| It's
not quite time for 160 count sliced American to move over, but foodservice
is discovering that there is cheese beyond the commodity realm.
With cheddar, mozzarella, Monterey jack, cream cheese and Swiss
accounting for more than 90% of the market, some menus are differentiating
themselves by using specialty cheeses as cooking ingredients. In
addition, white tablecloth restaurants are marketing cheese plates
in response to the American increase in per capita cheese consumption.
Retailers learned long ago about specialty cheeses' ability to
build incremental profits. Commodity cheeses are merchandised
in the dairy section with packaged commodities taking the lion's
share of shelf space. However, the deli department is home to
the specialty cheeses in the upscale European cases. With prices
ranging from $5-$15 per pound, specialty cheeses, add gross profit
at a much faster rate than sliced American and shredded mozzarella.
The American consumer has posted huge increases in the consumption
of cheese. This has caught the attention of foodservice. The tablecloth
Italian segment has used hard grating cheeses like Parmesan and
Romano for years. More recently, however, table grated hard cheeses
on salads and pasta dishes have allowed foodservice menus to notch
prices up, even in the casual Italian segment like Olive Garden.
Let us understand why; cheese adds tremendous flavor and complexity
to dishes for very little cost. The addition of 25 cents worth
of cheese can easily bring $1.00 - $1.50 in revenue. Mashed potatoes
are a cheap side dish. Garlic Romano Mashed fetches $3.50. Fresh
fruit as a dessert sells well but add a dollop of Crème Fraiche
and watch profits escalate. Homemade Blue Cheese dressing is sold
for a 50-cent premium. We have all seen the power of cheese in
those "Poppers".
One of the hottest trends in recent years is the rise of artisan
produced, farmstead cheeses. Like their European cousins, artisan
cheesemakers are using milk from their own herds and producing high
quality handmade cheeses. This trend is red hot in California. The
common wisdom says, "As goes California, so goes the nation." The
farmstead cheese movement is reminiscent of the California wine
industry in the 1970's. It is poised for explosive growth nationwide
and ultimately worldwide.
The history of cheesemaking in Wisconsin is a history of farmstead
cheeses. Many plants were begun at the intersection of four dairy
farmer's plots. These plants produced high quality artisan cheeses.
As cheese production grew in the state, many of these specialty
cheese producers could not compete with the more efficient larger
plants. In addition, the dairy farmers saw that selling their
milk to these large producers could bring higher returns to their
farms. As California production rises, it will be interesting
to see if some Wisconsin producers return to their roots.
A
growing trend on mid-scale and upscale menus is "micro-naming".
Beers have proliferated from microbreweries with eclectic names.
Small batch wineries in Napa have succeeded for years by producing
4,000 cases and less. Now this trend is growing in the center
of the plate. Fish from certain creeks or rivers are gaining popularity
and profits for perceptive operators who market these names. Chilean
Sea Bass and Copper River Salmon come to mind. Certified Angus
Beef commands premium pricing while New York strip sales are flat.
West Coast chefs are beginning the process of naming dishes that
use artisan cheeses on their menu. Point Reyes Blue Cheese on
salads is gaining mention on Bay Area menus and Three Sister's
"Sareanah" is named on several chicken dishes in California's
Central Valley. This trend promises to grow opening a marketing
and merchandising opportunity for specialty producers who collaborate
with area chefs.
Other growing food trends are the anti-global and slow food movements.
This is a highly political topic but one must recognize that more
and more people worldwide are saying, bigger is not better. In
fact, they are saying, smaller is better. In many marketing strategies,
big companies want to look small and small companies want to look
big. This "eco-trend" has large companies coming under attack
for simple being big. For these large producers, looking small
might include artisan cheese production. The hallmark of efficient
production includes limited SKU's and long production runs. Specialty
cheeses are the antithesis of this strategy. Small batches of
unusual cheeses create not only production issues but marketing
and logistics challenges as well. The easiest solution for a large
producer is to ignore this market and focus on what it does best,
large-scale commodity production.
The 3M
Corporation employees a unique strategy in their R&D department.
Each of their R&D engineers is required to spend 10% of their development
time on weird, unusual, out-of-the-box projects. Several years ago,
a 3M scientist in the tape division spent his time developing better
"stickiness" for tape. His "special project" was to find a substance
that did not stick so well. The outcome of that thinking became
the little yellow sticky pads that we all use everyday. This product
has become one of 3M's top selling items. What can your R&D department
develop that makes use of your core strength but from a specialty
point of view?
According to legend, the discovery of cheese was an accident.
Is there an "accident" out there waiting for you? The confluence
of events before our industry is unmistakable. Foodservice and
retail are craving specialty cheeses. Anti-globalists are attacking
agro-business. Commodity prices are low and trending downward.
Market share is traded everyday on 1/2 cent and 1/4 cent pricing.
Surely there must be a way to make use of capacity that answers
these opportunities.
Over
the coming 10 years, the projected growth of U.S. food consumption
will be split 70%-30% to the foodservice side. Consumers are willing
to pay additional dollars for value-added products in restaurants.
Specialty cheeses add flavor and value for low cost relative to
other protein sources. It is possible that foodservice can create
an opening for cheese producers and marketers to create the next
big thing.
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