THE BACKGROUND
This market has been hit by the Food Standards Agency's profiling system, which marks out cheese as being high in fat and salt, meaning it cannot be advertised during children's television programmes. Groups such as the Dairy Council are lobbying to overturn the Ofcom ban, while cheese makers are fighting back against the food's negative health image by producing low-fat varieties, positioning their products as specialty items, and capitalising on a burgeoning territorial sector thanks to the Protected Designation of Origin programme.
The food-labelling debate continues to rage among retailers and manufacturers, and if there is one product that has particularly suffered from the traffic-light system, it is cheese. Despite having a high nutritional content and clear health benefits, its high fat and salt content means some consumers are giving it a wide berth.
The cheese market is also under pressure from price competition. UK cheese sales reached 拢1.9bn in 2006, but this has been a flat market with minimal growth in the past couple of years. The traditional cheese sandwich and after-dinner option with crackers are in decline.
To bolster sales, manufacturers have not only made the most of its pure nature - cheese is usually additive- and preservative-free - they have also looked at innovations such as added ingredients and convenience formats.Some producers have added reduced-fat versions to their ranges, but health benefits have often come at the cost of flavour.
Several Continental and specialty cheeses, such as mozzarella, parmesan and goat's cheese, have benefited from a greater interest in cooking - sales have increased as recipes have included them as an ingredient. However, these cheeses have been affected by price promotions as they become more of a staple item.
Regional focus
Many manufacturers are promoting the provenance of their products or positioning their cheese as a specialty item. The regional nature of cheese means this type of marketing is a natural fit, and consumers are showing greater interest in the source of the food they eat.
This strategy has been helped by the Protected Designation of Origin (PDO) status granted to several British cheeses. The status ensures that only those cheeses prepared and produced in specific areas can use a particular name.
However, the proportion of shoppers interested in provenance is relatively low, with many putting the cheeses' type and strength first.
Because cheese has been classified by the Food Standards Authority (FSA) as a food high in fat, sugar or salt, under Ofcom's ruling it is banned from being advertised during children's television programmes, setting back its promotional options.
However, the Dairy Council, among others, is lobbying to get the nutritional benefit of cheese recognised by the food-labelling system. Dr Judith Bryans, director of the council, says: 'We are not convinced that any profiling system can accurately reflect the role a food, or food group, plays in people's diet, as some of these systems place a heavy focus on the negatively perceived elements of a food, without taking into account its positive nutrients, such as vitamins and minerals.'
While the Dairy Council says it is pleased that the FSA agreed to allow ads promoting whole milk during children's programmes, Bryans wants to see cheese reconsidered, too. 'We are disappointed that the importance of cheese has been ignored. We will put forward a variety of nutritional arguments to the nutrient profiling review panel,' she adds.
Cheddar continues to dominate the market, driven by the popularity of mature varieties. Dairy Crest claims its Cathedral City brand is the nation's favourite mature cheddar, and it has invested heavily in marketing the range. Innovations have included a milder variety called Mild Yet Distinctive and a reduced-fat option.
Kraft's emphasis has been on reducing the fat content of its children's products, such as Dairylea, Dairylea Dunkers and Lunchables. It has also reformulated Dairylea to include calcium and vitamin D to improve its health credentials.
Kerry Foods' cheese portfolio was boosted with its purchase of Golden Vale in 2001, and its brands now include Cheestrings and Attack-a-Snack. It recently launched a 拢1.7m 'back to school' ad campaign for Cheestrings. Spanning TV, online and PR activity, it introduced the product to families preparing lunchboxes for the first time this school year.
Though many people avoid cheese for dietary reasons, overall consumption has increased slightly. By 2012, the market is expected to be worth almost 拢2.2bn, according to Mintel. This is a 4% increase on 2007 when inflation is taken into consideration.
It is predicted that territorial cheeses will continue to improve their position, while Continental varieties will be seen as more commonplace and less exotic. Processed cheeses, meanwhile, will lose out as the advertising ban bites and consumers shun heavily processed products as they try to improve their diets.
CHEESE BRANDS BY SALES (pounds m)
Brand 2006 2004
1 Dairylea 131 120
2 Cathedral City 101 92
3= McLelland Seriously Strong 55 52
3= Pilgrim's Choice 55 51
5 Wyke Farms 54 50
6= Cheestrings 53 49
6= Philadelphia 53 46
8= Davidstow 40 36
8= Babybel 40 34
8= The Laughing Cow 40 33
11 Rosenburg Danish Blue 14 13
12 Primula 13 12
13 Anchor Mature 10 9
Other brands 90 85
Own-label 1151 1148
Total 1900 1830
Source: Mintel
CHEESE TYPES BY SALES (pounds m)
Type 2006 2004 2002
1 Cheddar 985 924 853
2 Continental 340 366 280
3 Territorial 220 190 160
4 Processed 235 240 215
5 Soft 120 110 91
Total 1900 1830 1600
Source: Mintel
CHEESE BRANDS BY 2006 ADSPEND
Brand Spend (pounds)
1 Cheestrings 3,274,222
2 Mini Babybel 3,133,913
3 Philadelphia Splendips 2,400,745
4 Light Philadelphia 2,046,989
5 Dairylea Dunkers 2,016,735
6 Apetina Feta 1,477,175
7 Leerdammer 1,319,488
8 Cathedral City 1,186,968
9 Philadelphia Garlic & Herbs 110,230
10 Dairylea Lunchables 76,475
Source: Nielsen Media Research
ANALYST COMMENT - VICKY MCCRORIE EDITOR, DATAMONITOR
The UK cheese market grew just 0.6% between 2001 and 2006, as manufacturers struggled to enhance performance through innovation.
Now, cheese makers are looking to capitalise on the convenience trend to reignite growth. This has resulted in the launch of on-the-go products, aimed mainly at children, including Dairylea Lunchables and Kerry Foods' Cheestrings.
An alternative focus has been put on cheeses with authentic and premium qualities, such as Waitrose's cave-aged Gruyere, which is made from unpasteurised milk and matured in a cave.
One area that cheese has struggled to focus on is health, due to its high fat and salt content. Nonetheless, manufacturers are attempting to offer healthier versions of cheese, with probiotic, organic and even cholesterol-lowering varieties reaching stores in the past year.
Probiotic cheeses, such as Dale Farm's Dromona Probiotic Cheddar, are capitalising on the success of functional yogurt drinks, which claim to improve digestion, among other health benefits.
Cholesterol-lowering cheeses have perhaps the hardest marketing mission, due to the high-fat nature of traditional varieties.
However, Emmi and Asda launched their own varieties last year. Emmi's MiniCol contains wheatgerm oil instead of milk fat, while Asda's Heartfelt Plus cheddar is a 12%-fat cheese that contains Reducol, which is credited with cholesterol-reduction benefits.
With consumers expected to continue to desire healthier foods due to obesity fears, the cheese market looks likely to be bombarded with further health variants in the near future.