A Natural Progression

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A Natural Progression

By David Phillips - 03/01/2011

Whether they are seeking a better glass of milk, a locally made yogurt or an award-winning goat's milk cheese, today's consumers have more choices that ever before — especially when it comes to organic and specialty options.

Fast Fact
5

The percent that organic fresh dairy products represent of the total dairy products sold in the United States

Source: Organic Trade Association (OTA)

Organic dairy sales are rebounding after a decline in 2009, and specialty cheese sales have remained strong despite a soft economy. While both of these subcategories command premium prices, the various attributes associated with them keep consumers willing to spend a few more dollars, even in difficult times. Artisan cheese, in particular, has so many attractive features that many full-service retailers are launching, expanding and diversifying to include wine bars and food service items.

"Our customers are very cheese savvy," says Ken Monteleone, who opened Fromagination in Madison, Wis., in 2007. The shop has seen 30-35 percent annual sales growth. "In the summer, our business is half tourists and half local. People visiting from Chicago or elsewhere are looking for cheeses made in Wisconsin. The local customers want that, too, but also perhaps something they encountered in France or when they were in California and visited Cow girl Creamery."

Organic fresh dairy products (milk, yogurt and kefir, plus butter) now represent 5 percent of the total dairy products sold in the United States, according to the Organic Trade Association (OTA), with nearly $3.6 billion in annual sales. Sales of organic dairy shrank 1 percent in 2009 (from $3.6 billion to $3.57 billion), while other organic food categories saw slower growth. Only the organic yogurt subcategory (including kefir) saw positive growth in 2009, up 4.3 percent to $953 million. However, a turnaround may have already begun, says Barbara Haumann, spokesperson for OTA, which is at work on a new report.

"Preliminary estimates for 2010 indicate that (overall) organic products sales rebounded, and that organic dairy sales showed positive growth," Haumann says.

Part of the slowdown in demand for organic milk is due to availability of non-organic products with similar benefits, according to natural foods retailers. In addition, the price differential for organic remains quite high, due in part to the higher cost of organic feed. Consumers might prefer local product or milk from grass-fed cows, and, if their primary attraction to organic has been its prohibition of the use of synthetic growth hormones, they have new options. Since 2007, most of the largest conventional milk cooperatives, dairy processors and supermarket retailers have begun to offer non-organic milk made without the use of rBST. That list includes Dean Foods, California Dairies Cooperative and Walmart's and Safeway's private-label brands.

Those consumers who prefer organic and want more from their milk glass may find their way to the dairy section of a store such as MOM's Organic Markets, Rockville, Md. Lisa de Lima, VP of grocery operations for the six-store chain, says the dairy department now includes organic products from producers who practice rotational grazing, a product line driven by greater consumer interest in how milk is produced. Studies have shown that cows fed mostly grass (as opposed to mostly grain) give milk that's higher in fats like conjugated linoleic acid, which may have a variety of health benefits, including increased immune functions and lower insulin resistance.

"We have more variety than ever," de Lima says. "We have a lot of dairy substitutes, including a coconut milk kefir. We also carry the goat's milk kefir from Redwood Hills Farm."

Concerns about the use of synthetic hormones may have driven many consumers toward organic milk several years ago, de Lima says, but those who have become regular users find other reasons to stay with organic and grass-fed milks. A good yardstick of the U.S. cheese industry is the American Cheese Society (ACS) in Denver, a 28-year-old organization that is known for its annual cheese awards. Executive Director Nora Weiser says it now has about 1,300 members, most of them cheesemakers, retailers and distributors.

"There were 1,462 cheeses in the (ACS) judging in 2010," Weiser says. "That was a record, and the year before that was a record, and so on." Indeed, ACS membership and the number of cheeses in its competition have both doubled since 2005.

Steve Jones, Portland, Ore., has been involved in the operation of cut-to-order shops for more than 10 years. Last March, he expanded and diversified Steve's Cheese, his retail business, moving to a new location to establish Cheese Bar — a hybrid business that's one part retail cheese shop and one part neighborhood bar — serving a variety of food plus beer and wine.

"I always say that ‘cheese' is the first word in Cheese Bar," Jones says. "And the cheese case is still the largest part of our business." But Jones says the added experience of sipping a craft beer or a local wine while shopping for cheese is crucial.

A record-number of cheeses — 1,462 — competed at ACS in 2010.
Photo courtesy of Steve Schneider Photography

"There are so many places that now carry good cheese that I think places that only sell cheese are in danger of extinction, much like record stores," he says.

In Alexandria, Va., Cheesetique morphed into a cheese shop/wine bar with an expansion three years ago. The wine bar certainly brings traffic, but Cheese Department Manager Sarah Mason says that Cheesetique's regular clientele expects to be dazzled by great cheeses with every visit.

"There is more awareness," Mason says. "We do have customers coming in and asking for specific dairies. People know ACS a little more, and when we point out award winners, they are interested. " Mason says one of the top sellers at Cheesetique is Grayson, a pungent washed-rind cheese from nearby Meadow Creek Dairy, Galax, Va.; it was named best farmstead cheese in ACS competition in 2007.

"People are less scared of blue cheese and less scared of stinky cheeses than they once were," Mason adds.

Monteleone enjoys unique opportunities because of his store's location on the Wisconsin capital square. A twice-weekly famers market draws 15,000 people for much of the year, and Fromagination is a stone's throw away. Booth allotments are limited, so many cheesemakers turn to the shop as their only local outlet. Monteleone features more than 25 dairy-state cheesemakers, whose products sometimes account for more than 70 percent of the cheese he sells.

Source: Organic Trade Association’s 2010 Organic Industry Survey conducted 1/21/2010 – 3/3/2010.

Monteleone agrees with Mason's account of the expanding vocabulary of artisan cheese customers. Many are seeking raw-milk cheeses, goat's and sheep's milk cheeses when in season, cheeses made with vegetable rennet and cheeses from small local producers. Few artisan cheesemakers have organic status, but the aforementioned Cowgirl Creamery cheeses are award winners made only from organic milk.

Some cheeses and artisans achieve something approaching pop-icon status. Currently, cheese aficionados across the country are coveting a particular cow's milk cheese from Wisconsin. Rush Creek Reserve, released late last year, is a new cheese from Uplands Cheese Co. in Dodgeville. Uplands' flagship Pleasant Ridge Reserve had been an only child and taken best of show in the ACS judging three times in 10 years.

"The Rush Creek sold out right away, and I have customers on a waiting list," Monteleone says.

Indeed, today's consumers know what they like, and an increasing number of organic and specialty products give them the power to choose.

"There are so many places that now carry good cheese that I think places that only sell cheese are in danger of extinction, much like record stores."
—Steve Jones, Owner, Steve's Cheese

David Phillips is a Chicago-based freelance writer and consultant, with nearly 20 years of experience working in community news and business news, including an eight-year editorial stint at Dairy Foods magazine.

INDUSTRY NEWS

Saputo Strikes Deal to Buy DCI Cheese Co.
Saputo Cheese USA Inc., a wholly owned subsidiary of Saputo Inc., will acquire Fairmount Cheese Holdings Inc., the parent company of DCI Cheese Co. The transaction is expected to close this month, according to a Feb. 17 statement from DCI.

"We are very excited to become a part of the Saputo team," says Michael Mulhern, CEO of Fairmount. "Saputo is a high-performance organization with significant manufacturing and operational resources, which will enhance our ability to better serve customers."

Saputo produces, markets and distributes a wide range of products, including cheese, fluid milk, yogurt, dairy ingredients and snack cakes. It is one of the largest dairy processor in the world and the largest in Canada. Saputo's products are sold in more than 40 countries under brand names such as Saputo, Alexis de Portneuf, Armstrong, Baxter, Dairyland, Danscorella, De Lucia, Dragone, DuVillage 1860, Frigo Cheese Heads, Kingsey, La Paulina, Neilson, Nutrilait, Ricrem, Stella, Treasure Cave, HOP&GO!, Rondeau and Vachon. Saputo is a publicly traded company on the Toronto Stock Exchange under the symbol SAP.

DCI Cheese imports, manufactures and markets of specialty cheeses and other restaurant-quality prepared foods. Its imported and domestic specialty cheese brands include Black Diamond, Goldy's, il Giardino, Joan of Arc, King's Choice, Meza, Nikos, Organic Creamery and Salemville.

Mifroma Brings Swiss Cheeses to United States
Switzerland-based Mifroma, a European milk processing company, has launched its Emmentaler, Switzerland Swiss, Gruyere, Appenzeller, Fondue and Exclusive Specialty Cheeses in the United States.

Mifroma USA is a division of M Industry USA Inc., which has offices in Lancaster, Pa. Mifroma plans on having a sales and administrative location on the East Coast as well as a regional sales office on the West Coast, headed up by Jim Basta. Mifroma will work with importers and distributors to sell its Swiss cheeses to the U.S. market.

"Mifroma is proud to uphold the tradition of the high-quality dairy products manufactured in our home country of Switzerland," says Paul Schilt, executive vice president of Mifroma USA. "We are excited about bringing delicious Swiss cheese products to cheese-lovers across the United States."

The company is comprised of a small group of dedicated professionals with expertise gained from more than 60 years in the cheese business. It is part of Federations of Migros Cooperatives, the largest supermarket chain in Switzerland and a manufacturer of chocolates, cookies, pastas, juices, body care, household cleaners, cheeses, mineral waters, preserves and other products.