The continued growth of the global dairy market has seen an increased demand for dairy products across the world, with modern consumers placing increased importance on grass-based, sustainably produced, clean labelled dairy products.
Cheese is one of the main products Irish milk is processed into.
Cheese is one of the key Irish dairy export categories. The value of cheese exports increased by 24% to €633m from January to August in 2019.
The UK accounted for 50% of Irish cheese exports in 2018. As with many other sectors, Brexit is the most significant trading challenge for the dairy sector with continuing uncertainty towards the end of 2019.
There are many factors influencing the changes in the cheese market
Rabobank forecasts increased cheese demand over the medium term (2019 to 2024) driven by export market expansion.
As well as experiencing a time of growth, the market is also undergoing a period of substantial change.
There are many factors influencing the changes in the cheese market.
These include: the accelerated increase in milk pools along with expanding market opportunities; increased new demand for pizza cheese and mozzarella; and the rapid expansion of fast-food chains have all contributed to the market experiencing a substantial period of change.
Innovation is key to driving growth in mature categories.
Some of the big trends in the cheese category include digestive wellness, “snackification” and authenticity and provenance.
The Japanese market will remain a key focus for cheddar cheese exports and continue to be the number two (second only to the UK) export destination for cheddar cheese, compelled by its high price point and relative stability.
Japan has been identified as offering potential for dairy export growth through Bord Bia’s Prioritising Markets study due to their expanding middle class, dependence on imported dairy and the growing demand for consumer foods made from quality ingredients.
Japan has one of the world’s largest milk deficits with a self-sufficiency level of below 75%
Japan’s imports are substantial: in 2017 they imported 67,000mt of cheese.
It is also important to highlight Japan has one of the world’s largest milk deficits with a self-sufficiency level of below 75%.
The Japan-EU economic partnership came into effect in February 2019, and this will see a progressive reduction in tariff levels for imported dairy ingredients over the coming years.
For Irish dairy exporters, there are opportunities in this market and the Japan-EU economic partnership has paved the way for EU cheese exporters to expand market share in the world’s largest cheese import market.
Michael Creed led a trade mission to Japan in June 2019 attended by 12 Irish dairy delegates
Bord Bia continues to invest in the market and opened an office in Tokyo in 2019, co-located in the Irish Embassy, and led by Bord Bia’s south east Asian manager, Ciaran Gallagher, and East Asia market specialist (Japan), Joe Moore.
The Minister of Agriculture, Michael Creed led a trade mission to Japan in June 2019 attended by 12 Irish dairy delegates.
Growth in foodservice has been driving the growth in mozzarella, with considerable investment taking place in production facilities, in particular in Europe, and but also in the US and Oceania.
It is reported by Euromonitor that the consumer foodservice industry is worth $2,958bn.
Ireland has seen increased investment in mozzarella in recent years in an attempt to mitigate against Brexit
Rabobank reports the consumer foodservice channel will be the main volume driver across major cheese markets.
Ireland has seen increased investment in mozzarella in recent years in an attempt to mitigate against Brexit and use additional milk supply, with co-ops like Carbery and Glanbia set to release products in the coming years.
The growth is projected to remain, with the focus of production as well as in other products more geared towards foodservice.
The foodservice focus is grated and diced frozen mozzarella from block or made straight from raw milk and processed.
Cheese imports to China during January to September 2019 increased by 4.8% year over year
However, this increase in cheese production is not without its challenges as issues relating to overcapacity may arise.
In New Zealand, it is reported that the new mozzarella line in Fonterra’s cheese plant near Temuka is currently running well below capacity.
Cheese imports to China during January to September 2019 increased by 4.8% year over year. However, the growth rate was not as high as expected.
Tier 1 and 2 cities are now well serviced with mozzarella, and lower-quality mozzarella is now available, with domestic supply moving to the fore. The medium term outlook still remains positive.
There are opportunities and challenges ahead for cheese companies and the success in markets will consist of being able to compete and differentiate from the larger global players.
This will position Ireland as an alternative supplier meeting product specs, continuity of supply, detailed market knowledge and understanding end use applications.
As new products come through, we expect to see increased exports of cheese to these markets.