Getting Comfortable Being the Cheese Leader

In 2013, America's cheese suppliers held the No. 1 global market share position.

The U.S. cheese industry deserves to take a bow for its 2013 export performance. It took only 11 months for U.S. suppliers to establish a new cheese export record. Shipments broke the 600-million-lb. mark in November on their way to an estimated 680 million lbs. What you may not realize is that, for the first time, no other single country shipped as much cheese overseas as the United States.

That’s right, America’s cheese suppliers held the No. 1 global market share.

It was an achievement the industry had been gradually building toward for the past decade and one that—now achieved—begs the question: Where to next?

Clues to the answer can be found in how we got here in the first place. There are numerous reasons for U.S. cheese export success. World demand continues to build, driven by an expanding emerging-market middle class, urbanization, the global proliferation of foodservice chains and the rising incorporation of cheese into formerly cheese-bare traditional diets.

Kudos to U.S. suppliers who recognized this growing opportunity and moved to fill the demand. Their efforts have been impressive, supported by a host of programs and initiatives from industry, government and organizations like the checkoff-funded U.S. Dairy Export Council (USDEC). Some have been solo efforts, some collaborative, but all have helped to grow markets and build the reputation of the United States as a reliable, high-quality supplier.

Perhaps most influential were intensified efforts to manufacture products to better suit overseas buyers’ tastes, represented best by the industry’s Gouda Initiative, a program in which USDEC teamed with U.S. cheese makers and Wisconsin’s Center for Dairy Research to develop bulk-format gouda destined for export markets.

Coupled with competitive pricing, it has all translated into steady U.S. growth. The United States is exporting more than triple the volume it shipped in 2007.

While the achievement is laudable, this is no time to pause. By all accounts, the same structural factors that drove demand to date will continue to do so unabated. The opportunities are broad, with Latin America, the Middle East and Southeast Asia all on a path to consume more cheese, while China’s budding familiarity with cheese could strain existing supply sources with just small per capita increases across its large population.

U.S. efforts have led us to the position of No. 1 cheese supplier in the world, but maintaining that spot and fostering further expansion requires a shift in tactics. Market leaders take a different approach to markets than those with smaller slices of the pie. Market leaders are not looking to chip away at competitors share to build business. Rather, market leaders look to grow the market as a whole—to expand the pie.

If we look at pizza cheese, for example, part of the market leader’s charge is to build overall pizza consumption while also getting more cheese on pizza.

Expanding usage beyond current levels is in fact at the core of USDEC’s new marketing approach, and it extends beyond the fast-growing pizza sector. We are, for example, exploring the potential for U.S. suppliers to work with food companies in Asia to incorporate cheese into more processed foods.

By definition, market leaders take a leadership role. By taking on the responsibilities of the market leader, customers will more frequently see the United States as the supplier of choice. The market leader is generally the first supplier approached by a buyer. Buyers seek out market leaders and desire to work with them.

At the same time, the United States must work at strengthening activities that got us here in the first place, such as building overseas relationships, working more closely with the major buyers in target markets, taking the time to explore foreign markets and listening to customer needs. The Cooperatives Working Together (CWT) program has also had some impact in improving trial of its approved suppliers.

Whatever the platform, customers are still looking for products that we do not necessarily make, so we can either adapt to their taste, packaging and other preferences or work through their preconceptions then encourage the customer to adapt.

As emerging-market demand continues to flourish, we don’t want to be in a position where we are trying to claw back share from the dominant suppliers, as we had to do over the past decade. We want to remain the dominant supplier.

With some of our competitors talking of cheese shortages, the time is right. At one point in the not-so-distant past, the export market may have seemed a strange and unfamiliar place to U.S. cheese suppliers. But our industry has displayed a rising comfort in moving up the rankings and proving it has a leading global role to play. 

(This article first appeared in Cheese Market News in January 2014.) 

Image copyright: 123RF Stock Photo

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.