1. The Specialty Cheese Market in the United States presented by Paul Savello, Ph.D. Ministerio de Ganadería, Agricultura y Pesca

2. ¡Gracias a los expertos en lácteos visitantes por su tiempo e interés en ayudar el sector lácteo del Uruguay!

3. Summary Cheese consumption in U.S. increased during past 30 years Specialty cheese market helping to drive the per capita consumption Specialty cheese retail sales – U$S 2.4 billion in 2000 with growth to U$S 2.9 billion in 2005 Four P’s (Product, Promotion, Place, Price) of marketing used to describe the specialty cheese market Need to uncover a niche product

4. Summary Most rapidly growing niche market is ethnic cheese market Hispanic style cheese is fastest growing sector “Farmstead”/”artisan” cheese market rapidly growing in specific geographic areas Opportunities exist for international manufacturers of specialty cheeses in the U.S. market

8. Cheese Consumption Increase Consumer desire for new cheese varieties in convenient forms and packages Consumers willing to try new varieties of cheese Consumer willing to pay premium for the new varieties Dairy Management Inc. (Rosemont, Illinois): 74% of consumers “love the taste of cheese” and 78% want to try “new and different varieties”

9. Cheese Consumption Increase Health conscious consumer – calcium and protein in cheese New cheese varieties (imported or manufactured by artisan cheesemakers) turn non-cheese consumers into users or occasional cheese users Farmstead/artisan cheeses represent small portion of total cheese market, but these cheeses show significant opportunity for market growth

10. Cheese Consumption Increase Jim Path (University of Wisconsin Center for Dairy Research) defines “specialty cheese” as “cheese that is low in production volume – less than 40 million pounds annually…labor intensive…perception of value added product… may have ethnic background…special manufacturing process or packaging”

11. Specialty Cheese – Market Overview Nature of specialty cheese derived from one or more unique qualities: Exotic origin Particular processing Design Limited supply Unusual application or use Extraordinary packaging or channel of sale

12. Specialty Cheese – Market Overview Why is specialty cheese market increasing? Subtle variations in textures, flavors Ethnic heritages Perfect match for today’s adventurous and flavor- seeking consumer Quality and variety of specialty cheeses advances due to: innovation, research, global migrations of cheesemakers, craftsmanship programs

13. Specialty Cheese – Market Overview Artisan cheeses have great reception in market Goat cheese one of the most popular specialty cheeses Retailers can carry as many as 50 varieties of goat cheese

14. Specialty Cheeses – Retail Growth Fastest growing at retail – Asiago cheese Next – Gorgonzola, Provolone, Muenster, Colby Jack, Brie, Goat, Blue, Havarti, Swiss Ten years ago, consumers not even aware of cheeses such as Asiago, Gorgonzola, or Havarti

16. Specialty Cheeses – Retail Growth Specialty cheeses sold in “deli” departments of supermarkets Commodity cheeses sold in pre-packaged, set weight varieties in the dairy case Research of Fromartharie (New Jersey): “most shoppers purchase commodity cheese for cooking and baking, while they shop the deli case for entertaining”

17. Specialty Cheeses – Retail Growth Packaged Facts report “U.S. Gourmet Specialty Foods Market:” Supermarkets – 55% of specialty cheese sales Specialty cheese stores – 30% of sales Health/natural food stores – 5% of sales Warehouse clubs – 4% of sales Other retail outlets – 6% of sales

18. Specialty Cheeses – Retail Growth Supermarket Business 2000 Expenditure Survey Cheese category at 35.5% gross profit margin compared to 29.8% gross profit margin for entire dairy department International Dairy-Deli-Bakery Association (IDDBA) 2001annual foodservice trend report “Cheese has highest gross profit margin of any product sold in dairy department of grocery stores”

19. Specialty Cheeses – Retail Growth Supermarket consumers choosing more farmstead/artisan and ethnic cheeses – due to rebirth of “cheese course” at restaurants Greek feta cheese (including flavored feta cheeses) increased 30% in retail sales last year “Other” Italian cheeses and Hispanic varieties significantly increasing in retail sales

20. Specialty Cheeses – Retail Growth Consumer data important in specialty cheese market Consumers with household income >$250,000 more than 4x likely to purchase Brie cheese over other cheeses Professionals and consumers with incomes >$100,000 more likely to choose Camembert cheese Havarti cheese has high appeal to middle income consumers earning $50,000 to $59,000

21. Specialty Cheeses – Retail Promotion Gourmet Retailer report 60% of retailers offer full-service cheese counter 1/3 of supermarkets offer up to 300 individual specialty cheeses 60% said that artisan cheese makes up more than 50% of the cheese case Most effective ways to promote specialty cheese are sampling/demonstrations and staff recommendations

22. Specialty Cheeses – Retail Promotion Gourmet Retailer report Educational “signage” important Type, age, taste profile, country of origin, serving suggestions, care instructions A cheese-wine pairing guide helps promote cheese sales

23. Specialty Cheeses – Education University of Wisconsin Center for Dairy Research Dutch Cheese Artisan Course Wisconsin Cheese Grading Short Course Applied Dairy Chemistry Short Course Quality Assurance Short Course Wisconsin Cheese Technology Short Course Wisconsin Master Cheesemaker ® Program

24. Specialty Cheeses – Education American Cheese Society Special attention to specialty and farmstead cheeses from cow’s, goat’s, sheep milk “Farmstead” cheese – handmade in small quantities produced on the farm using only milk from the herd located on that farm Farmstead producer can direct cheesemaking process from determining the animal’s feed through the final aging of the cheese

25. Ethnic/Niche Markets By 2010 ethnic food sales in U.S. will reach U$S75 billion per year Fastest growing ethnic market is Hispanic community U$S 421 billion spending power Hispanic food sales to grow 5.5% per year over the next 50 years U.S. is world’s fifth largest Hispanic marketplace

29. Ethnic/Niche Markets Other ethnic/niche cheese markets Greek feta cheese Kosher cheeses English style cheeses Farmstead cheeses

30. Farmstead/Artisan Cheeses Wisconsin’s Full Circle Farm – current interest in naturally-occurring fatty acid found in dairy products that may have cancer-fighting abilities Introduced artisan cheese produced from milk of grass-fed cows to promote these health benefits Takes advantage of the higher than normal level of “conjugated linoleic acid (CLA)” in the milk/cheese Web site (www.fullcirclefarm.net) provides detailed description of farm including quietness, humane treatment of animals, fresh grass and clove, farm’s family historywww.fullcirclefarm.net

31. Special “niche” markets (with “sub-niches”) for Specialty Cheeses Supermarket chain “Whole Foods Market” of United States and Canada provides an interesting and opportunistic example/possibility for Uruguay’s dairy industry in the “niche” and “sub-niche” markets Uruguay’s cheese sector (industry and artisan) can provide value-added cheese varieties to the Whole Foods Market chain for the chain’s local, regional, and national markets

32. Summary Cheese consumption in U.S. increased during past 30 years Specialty cheese market helping to drive the per capita consumption Specialty cheese retail sales – U$S 2.4 billion in 2000 Four P’s (Product, Promotion, Place, Price) of marketing used to describe the specialty cheese market Need to uncover a niche product

33. Summary Most rapidly growing niche market is ethnic cheese market Hispanic style cheese is fastest growing sector “Farmstead” cheese market rapidly growing in specific geographic areas Opportunities exist for international manufacturers of specialty cheeses in the U.S. market