The  Global  Cheese  Market  Report    2000-­‐2015  

     

   

PM  FOOD  &  DAIRY  CONSULTING    JANUARY  2012  

 

New  report  about  the  global  cheese  market  –  Subscribe  now!  

 

The  World  Cheese  Market  Report  

PM  FOOD  &  DAIRY  CONSULTING   is  publishing  a  new  report:  The  World  Cheese  Market  Report  2010-­‐2015  in  January  2011.  It  is  a  follow  up  on  the  report  from  2009:  The  Global  Cheese  Markets  –Opportunities   and   Challenges   in   a   volatile  Market,  but   the   new   report   contains   a   lot   of   new  features  and  valuable  information  (see  content  of  the  report).  The  report  gives  the  overall  view  of  the   development   on   the  world  market   for   cheese   in   the   2000s   in   all   regions   of   the  world.   The  future  prospects  for  cheese  in  the  next  decade  is  analyzed  with  focus  on  consumer  trends,  impact  of  the  economic  crisis,  developments  in  the  emerging  dairy  markets,  and  prognosis  for  the  overall  prospects  until  2020.    

The  report  also  provides  in  debt  analysis  of  more  than  60  countries  from  all  region  of  the  world.  This   provides   all   the   necessary   information   for   evaluating   the   different   cheese   markets   in   the  world  and  the  future  potential  for  expansion.  

Is  your  company  seeking  new  opportunities  in  the  global  cheese  market  this  report  is  a  must!  

 

Background  

Several  dairy  experts  have  in  advocated  that  the  future  for  the  dairy  sector  will  be  to  return  to  the  basic  commodities  butter  and  milk  powder  instead  of  value  added  products  like  cheese.  

 PM  FOOD  &  DAIRY  CONSULTING  examine  this  statement  and  evaluates  the  future  prospects  for  the  world  cheese  market  in  spite  of  short  term  changes.    

The   main   thesis   of   the   report   is   that   cheese   has   a   dynamic   prospect   in   medium/long   term.  However,  the  cheese  segment  has  to  adapt  to  the  new  situation  saturated  markets  in  OECD  and  no  tradition  for  consuming  cheese  in  the  emerging  dairy  markets.  

The  development   in   the   last   five  years   in   the  global  dairy  and  cheese  market  have   shown  what  volatility   means.   The   dairy   commodity   prices   rocketed   from   2005   to   2008   including   cheese  

• Price:  €3,500  /  $4,700    • 400  pages  of  valuable  information  • Order  by  replying  to  this  mail  and  receive  an  invoice  • Your  company  will  receive  the  report  electronically  when  the  payment  is  registered  • You  can  subscribe  on  mikkelsenpreben@hotmail.com    • Find  more  information  about  PM  FOOD  &  DAIRY  CONSULTING    www.pmfood.dk    

1

because  of  the  rapid  economic  growth  in  most  regions  of  the  world.  The  growth  was  created  by  the  demand  for  dairy  products  that  for  the  first  time  in  three  decades  surpassed  the  supply.  The  general   fiscal   crisis   from  mid-­‐   2008  altered   the   situation  and   the  prices  declined  and   the  global  dairy  sector  was  hit  severely  with  declining  prices  and  world  and  regional  level.  At  the  same  time  the  production  cost  for  both  milk  production  and  dairy  processing  remained  at  a  high   level.  This  lead  to  a  cost  squeeze  and  the  situation  eased  late  2010  when  the  dairy  prices  recovered.  

During  the  financial  crisis  the  demand  for  whole  milk  powder  continued  to  grow  due  to  the  milk  balance   problems   in   especially   China   and   Brazil.   Several   of   the  major   exporting   dairy   countries  with  New  Zealand   in  the   lead  changed  strategy  and  turned  away  from  cheese  towards  the  basis  dairy  commodities  –  butter  and  milk  powder.  Opposite  Russia  was  the  driving  force  for  expanding  the  cheese  export  because  the  domestic  milk  production  still  is  unable  to  meet  the  demand  for  all  dairy  products  especially  cheese.  

The  turbulence  the  last  five  years  show  how  fast  the  world  dairy  market  can  change  and  how  the  demand  for  dairy  products  shift.    

Several  dairy  experts  have  in  advocated  that  the  future  for  the  dairy  sector  will  be  to  return  to  the  basic  commodities  butter  and  milk  powder  instead  of  value  added  products  like  cheese.  PM  FOOD  &  DAIRY  CONSULTING  contests  this  analysis  and  the  report  will  show  the  dynamics  of  the  world  cheese  market  in  the  medium  –  long  term.    

The  aim  of  the  report  is  to  analyze  the  future  prospects  for  the  world  cheese  market  will  develop  in  the  next  decade  and  answer  the  following  questions:  

• What   has   been   the   impact   on   the   cheese   sector   of   the   financial   crisis   –  will   the  dynamic  growth  from  the  2000s  return?  

• Can  cheese  be  a  future  product  in  the  emerging  dairy  markets  where  the  expansion  until  now  has  focused  on  fresh  dairy  products  and  milk  powder?  

• Can  the  cheese  market  regain  the  value  growth  in  the  matured  OECD  dairy  markets  where  private  label  and  discount  cheese  has  gained  market  shares  in  recent  years?  

• What  are  the  future  consumer  trends  for  cheese  in  different  parts  of  the  world?  • What  has  to  be  focus  of  the  cheese  processing  companies  in  relation  to  innovation  

and  marketing  to  develop  the  cheese  market  in  the  emerging  dairy  markets?  • The  report  will   identify  the  major  cheese  processing  dairy  company’s  in  the  future  

on  national,  regional  and  global  scale.  • How  will   the   trade   patterns   for   cheese   develop   in   the   next   decade   and  will   new  

countries  and  companies  enter  the  world  market?  

   

 

2

Content  of  the  report:  The  World  Cheese  Market  2010-­‐2020  

i. Introduction    ii. Methodology  

Part  I:  World  cheese  market  2010-­‐2020  

1. World  cheese  production  1.1. Production  2000-­‐2010  1.2. Major  cheese  producing  countries  1.3. Production  of  the  major  cheese  types  1.4. Future  prospects  2010-­‐2020  

2. World  trade  patterns  2.1. World  trade  developments  2000-­‐2010  2.2. Major  exporting  and  importing  countries  2.3. New  WTO  –agreement?  2.4. Future  trade  developments  

3. Cheese  consumption  3.1. Consumption  2000-­‐2010  3.2. Consumption  per  capita  3.3. Consumption  prognosis  2010-­‐2020  

4. Cheese  price  4.1. Development  in  2000s  4.2. Value  of  the  world  cheese  market  4.3. Future  price  developments  

5. Major  cheese  processing  companies  5.1. Top-­‐20  cheese  processing  companies  5.2. Global  players  in  the  next  decade  5.3. How  to  penetrate  the  emerging  dairy  markets  

6. Future  trends  6.1. Cheese  as  ingredient  6.2. Analogue  cheese  6.3. Food  service  and  food  industry  6.4. New  cheese  types  for  the  future  

7. External  factors  affecting  the  cheese  market  7.1. Policy  changes  7.2. Economic  development  7.3. SWOT  analysis  of  the  world  cheese  market  

8. Conclusions  8.1. Prognosis  for  2020  

3

8.2. Will  cheese  be  a  success  product  for  the  2010s?  

 

Part  II:  Cheese  country  analysis  

The  report  analysis  more  than  60  countries  in  all  regions  of  the  world  and  the  respective  cheese  market  analysis  have  the  following  content:  

1. General  country  information  2. The  dairy  sector  in  general  3. Cheese  production  

3.1. Traditional  country  cheese  3.2. Production  2000-­‐2015  

4. Export  and  import  5. Major  cheese  processing  companies    6. Consumption  7. Cheese  market  8. Future  prospects  

The  description  contains  statistics  from  2000-­‐2010  and  the  country  prognosis  reach  until  2015.  

The  countries  included  in  the  report  are:  

EU  27  

Austria,   Belgium,   Denmark,   Sweden,   Finland,   France,   Germany,   Netherlands,   UK,   Ireland,  Portugal,   Spain,   Italy,   Greece,   Estonia,   Latvia,   Lithuania,   Poland,   Czech   Republic,   Slovakia,  Hungary,  Slovenia,  Bulgaria,  Romania  

Other  European  countries:  

Norway,  Switzerland,  Croatia,  Bosnia-­‐Herzegovina  

CIS:  

Russia,  Ukraine,  Belarus    

Middle  East  and  Africa:  

Turkey,  Israel,  Egypt,  Saudi  Arabia,  Morocco,  Kenya,  South  Africa  

North  America:  

USA,  Canada,  Mexico      

4

South  America:  

Brazil,  Argentina,  Columbia,  Chile,  Venezuela,  Uruguay,  Paraguay,  Peru,  Bolivia,  Ecuador    

Asia:  

China,  India,  Indonesia,  Japan,  Malaysia,  Philippines,  South  Korea,  Taiwan,  Vietnam.  

Oceania:  

Australia,  New  Zealand  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

EXTRACT  FROM  THE  REPORT  Croatia    

                 

 

1.  General  information  

The  lands  that  today  comprise  Croatia  were  part  of  the  Austro-­‐Hungarian  Empire  until  the  close  of  World  War   I.   In   1918,   the   Croats,   Serbs,   and   Slovenes   formed   a   kingdom   known   after   1929   as  Yugoslavia.   Following  World  War   II,   Yugoslavia   became   a   federal   independent   Communist   state  under  the  strong  hand  of  Marshal  TITO.  

Although   Croatia   declared   its   independence   from   Yugoslavia   in   1991,   it   took   four   years   of  sporadic,   but   often   bitter,   fighting   before   occupying   Serb   armies   were   mostly   cleared   from  Croatian  lands.    

Under  UN  supervision,   the   last  Serb-­‐held  enclave   in  eastern  Slavonia  was   returned   to  Croatia   in  1998.  

In  April  2009,  Croatia  joined  NATO;  it  is  a  candidate  for  eventual  EU  accession  in  2013  

Table  1:  Key  indicators  for  Croatia    

Subject   Information   World  ranking  Area   56,394  km2                                                        127  Population   4.4  million   124  Population  growth  rate                                      -­‐0.07%           224  Capitol                                    Zagreb    Arable  land   26%    Religion   88%  Roman  Catholic    Urbanization   58%    GDP     $78  billion   79  GDP  growth  rate   -­‐1.4%(2010)  

2.0%(2011)    

GDP  per  capita   $17,400   67  Source:  Economist,  CIA,  OECD,  PM  FOOD    

Once  one  of  the  wealthiest  of  the  Yugoslav  republics,  Croatia's  economy  suffered  badly  during  the  1991-­‐95  war  as  output  collapsed  and  the  country  missed  the  early  waves  of  investment  in  Central  and  Eastern  Europe  that  followed  the  fall  of  the  Berlin  Wall.    

 

6

Between   2000   and   2007,   however,   Croatia's   economic   fortunes   began   to   improve   slowly,   with  moderate  but   steady  GDP  growth  between  4%  and  6%   led  by  a   rebound   in   tourism  and   credit-­‐driven  consumer  spending.   Inflation  over  the  same  period  has  remained  tame  and  the  currency,  the   kuna,   stable.   Nevertheless,   difficult   problems   still   remain,   including   a   stubbornly   high  unemployment  rate,  a  growing  trade  deficit  and  uneven  regional  development.    

The  state  retains  a   large  role   in  the  economy,  as  privatization  efforts  often  meet  stiff  public  and  political   resistance.   While   macroeconomic   stabilization   has   largely   been   achieved,   structural  reforms  lag  because  of  deep  resistance  on  the  part  of  the  public  and  lack  of  strong  support  from  politicians.  The  EU  accession  process  should  accelerate  fiscal  and  structural  reform.    

While   long   term   growth   prospects   for   the   economy   remain   strong,   Croatia   will   face   significant  pressure  as  a  result  of  the  global  financial  crisis.  Croatia's  high  foreign  debt,  anemic  export  sector,  strained  state  budget,  and  over-­‐reliance  on  tourism  revenue  will  result  in  higher  risk  to  economic  stability  over  the  medium  term.  

 

2.  The  dairy  sector  in  general  

The  dairy  industry  is  one  of  the  most  important  parts  of  Croatian  agriculture  with  9%  of  the  total  agricultural  production  value.  There  are  more  than  20,000  dairy  farms  in  Croatia  and  they  are  very  small,   however   the   number   of   dairy   farmers   has   been   halved   from   2000   to   2007.   In   the   same  period  the  yield  per  cow  has  increased  from  2,300kg  to  3,555kg.  

The  overall  milk  production  in  Croatia  declined  in  the  last  decade  but  the  deliveries  to  dairies  have  increased  significantly  with  75%  illustrating  the  improvements  in  the  dairy  sector.  

Table  2:  Key  dairy  figures  2000-­‐2011  

Milk  production            2000            2005            2009            2010            2011  

Dairy  cattle  (1,000)              287                239              212                    -­‐                  -­‐  Milk  production  (1,000  MT)  

           607          1,073              818                800                850  

Deliveries  to  dairies  (1,000  MT)  

             380                  605                675                670                710    

Production  of  dairy  products  (1,000  MT)  

         

Liquid  milk                  296                  325                322                310                  300  Fermented  products                      55                      83                104                110                      120  Cream                      -­‐                      -­‐                    27                      25                      26  Butter                          2                          4                        6                        6                          8  SMP                          3                          3                            3                        4                          5  WMP                          1                          1                        1                        -­‐                          -­‐  WP                      -­‐                      -­‐                        5                        5                                                7  

Source:  IDF,  ZMP,  PM  FOOD  &  DAIRY  CONSULTING  

The  production  of  dairy  products  has  enlarged  due  to  the  growing  supply  for  processing  mainly  for  liquid  milk  and   fermented  products.  The  production  of   liquid  milk  accounts   for  65%  of   the  milk,  fermented  products  11%,  cheese  6%  and  other  dairy  products  18%.  

7

3.  Cheese  production    

Cheese   still   plays   a  minor   role   in   the   Croatian   dairy   industry   but   the   production   has   improved  along  with  the  growing  supply  of  milk  to  the  dairies.  From  2000  to  2010  the  production  increased  by   nearly   50%.   However,   the   GFC   has   affected   the   Croatian   economy   severely   and   also   the  domestic  demand  for  cheese.    

Table  3:  Cheese  production  in  Croatia  2000-­‐2015  

1,000  MT            2000            2005            2009            2010            2011          2015  Total                19                26                30                28                29                32  

Source:  ZMP,  IDF,  CNIEL,  PM  FOOD  &  DAIRY  CONSULTING  

The  future  prospects  are  uncertain  for  several  reasons.  First,  how  soon  will  the  economy  recover  and   improve   the   purchasing   power   of   the   Croatian   consumers?   Secondly,   how   much   will   the  foreign   dairy   companies   invest   in   cheese   production   in   Croatia   or   will   they   rely   on   increasing  import  from  other  countries  where  they  produce  cheese.  Finally,  what  will  the  impact  be  if  Croatia  becomes  a  member  of  EU  in  2013  and  there  will  be  free  access  to  the  Croatian  dairy  market?  

The  prognosis   is   that   the  cheese  production  will   increase  modestly  with  4,000  MT  from  2010  to  2015.  

 

4.  Export  and  import    Croatia   is   a   net-­‐importer   of   dairy   products   and   this   is   also   the   case   for   cheese.   The   export   is  minimal   and   it   is   expected   to   remain   stable   also   until   2015.   The   export   is  mainly   to   the   other  countries  in  the  former  Yugoslavia  and  the  majority  of  the  import  comes  from  Germany.    

Table  4  Cheese  export  and  import  2005-­‐2015  

1,000  MT          2005          2009        2010          2011          2015  Export                    2                    2                  1                    2                      3    Import                    9                11              10                12                  20              Net-­‐import                    7                    9                  9                10                                17  

Source:  IDF,  ZMP,  PM  FOOD  &  DAIRY  CONSULTING  

The   import   is   increasing   and   a   possible   membership   of   EU   will   increase   the   import   and   the  competition  for  the  domestic  dairy  industry.  

 

5.  Major  cheese  producing  companies    The  milk  processing  in  Croatia  is  handled  by  37  dairy  companies.  The  5  largest  dairies  process  80%  of  the  delivered.  Most  other  dairies  are  craft-­‐type  and  they  process  up  to  10,000  kg  milk  per  day.  The  existing  capacities  satisfy  the  domestic  needs  for  milk  processing.  

 

8

Table  5  Key  dairy  companies  in  Croatia    

 

Source:  CLC  (  Croatia  Livestock  Centre)  

The  two  largest  dairy  companies  Dukat  and  Vindija  processes  more  than  2/3  of  the  milk.  They  have  modern  production  technology  and  comply  with  the  hygiene  and  quality  standards  from  EU.  

The   Croatian   dairy   industry   has   penetrated   by   the   EU   dairy   companies   and   they   control   the  majority  of   the  dairy  production  and  this  also   includes   the  cheese  production.  Several  EU  based  companies  have  in  invested  in  Croatia  before  a  possible  EU  membership  in  2013  to  be  able  to  take  advantage  of  the  opportunities  that  follows  from  opening  the  Croatian  dairy  market.  

The  major  cheese  producing  companies  are:  

Dukat  

The   company  was   established   in   1912   and   it   has   reached   a   dominating   position   by   continuous  mergers   and   acquisitions   through   the   years.   The   company   has   national   coverage   with   dairy  products  and  produces  the  full  range  of  dairy  products  –  fresh  dairy  products,  butter,  and  cheese.  

In   2007,   Lactalis   acquired   the   company   as   part   of   their   Balkan   strategy   that   also   included  production   in   Bosnia-­‐Herzegovina,   Macedonia,   and   Romania.   The   focus   is   now   to   develop   the  Dukat  brand  into  a  regional  brand.    At  the  moment  Dukat  has  five  processing  plants  in  Croatia  and  in  2009  the  company  took  over  KIM  dairy  company  (no.  5  in  Croatia)  with  a  milk  intake  of  22,000  MT.    

Dukat  produces  approximately  15,000  MT  of  cheese  annually  mainly  hard  and  semi-­‐hard  cheese.  

 

Vindija  

Vindija  is  the  second  largest  dairy  in  Croatia  that  process  160,000  MT  milk  annually.  The  company  is  a  food  company  that  operates  in  poultry,  meat  and  bakery  besides  dairy.  In  the  dairy  business  Vindija   has   been   focusing   on   the   domestic  market.   The   company   has   two   processing   plants   in  Varazdin  County.  The  annual  cheese  production  amounts  to  7,000  MT.  

The   other   cheese   processing   dairy   companies   are   small   craft-­‐type   operations   with   local   focus.  Meggle   from  Germany  has  also  established  dairy  production   in  Croatia  but   the   focus   is  on   fresh  dairy  products,  butter  and  ingredients.  

The  possible   EU  membership  will   be   a  huge   challenge   for   the  Croatian  dairy   industry   and   rapid  concentration  can  be  foreseen  also  in  the  cheese  production.  

Company   Milk  intake  (1,000  MT)   %  of  total  milk  Dukat   275   42  Vindija   160   25  Meggle  Hvatska   45   7  Ledo     30   4  Kim  Mljekare   22   3  Others     124   19  Total   656   100  

9

6.  Consumption    In  the  first  part  of  2000s,  the  consumption  increased  due  to  the  economic  growth.  From  2008  until  now,   the   consumption   of   cheese   has   suffered   from   the   impact   of   the   GFC   and   the   level   has  declined  with  25%.    

Table  6:  Cheese  consumption  2005-­‐2015  

           2005              2007            2009            2010              2015  Total  (1,000  MT)                  33                    37                31                  28                  38  Per  capita  (kg)                  7.0                    8.2                6.9                  6.6                  8.3  

Source:  IDF,  PM  FOOD  &  DAIRY  CONSULTING  

The   consumption   is   expected   regain   the   dynamic   path   in   the   future   along   with   the   expected  recovery  of  the  economy.  The  consumption  is  expected  to  reach  the  2007-­‐level  in  2015.  

 

7.Cheese  market    The  Croatian  consumers  are  very   loyal   to   the  domestic   standard   types  of   cheese   in   spite  of   the  availability   of   imported   cheese   and   premium   products.   The   sales   of   cheese   have   followed   the  turbulence  of  the  economy  both  in  volume  and  value  terms.  

The  major  outlet   for   cheese   in  Croatia   is   supermarkets/hypermarkets,   accounting   for  60%   retail  value  sales   in  2010.  The  share  of  convenience  stores  and  independent  small  grocers   is  declining,  since  they  cannot  compete  with  the  prices  offered  by  the  supermarkets/hypermarkets.  

Table  7:  Cheese  company  shares  2005-­‐2009  (%retail  value)  

Company              2005                2007                2009   Brands  Dukat              36.1                36.5                  40.0   Sirela,  Dukatela,  Dukat  Vindija              16.6                18.0                  16.4   Z  Bregov,  Varazdinec,  Vindija,  

Gebrüder  Woerle                  7.4                    7.7                      7.9   Happy  Cow  Kraft  Foods                  5.5                    5.4                      5.7         Philadelphia  Meggle  Hrvatska                  2.5                      2.9                      3.3   Meggle  Zott                  3.5                    3.4                      3.0   Zottarella,  Zott  Toasty  Bayernland                  2.8                    2.5                          2.8   Gouda,  Edamer,  Kerniger,  Chester  Cheddar,  BL  

Mozzarella  

Unilever                  2.9                    2.9                      2.5     Rama  Créme  Bonjour  Belje                  2.3                                  2.3                      2.1   Buco  Konzum                  0.6                        1.1                      1.4         K  Plus  Zanetti                  0.3                    0.4                      0.3   Mascarpone  Italioano,  Ricotta  

Other  private  label                  1,4                    2.5                      3.2    Others                18.1                14.4                  14.4    Total            100.0              100.0              100.0    

Source:  Euromonitor  International,  PM  FOOD  &  DAIRY  CONSULTING  

Dukat  (Lactalis)  is  the  undisputed  market  leader  with  40%  ahead  of  Vindija  with  16%  market  value  share.   Foreign   dairy   companies   like   Kraft   Foods,   Meggle,   Zott,   Gebrüder   Woerle,   Bayernland,  Unilever  and  Zanetti  also  play  a  role  on  the  Croatian  dairy  market.  

10

Private  label  has  gained  market  shares  during  the  GFC  and  this  trend  is  expected  to  continue  in  the  future.  

 

8.  Future  prospects    The  Croatian  cheese  production  and  market  is  relatively  small  but  in  spite  of  this  it  has  attracted  a  lot  of  interest  from  foreign  dairy  companies  with  Lactalis  in  the  lead.  The  coming  EU  membership  is   the  major   reason,   and   the   possibilities   to   get   further   access   to   the   dairy  market.   This   is   also  expected  to  have  a  positive  effect  on  the  cheese  market  and  the  future  prospects   from  2010  to  2015  are:  

• The  production  will   increase  by  4,000  MT  but   this   is   only   to   regain   the   level   before   the  GFC.  

• The   export   remains   stable   at   a   very   level   but   the   import   will   increase   by   8,000   MT  especially  due  to  the  coming  EU  membership.  

• The  consumption  will  soar  in  line  with  the  economic  recovery  with  10,000  MT.    

11