I. Executive Summary

The Products
• Cheese in America
• Cheese Manufacturing: Still Curds and Whey
• Variables in Manufacturing
• Four Primary Categories
• Classification by Process
• Two Federal Regulatory Agencies
• End of the NCE
• European Union Subsidies Slashed

The Market
• Retail Market Reaches $8.8 Billion in 1997
• Natural Cheese Leads in Volume and Growth
• Table 1-1: The U.S. Market for Cheese: Supermarket Sales by Category, 1993-2002 (dollars): Natural, Processed, Reduced Fat, Imitation
• Shredded Cheese a Speed-Scratch Miracle

The Marketers
• Marketers Widely Varied
• Three Levels of Marketers
• Cheese Market Highly Competitive
• Kraft Leads with 31% Share
• Private Label a Strong Second
• Shares for Other Top Marketers
• Figure 1-1: Top Marketers of Cheese in U.S. Supermarkets, 1996 (percent): 8 Marketers
• Associations Guide Marketing for Cheese Companies
• Packaging Round-Up
• New Product Round-Up
• Cheese Advertising Approaches $70 Million
• Marketers Concentrate on Broadcast Media
• Kraft Dominates Cheese Advertising Spending
• Cheese Associations Outspend Most Marketers

Distribution and Retail
• Leaving the Manufacturer
• Two Distribution Networks
• Largest Cheese Distributors
• Supermarkets Claim 88% of Market
• American Cheese Accounts for 27% of Supermarket Sales
• The Name-Brand vs. Private-Label Battle
• Supermarket Margins at 37%-50%
• Higher Margins a Hindrance?
• Tastes Changing, But Not Shopping Preferences
• Cheese Presentation and Promotion
• Specialty Cheese Store Shopper Demographics

The Consumer
• Range of Data
• Basic Consumer Patterns
• 68% Purchase American Cheese
• Median Income Nearly $40,000 for Natural Cheese Users
• Patterns for Cream, Grated, and Cottage Cheese
• Only 20%-25% Purchase Low-Fat or Spreadable Cheese

Scope and Methodology
• Market Parameters
• Report Methodology

II. The Products

Introduction
• Scope of Market
• The Discovery of Cheese
• Cheese and the Continent
• Cheese in America
• Cheese Manufacturing: Still Curds and Whey
• Variables in Manufacturing

Classifications of Cheese
• Four Primary Categories
• Natural or Specialty Cheese
• Processed Cheese
• Light Cheese
• Imitation Cheese
• Classification by Process

The Regulatory Environment
• Two Federal Regulatory Agencies
• Food Labeling and the NLEA
• The FDA and Food Standards
• Dairy Price Support Programs
• The Commodity Credit Corporation
• End of the NCE
• European Union Subsidies Slashed
• Pasteurization Regulations Sour for European Cheesemakers

Packaging and Labeling
• Packaging Basics
• "Green" Containers
• Added Convenience
• Extra Freshness

III. The Market
Figure 3-1: Estimated U.S. Retail Sales of Cheese, 1993-1997 (dollars)

Market Size and Growth
• Notes on Methodology
• Retail Market Reaches $8.8 Billion in 1997
• Table 3-1: Estimated U.S. Retail Sales of Cheese, 1993-1997 (dollars)
• Natural Cheese Leads in Volume and Growth
• Processed Cheese Products Now Second Tier
• "Light" Cheese Still Scant on Sales
• Imitation Cheese Sales Recover
• Table 3-2: U.S. Supermarket Sales of Cheese by Product Category, 1993-1997 (dollars): Natural, Processed, Reduced Fat, Imitation

Market Composition
• Most Cheese Sold Is Domestic
• Wisconsin King of American Cheesemaking
• Figure 3-2: Top Five Cheese-Producing States, 1996 (percent): Wisconsin, California, Minnesota, New York, Idaho, Remaining States
• Natural Cheese Share of Supermarket Sales Rises to Nearly Two-Thirds
• Figure 3-3: Share of U.S. Supermarket Sales of Cheese by Product Category, 1993 vs. 1997 (percent): Natural, Processed, Reduced Fat, Imitation
• Processed Cheese Claims Only Third of Market
• Figure 3-4: U.S. Supermarket Sales of Cheese by Major Product Group, 1997 (percent): Processed Cheese, Cheddar, Italian, Other
• Shredded Cheese a Speed-Scratch Miracle
• Figure 3-5: U.S. Retail Sales of Shredded Cheese, 1991-1997 (dollars)
• Supermarkets Dominate Cheese Sales
• Figure 3-6: Cheese Sales by Retail Outlet Type, 1997 (percent): Supermarkets/Grocery Stores, Gourmet Grocery Stores/Cheese Shops/Delicatessens, Warehouse Clubs, Convenience Stores, Other
• West Leads in Natural, Lags in American
• Table 3-3: Regionality of Cheese Purchasing: Natural vs. American Cheese, 1997 (percent): Northeast, Midwest, West, South
• Purchasing Patterns by Age Bracket
• Table 3-4: Cheese Purchasing by Age Bracket, 1997 (percent): Natural, American, Low-Fat Cheese

Factors Affecting Market Growth
• Cheese a Mature Market
• All-Natural vs. All-American
• Table 3-5: Percent Distribution of U.S. Population by Age Bracket, 1995-2005 (percent): From Age Under 5 to Age 65 and Over
• Reduced-Fat Cheese Down But Not Out
• Shredded Cheese Products Booming
• Italian Cheese Crucial to Market
• Hispanic Cheese Stakes a Claim
• Flavored Cheese the New Kid on Block
• Organic Cheese Growing in Popularity
• Hurdles Ahead for European Importers
• Figure 3-7: Projected U.S. Retail Sales of Cheese, 1997-2002 (dollars)

Projected Market Growth
• Retail Sales to Surpass $10 billion by 2001
• Table 3-6: Projected U.S. Retail Sales of Cheese, 1997-2002 (percent)
• Supermarket Sales Growth by Category
• Table 3-7: Projected U.S. Supermarket Sales of Cheese by Product Category, 1997-2002 (dollars): Natural, Processed, Reduced Fat, Imitation

IV. The Markerters

The Marketers
• Marketers Widely Varied
• Three Levels of Marketers
• Kraft and Private Label Dominate Cheese Market
• Other Top Marketers
• Lower-Tier Marketers
• Table 4-1: The U.S. Market for Cheese: Selected Marketers and Brands (40 Marketers and Their Brands/Products)

Marketer and Brand Shares
• Note on Methodology
• Cheese Market Highly Competitive
• Kraft Leads with 31% Share
• Private Label a Strong Second
• Sargento Foods a Distant Third
• Figure 4-1: Top Marketers of Cheese in U.S. Supermarkets, 1996 (percent): 8 Marketers
• Private Label Top Seller of Block and Shredded Natural Cheese
• Figure 4-2: Top Marketers of Natural Block/Shredded Cheese in U.S. Supermarkets, 1996 (percent): 6 Marketers
• Kraft Top Marketer of Processed Cheese
• Figure 4-3: Top Marketers of Processed Cheese in U.S. Supermarkets, 1996 (percent): 6 Marketers
• Private Label Dominates American Cheese Segment
• Private Label Leads Shredded Segment

The Competitive Situation
• Kraft Style Emulated by Private Label
• Consolidation Flattens the Landscape
• The Pulse of Private-Label
• Going Ethnic to Grab Share
• Marketers Not Giving Up on Low-Fat
• Revolt Over Milk Prices

Competitive Profile: Alpine Lace Brands, Inc.
(Land O'Lakes, Inc.)
• Corporate Overview
• Acquisition by Land O'Lakes
• Production
• Distribution
• Competitive Strategies

Competitive Profile: Beatrice Cheese Co.
(ConAgra, Inc.)
• Corporate Overview
• Production
• Distribution
• Cheese Products
• Competitive Strategies

Competitive Profile: Borden, Inc.
• Corporate Overview
• Acquisition by Mid-America Dairymen
• Cheese Products

Competitive Profile: Cacique, Inc
• Corporate Overview
• Cheese Products
• Distribution
• Exports

Competitive Profile: California Cooperative Creamery
• Corporate Overview
• Cheese Products
• Distribution

Competitive Profile: Heluva Good Cheese, Inc.
(Bols Wessanen USA)
• Corporate Overview
• Cheese Products
• Distribution

Competitive Profile: Kraft Cheese Division (Kraft Foods/Philip Morris Cos., Inc.)
• Corporate Overview
• Velveeta-Gate
• Production
• International Cheese Sales
• Competitive Strategies

Competitive Profile: Land O'Lakes, Inc
• Cooperate Overview
• Cheese Products

Competitive Profile: Sargento Foods, Inc
• Corporate Overview
• Production
• Distribution
• Products and Packaging
• Recipe Blends a Bright Spot
• A Line for Kids
• Competitive Strategies

Competitive Profile: Sorrento Cheese Co., Inc.
(Besnier USA, Inc.)
• Corporate Overview
• Production
• Distribution
• Cheese Products

Competitive Profile: Specialty Cheese Co.
• Corporate Overview
• Production
• Distribution
• Cheese Products

Competitive Profile: Stella Foods, Inc.
(Specialty Foods Corp.)
• Corporate Overview
• Distribution
• Cheese Products
• The Rise and Fall Estrella

Competitive Profile: Tillamook County Creamery Association
• Corporate Overview
• Production
• Distribution
• Cheese Products

Marketing and New Product Trends
• Associations Guide Marketing for Cheese Companies
• Organic Dairy Products Win Campaign in Court
• Kraft Markets on the Road
• Kraft Reaches Out to Kids
• For Sargento and Sorrento, Proof Is in the Packaging
• Sargento Taps Kids, Too
• Borden's Big Cheese
• Alpine Lace and Do-It-Yourself Endorsing
• Stella Undergoes Marketing Makeover
• Valio Claims a Place at the Table
• Packaging Round-Up
• New Product Round-Up
• Table 4-2: The U.S. Market for Cheese: Selected New Product Introductions, 1997-First Quarter 1998

Consumer Advertising and Promotion
• Cheese Advertising Approaches $70 Million
• Marketers Concentrate on Broadcast Media
• Kraft Dominates Cheese Advertising Spending
• Sargento Trails as Second-Place Advertiser
• $1-Million-and-Under Advertisers
• Cheese Associations Outspend Most Marketers
• Cheese Ads a Feast for the Eyes
• Low-Fat Cheese Ads Tilt Toward Moderation
• Recipes Included
• For Her Eyes Only
• Samples of Consumer Advertising

Trade Advertising and Promotion
• Trade Ads: Products on Parade
• Trade Promotions
• The Trade Show Battleground

V. Distribution and Retail

Distribution
• Leaving the Manufacturer
• Two Distribution Networks
• Full-Line Distributors
• Specialty Distributors
• Distributor Buying Groups
• Largest Cheese Distributors

Retail Overview by Outlet Type
• The Retail Channels
• Supermarkets Claim 88% of Market
• American Cheese Accounts for 27% of Supermarket Sales
• Table 5-1: Share of U.S. Supermarket Sales of Cheese by Product Type, 1996 (percent): 8 Product Types
• The Name-Brand vs. Private-Label Battle
• Table 5-2: Supermarket Overview of Name-Brand Cheese by Major Product Type, 1996 (percent and dollars): 3 Product Types
• Table 5-3: Supermarket Overview of Private-Label Cheese by Major Product Type, 1996 (percent): 3 Product Types
• Supermarket Margins at 37%-50%
• Higher Margins a Hindrance?
• Gourmet, Cheese, and Deli Outlets Second in Sales
• Beyond Brie at the Specialty Shops
• Specialty Cheese Stores Suffer from Focus
• Cheese Critical to Deli Sales
• Warehouse Clubs Claim Slice of Market
• Price the Appeal in Warehouse Clubs
• Warehouse Clubs and the Special-Occasion Shopper
• Convenience Stores Stick to Basics
• Mail Order Seasonal

Retailing Trends
• Tastes Changing, But Not Shopping Preferences
• Retail Supply Creates Consumer Demand
• Shelf-Life a Factor for Natural Cheese
• Marketers Seek Improved Merchandising
• Cheese Presentation and Promotion
• The Lure of Signs

Retail Focus: The Cheese Store Shopper
• Specialty Cheese Store Shopper Demographics
• Table 5-4: Demographic Characteristics Favoring Shopping in a Specialty Cheese Store, 1997 (U.S. Principal Shoppers): Heavy, Medium, Light
• Income a Key Indicator

VI. The Consumer

The Cheese Consumer: Overview
• Note on Simmons Market Research Bureau Data
• Range of Data
• Basic Consumer Patterns
• 68% Purchase American Cheese
• Table 6-1: Consumer Overview by Selected Cheese Types, 1997 (U.S. Principal Shoppers): % Users, Median Age, Median Income/7 Selected Cheese Types
• Median Income Nearly $40,000 for Natural Cheese Users
• Table 6-2a: Demographic Characteristics Favoring Use of Selected Cheese Types: American vs. Natural, 1997 (U.S. Principal Shoppers)
• Patterns for Cream, Grated, and Cottage Cheese
• Table 6-2b: Demographic Characteristics Favoring Use of Selected Cheese Types, 1997 (U.S. Principal Shoppers): Cream, Grated, Cottage
• Only 20%-25% Purchase Low-Fat or Spreadable Cheese
• Table 6-2c: Demographic Characteristics Favoring Use of Selected Cheese Types: Low-Fat/Calorie/Cholesterol vs. Spreadable, 1997 (U.S. Principal Shoppers)

Consumer Focus: American Cheese
• Users of Pre-Sliced American Cheese
• Table 6-3a: Demographic Characteristics Favoring Purchase of American Cheese by Type: Wrapped Slices vs. Other Pre-Sliced, 1997 (U.S. Principal Shoppers)
• Users of Non-Sliced American Cheese
• Table 6-3b: Demographic Characteristics Favoring Purchase of American Cheese by Type: Chunk/Loaf/Block vs. Pre-Shredded, 1997 (U.S. Principal Shoppers)
• Heavy Users of American Cheese
• Table 6-4: Demographic Characteristics Favoring Purchase of American Cheese: By Usage Level, 1997 (U.S. Principal Shoppers): Heavy, Medium, Light
• Demographics for Purchasers of Kraft
• Table 6-5a: Demographic Characteristics Favoring Purchase of American Cheese by Kraft Brand and Type, 1997 (U.S. Principal Shoppers): Any Kraft, Kraft Singles, Kraft Deluxe
• Demographics for Purchasers of Velveeta
• Table 6-5b: Demographic Characteristics Favoring Purchase of American Cheese by Kraft Brand and Type, 1997 (U.S. Principal Shoppers): Any Velveeta, Velveeta Slices, Velveeta Light
• Demographics for Purchasers of Other Kraft Products
• Table 6-5c: Demographic Characteristics Favoring Purchase of American Cheese by Kraft Brand and Type, 1997 (U.S. principal shoppers): Other Kraft
• Demographics for Purchasers of Borden, Land O'Lakes
• Table 6-6a: Demographic Characteristics Favoring Purchase of American Cheese: Other Brands, 1997 (U.S. Principal Shoppers): Borden, Land O'Lakes
• Demographics for Purchasers of Private Label and Other Brands
• Table 6-6b: Demographic Characteristics Favoring Purchase of American Cheese: Other Brands, 1997 (U.S. Principal Shoppers): Store Brands, Other Brands

Consumer Focus: Natural Cheese
• Users of Domestic and Imported Natural Cheese
• Table 6-7: Demographic Characteristics Favoring Purchase of Natural Cheese by Type: Domestic vs. Import, 1997 (U.S. Principal Shoppers)
• Users of Mild or Sharp Natural Cheese
• Table 6-8a: Demographic Characteristics Favoring Purchase of Natural Cheese by Kind: Mild/Medium Cheddar vs. Sharp/Extra Sharp Cheddar, 1997 (U.S. Principal Shoppers)
• Users of Natural Cheese by Kind
• Table 6-8b: Demographic Characteristics Favoring Purchase of Natural Cheese by Kind: Monterey Jack vs. Colby, 1997 (U.S. Principal Shoppers)
• Users of Italian Natural Cheese
• Table 6-8c: Demographic Characteristics Favoring Purchase of Natural Cheese by Kind, 1997 (U.S. Principal Shoppers): Mozzarella, Parmesan/Romano, Ricotta
• Users of Swiss, Muenster, and Blue
• Table 6-8d: Demographic Characteristics Favoring Purchase of Natural Cheese by Kind, 1997 (U.S. Principal Shoppers): Swiss, Muenster, Blue
• Users of Brie and Camembert
• Table 6-8e: Demographic Characteristics Favoring Purchase of Natural Cheese by Kind: Brie vs. Camembert, 1997 (U.S. Principal Shoppers)
• Users of Edam, Gouda, Brick, and Havarti
• Table 6-8f: Demographic Characteristics Favoring Purchase of Natural Cheese by Kind, 1997 (U.S. Principal Shoppers): Edam/Gouda, Brick, Havarti
• Users of Natural Cheese Blends
• Table 6-8g: Demographic Characteristics Favoring Purchase of Natural Cheese by Kind, 1997 (U.S. Principal Shoppers): Italian Blend, Mexican Blend, Other
• Users of Shredded, Sliced, or Chunk Natural Cheese
• Table 6-9a: Demographic Characteristics Favoring Purchase of Natural Cheese by Form, 1997 (U.S. Principal Shoppers): Pre-Shredded, Pre-Sliced, Wedge/Chunk/Slice
• Users of Bulk, String, or Ball/Log Natural Cheese
• Table 6-9b: Demographic Characteristics Favoring Purchase of Natural Cheese by Form, 1997 (U.S. Principal Shoppers): Bulk, String, Ball/Log
• Users of Miniature, Round, or Midget Natural Cheese
• Table 6-9c: Demographic Characteristics Favoring Purchase of Natural Cheese by Form, 1997 (U.S. Principal Shoppers): Miniature Waxed Wrapped, Round, Midgets Longhorn
• Heavy Users of Natural Cheese
• Table 6-10: Demographic Characteristics Favoring Purchase of Natural Cheese by Usage Level, 1997 (U.S. Principal Shoppers): Heavy, Medium, Light

Consumer Focus: Cream Cheese
• Users of Regular and Flavored Cream Cheese
• Table 6-11a: Demographic Characteristics Favoring Purchase of Cream Cheese by Type: Regular vs. Flavored, 1997 (U.S. Principal Shoppers)
• Users of Light/Low-Calorie and Fat-Free Cream Cheese
• Table 6-11b: Demographic Characteristics Favoring Purchase of Cream Cheese by Type: Light/Low Calorie vs. Fat-Free, 1997 (U.S. Principal Shoppers)
• Users of Brick, Whipped, and Soft Cream Cheese
• Table 6-11c: Demographic Characteristics Favoring Purchase of Cream Cheese by Form, 1997 (U.S. Principal Shoppers): Brick, Whipped, Soft
• Heavy Users of Cream Cheese
• Table 6-12: Demographic Characteristics Favoring Purchase of Cream Cheese by Usage Level, 1997 (U.S. Principal Shoppers): Heavy, Medium, Light

Consumer Focus: Grated Cheese
• Users of Grated Cheese
• Table 6-13: Demographic Characteristics Favoring Purchase of Grated, Parmesan, and Romano Cheese, 1997 (U.S. principal shoppers)
• Parmesan vs. Romano
• Minorities Generally Resisters

Consumer Focus: Cottage Cheese
• Users of Large Curd and Small Curd Cottage Cheese
• Table 6-14: Demographic Characteristics Favoring Purchase of Cottage Cheese by Type: Large Curd vs. Small Curd, 1997 (U.S. Principal Shoppers)
• Users of Regular and Low-Fat Cottage Cheese
• Table 6-15a: Demographic Characteristics Favoring Purchase of Cottage Cheese by Kind: Regular vs. Low-Fat, 1997 (U.S. Principal Shoppers)
• Users of Light and Non-Fat Cottage Cheese
• Table 6-15b: Demographic Characteristics Favoring Purchase of Cottage Cheese by Kind: Light/Lite vs. Non-Fat, 1997 (U.S. Principal Shoppers)
• Heavy Users of Cottage Cheese
• Table 6-16: Demographic Characteristics Favoring Purchase of Cottage Cheese by Usage Level, 1997 (U.S. Principal Shoppers): Heavy, Medium, Light

Consumer Focus: Low-Fat/Calorie/Cholesterol Cheese
• Users of Low-Fat Slices
• Table 6-17a: Demographic Characteristics Favoring Purchase of Low-Fat/Calorie/Cholesterol Cheese by Type: Wrapped Slices vs. Other Pre-Sliced, 1997 (U.S. Principal Shoppers)
• Users of Low-Fat Cheese by Type
• Table 6-17b: Demographic Characteristics Favoring Purchase of Low-Fat/Calorie/Cholesterol Cheese by Type, 1997 (U.S. Principal Shoppers): Chunk/Loaf/Block/Wedge, Pre-Shredded, Soft
• Users of Low-Fat American Cheese
• Table 6-18a: Demographic Characteristics Favoring Purchase of Low-Fat/Calorie/Cholesterol Cheese by Kind: American, 1997 (U.S. Principal Shoppers)
• Users of Low-Fat Natural Cheese
• Table 6-18b: Demographic Characteristics Favoring Purchase of Low-Fat/Calorie/Cholesterol Cheese by Kind: Mozzarella vs. Cheddar, 1997 (U.S. Principal Shoppers)
• Users of Low-Fat Muenster, Swiss
• Table 6-18c: Demographic Characteristics Favoring Purchase of Low-Fat/Calorie/Cholesterol Cheese by Kind, 1997 (U.S. Principal Shoppers): Muenster, Swiss, Other
• Heavy Users of Low-Fat Cheese
• Table 6-19: Demographic Characteristics Favoring Purchase of Low-Fat/Calorie/Cholesterol by Usage Level, 1997 (U.S. Principal Shoppers): Heavy, Medium, Light
• Demographics for Purchasers of Kraft Low-Fat Cheese
• Table 6-20a: Demographic Characteristics Favoring Purchase of Low-Fat/Calorie/Cholesterol Cheese by Kraft Brand and Type, 1997 (U.S. Principal Shoppers): Any Kraft, Light Singles, Kraft Free
• Demographics for Purchasers of Kraft Light & Lively, Light Naturals, and Healthy Favorites
• Table 6-20b: Demographic Characteristics Favoring Purchase of Low-Fat/Calorie/Cholesterol Cheese by Kraft Brand and Type, 1997 (U.S. Principal Shoppers): Light & Lively Slices, Light Naturals, Healthy Favorites
• Demographics for Purchasers of Borden Low-Fat, American Light
• Table 6-21a: Demographic Characteristics Favoring Purchase of Low-Fat/Calorie/Cholesterol Cheese by Borden Brand and Type: Any Borden vs. American Light, 1997 (U.S. Principal Shoppers)
• Demographics for Purchasers of Borden Light Line, Slim American
• Table 6-21b: Demographic Characteristics Favoring Purchase of Low-Fat/Calorie/Cholesterol Cheese by Borden Brand and Type: Light Line Slices vs. Slim American Slices, 1997 (U.S. Principal Shoppers)
• Demographics for Purchasers of Alpine Lace and Healthy Choice
• Table 6-22a: Demographic Characteristics Favoring Purchase of Low-Fat/Calorie/Cholesterol Cheese: Other Brands, 1997 (U.S. Principal Shoppers): Alpine Lace, Healthy Choice
• Demographics for Purchasers of Sargento Light and Weight Watchers
• Table 6-22b: Demographic Characteristics Favoring Purchase of Low-Fat/Calorie/Cholesterol Cheese: Other Brands, 1997 (U.S. Principal Shoppers): Sargento Light, Weight Watchers
• Demographics for Purchasers of Store Brands and Other Brands
• Table 6-22c: Demographic Characteristics Favoring Purchase of Low-Fat/Calorie/Cholesterol Cheese: Other Brands, 1997 (U.S. Principal Shoppers): Store Brands, Other Brands

Consumer Focus: Spreadable Cheese
• Users of Spreadable Cheese by Type
• Table 6-23a: Demographic Characteristics Favoring Purchase of Spreadable Cheese by Type, 1997 (U.S. Principal Shoppers): Aerosol, Tub/Cup, Jar
• Users of Spreadable Cheese in Crock, Ball or Tube
• Table 6-23b: Demographic Characteristics Favoring Purchase of Spreadable Cheese by Type, 1997 (U.S. Principal Shoppers): Crock, Ball/Log, Tube/Link

Appendix I: Examples of Consumer Advertising and Promotions

Appendix II: Addresses of Selected Marketers