Some price sensitivity in cheese?

Dairy Foods

Editor's note: This is the first in a an occassional segment-specific installation of Dairy Market Trends.

It's been clear for some time that last year's high milk prices had a detrimental effect on sales. There's also evidence that cheese sales were slowed when the increased cost of raw milk was passed on to consumers.

A look at quarterly sales of natural cheese shows that as dollar sales went up in the last three quarters of 2004, unit sales began to lose momentum. For processed slices, the picture is less clear. That category was shrinking by both dollar and unit measures before the prices of raw milk jumped last spring. But afterward, dollar sales increased, while unit sales were shrinking at a slower rate.

In the latter half of 2003. natural cheese in all its forms was growing at a significant rate both in terms of dollar sales and units. But starting with the second quarter of last year. dollar sales reached double-digit growth, and unit sales began to cool off.

For processed slices, unit sales have been lower each of the last six quarters, comparative to the same period in the year prior. A look at the top 10 brands of natural cheese in different forms shows that all but one experienced gains in dollar sales in 2004, but five of them sold less units than in 2003.

Shredded cheese has been one of the segment's best performing subcategories for the past few years. A look at the top shredded cheese brands shows that it's a competitive market, with some brands growing and others shrinking. But seven of the brands grew dollar sales last year, while only half saw an increase in unit sales.

The table of the top brands of natural cheese also demonstrates that the most popular forms continue to be chunks and shreds. All of the top 10 brands of shredded cheese are natural cheese.