(Bloomberg Businessweek) -- Is there such a thing as too much cheese? Producers across the US are betting billions of dollars that the answer is no. America’s per capita cheese consumption has more than doubled since the government began keeping track in 1975, to about 42 pounds a year—more than all the butter, ice cream and yogurt combined. Facilities for making cheese account for more than half of the $8 billion in US dairy-product projects slated to come online from 2023 to 2026, according to the International Dairy Foods Association.
Great Lakes Cheese Co. is spending more than $700 million on a New York plant that will double the company’s milk consumption. Lactalis USA is making a “big investment” to add feta capacity to a California facility as more at-home cooking and a viral baked-feta pasta goose demand for the brined cheese. Sargento Foods Inc., which just formed a partnership with Mondelēz International Inc. to package bite-size cheese with Chips Ahoy! cookies and Teddy Grahams in portable snack packs, recently updated two Wisconsin plants. “You’d be hard-pressed to walk around any of our facilities and not trip over an ‘Under Construction’ sign,” says Rod Hogan, Sargento’s innovation chief.
In the era of low-fat dieting that boomed through the early 1990s, there was a “nutritional war on saturated fats,” says Corey Geiger, lead dairy economist at agricultural lender CoBank. Many Americans opted instead for products like skim milk and light yogurt, until the rising popularity of low-carb diets such as Atkins and South Beach gave cheese a boost around the turn of the millennium. In the years since, even as paleo adherents and vegans eschew dairy, increased demand for high-protein foods has again put cheese on the menu.
The pandemic accelerated cheese’s ascent. When restaurants shut down, home cooks tried to re-create their favorite dishes, complete with piles of cheese. Others found increased opportunities to indulge while working 10 feet from the fridge. In fact, CoBank estimates cheese snacks are now worth $75 billion a year worldwide. The most traditional cheeses only have four ingredients—milk, salt, cultures and an enzyme—a simplicity that adds to their appeal. “‘Fat’ is not as much of a bad word as it once was, but ‘ultra-processed’ is,” says Michael Burdeny, president of Challenge Dairy Products Inc., a California butter producer.
Agri-Mark Inc., the owner of Cabot Creamery Cooperative, makes squares of cheese designed to fit on crackers, no knife required. The cracker-cut lineup, which started in 2017 with six varieties, now has a dozen after adding gouda in May. Cabot makes more than 140 cheese products, with new releases outpacing the company’s other dairy categories, according to Sarah Healy, Cabot’s senior vice president of marketing. Cheese “went from a snack that consumers felt a little bit guilty about,” Healy says, to something they “felt really good about.”
The cheese investments will be welcome relief to a dairy industry reeling from decades of tumbling demand for a tall glass of cold milk. Some of the decline can be traced to plant-based alternatives such as almond and oat milk—a concern that doesn’t really affect cheese. Plant-based cheeses exist, but they haven’t taken off in a big way because they can’t match the texture, consistency and meltability of the real thing.
With so much new capacity coming online, there’s a chance US households won’t keep up. Diet fads, after all, tend to flip-flop. Cottage cheese, for instance, is having a moment on social media, making it and other varieties a favorite of keto-diet fans. But cheese is also a key ingredient in higher-calorie foods such as pizza and cheeseburgers that are often among the first things to go in a lifestyle overhaul. “Domestic demand and economic conditions simply don’t augur continued growth at this rapid pace,” says Erica Maedke, a vice president at researcher Ever.Ag Insights. “We suspect that this wave of investment, particularly in cheese, will lead to an oversupply situation, at least in the short term.”
A potential cheese glut could spell good news for consumers, who saw prices spike to record levels two years ago, though they’ve come down slightly since then. Lower prices would also help US producers grab a bigger share of international markets. Even though the US imported a record $1.8 billion of cheese last year, including hard-to-imitate varieties from places such as France and Spain, the country is a net exporter of cheese. The industry’s overseas sales—everything from Wisconsin cheddar to cotija that’s popular in Mexico—reached a monthly record in March.
And if cheese demand doesn’t hold up, other dairy products—yogurt, cream or whey protein powder—can help buffer the industry even though plain ol’ milk is no longer the growth engine it once was, says Cara Murphy of market analysis firm HighGround Dairy. “Cheese and butter is American dairy’s ‘bread and butter,’” she says. “The beauty of the dairy industry is that dairy is so adaptive.” –With Deena Shanker
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