On Price Reforms
October 2, 2020

Demand Remain in Volatile Times
August 7, 2020

Dairy's Ready for the Whistle
June 5, 2020

Truths Emerge in COVID-19's Upheaval
May 1, 2020

Your Business is Your Workforce
April 3, 2020

Perfect Day at the Dairy Forum
February 7, 2020

Dairy's Future is CDR Innovation
December 6, 2019

Reform Federal Orders Because Everything Has Changed
November 1, 2019

Water Quality Solutions Begin with Agriculture
September 6, 2019

Assistance Abounds for Artisans
August 2, 2019

Tariffs Erode Export Strength
April 5, 2019

Study: Dairy Imitators Confuse Consumers
February 1, 2019

Dairy And The Evers Administration
January 11, 2019




What do you think about 
John Umhoefer's Comments?*



Please tell us if you are a
Dairy product manufacturer 
Dairy marketer /importer/exporter
Milk producer
Supplier to manufacturer
s