The U.S. Dairy Exporter Blog: Market Analysis, Research & News
  • Global 'Cheeseheads' Drive Growing Demand for U.S. Exports

    By Merle McNeil October 11, 2017

    Not all are wearing orange, wedge-shaped, foam hats yet. But the way major cheese importers are buying cheese these days suggests they are increasingly walking the path to become what are known affectionately in Wisconsin as “cheeseheads.”


    Cheese buyers and marketing managers from throughout Southeast Asia got into the cheesehead spirit at the U.S. Dairy Business Conference two years ago in Singapore.

    In 2016, cheese exports from the five leading global dairy traders—Argentina, Australia, the European Union (EU), New Zealand and the United States—increased 5 percent to a record 1.66 million metric tons. And they are picking up steam.

    Over the four months from March-June 2017, exports from the top five grew 10 percent from the same period the previous year. Cheese shipments to China, South Korea and Mexico increased more than 25 percent each, while exports to Southeast Asia and Japan jumped 16 percent and 8 percent, respectively.

    The main beneficiary for that four-month period was the United States, which boosted exports 32 percent compared to the previous year—a welcome shift after significant cheese volume declines in 2015 and 2016.

    That is very good news for U.S. cheesemakers. But in the years ahead, in order to ensure a healthy U.S. dairy industry, we will need to see more consistent sustained expansion of cheese exports—not 32 percent, but annual export volume growth of greater than 10 percent per year.

    USDEC estimates the U.S. dairy industry needs to increase U.S. dairy export volume from about 15 percent of the annual milk supply to around 20 percent—an effort we are calling The Next 5%—to maintain strong overall U.S. dairy industry growth.

    Increasing cheese exports by around 200,000 metric tons over the next five years is a critical component to achieving that goal.

    While such a gain is ambitious, given global dietary trends, we believe it is achievable.

    USDEC research suggests global cheese imports will increase more than 500,000 metric tons by 2021. U.S. suppliers essentially would need to win about 40 percent of that additional volume to get an additional 200,000 metric tons. And therein lies the challenge.

    To reach that plateau, the United States will need to target the highest growth regions (not necessarily regions where we are traditionally strong in cheese) with products suited to their particular consumer palates (not necessarily products we are accustomed to exporting).

    USDEC estimates more than half of the additional 200,000 metric tons will need to come from North Asia (China, Japan, South Korea) and the Middle East/North Africa (MENA)—regions currently dominated by U.S. competitors. If the industry is to get to The Next 5%, it must start exporting more cheese to those two regions. And it must broaden its portfolio to cheese categories and varieties where the United States currently lags its competitors.

    cheese climb.jpg

    Our top market, Mexico, can be seen as both a guide and a proving ground for U.S. efforts in other regions. The United States expanded cheese exports to Mexico from less than 5,000 metric tons in 1995 to about 90,000 metric tons last year. Developing close partnerships has been one of the keys to growth. U.S. cheesemakers going above and beyond to work with buyers to create gouda suited to Mexican applications and tastes went a long way to demonstrating how seriously U.S. suppliers wanted to build relationships. That kind of effort needs to be repeated in other major markets—and again in Mexico moving forward.

    A recent USDEC research report on natural cheese in Mexico estimated per capita cheese consumption at only 8.4 pounds/year—a number far less than the United States and significantly lower than many of its Latin American neighbors. Room for growth is significant.

    If U.S. cheesemakers expect to become global players in world cheese trade, they will need to defend and grow share in Mexico by better catering to market needs. But even more importantly, they will need to branch out and pursue strategies in the higher-volume-potential of MENA and North Asia.

    Editor's note: A version of this column first appeared in Cheese Market News.

    Merle McNeil is business unit director, Latin America and Caribbean, for the U.S. Dairy Export Council. 

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    The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. How to republish this post.  

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