Opportunities Emerge for Processed Cheese

Cheddar for processing is a huge opportunity, but it requires learning customers’ needs and manufacturing specifications.

Since France’s Bel Groupe built a processed cheese manufacturing facility in Morocco in 1991, emerging markets have steadily grown their processed cheese capacity. A USDEC study of global processed cheesemaking found that a bloc of 10 Middle Eastern/North African and Southeast Asian nations manufactured more than 560,000 tons in 2013, and that number could reach 780,000 tons by 2017.

“The trend to localize manufacturing has translated into rising imports of natural cheese for processing (the vast majority of which is cheddar) and significant opportunity for U.S. suppliers,” says Ross Christieson, USDEC senior vice president, market research & analysis.

The 10 countries in the USDEC study—Algeria, Bahrain, China, Egypt, Indonesia, Japan, Morocco, the Philippines, Saudi Arabia and South Korea—imported about 155,000 tons of cheddar from the world’s top four suppliers in 2013. USDEC projects that number will rise to more than 205,000 tons annually by 2017.

“Both regions are large and growing importers of natural cheese for processing,” says Christieson. “In addition, the Middle East/North Africa is turning into an export hub serving a broader region, and it hasn’t even started looking in Sub-Saharan Africa yet. There are big opportunities there, particularly in West Africa.”

U.S. gains share

U.S. share of cheddar exports to the 10 nations jumped from 8 percent in 2008 to 26 percent in 2013—a strong No. 2 behind New Zealand. But lately, New Zealand has been sending signals that cheddar for processing is a lower priority.

“We now have a golden opportunity to take over the No. 1 position,” says Christieson.

To do so, he suggests a strategy that boils down to learning about their industry and meeting their product and customer service needs.

“We do not have a lot technical knowledge about how that cheddar is being used or how the cheese process­ing industry operates in emerging markets. It’s a very different business in Seoul or Saudi Arabia than it is here in the United States,” Christieson says.

Not only do emerging markets make a broader array of processed cheese styles—slices, blocks, jars, cans, spreads, low-salt, etc.—they face unique operational challenges. Shelf life, storage and cold chain problems are ever present.

Most overseas processed cheese makers don’t buy one product; they buy cheeses in a range of specifications to achieve a desired functionality and flavor and/or to fill out production. And so to meet those needs, U.S. suppliers would need to adapt standard U.S. cheddar products by adjusting physical factors such as moisture levels and salt content, in tune with logistical considerations like cheese maturity and storage temperatures.

“To go from the No. 2 supplier to No. 1, we need to engage our technical people—get them overseas talking to the customers and understanding their technical challenges, the way the plants operate, and the ways the products are made, packaged, stored, distributed and utilized by the consumer,” says Christieson.

Partnering with key customers could help convince buyers of the United States’ seriousness about the market and desire to serve it consistently.

Says Christieson, “We as an industry have made sub­stantial progress in serving overseas processed cheese manufacturers. If we make further strides, cheddar for processing is going to be a huge part of our cheese export opportunity for the next decade or more.”

(This article first appeared in the June 2014 edition of Export Profile.)

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The U.S. Dairy Export Council is primarily supported by Dairy Management Inc. through the dairy farmer checkoff that builds on collaborative industry partnerships with processors, trading companies and others to build global demand for U.S. dairy products.