Dairy Market Update: July 2005

Recent data released by the U.S. Department of Agriculture (USDA) confirms that U.S. cheese consumption continues to be a major force in overall dairy product demand. Per capita consumption of cheese in 2004 grew by 0.8 pounds over the year prior — the largest annual increase in five years — to hit a record 31.24 pounds. While this trend has been building over three decades, it is interesting to note that Americans have been widening the variety of cheeses they choose as they increase their cheese consumption over time.

Specifically, per capita cheese consumption has grown nearly threefold since the 1970 level of 11.37 pounds. Back then, more than 61% of all cheese consumed in the United States was American-type cheese, with most of that being Cheddar. Today, just 41% of all cheese consumed is American-type cheese. At the same time, U.S. consumption of Italian-type cheeses (led by Mozzarella) has skyrocketed, from two pounds in 1970 to 12.88 pounds in 2004. Now, Americans consume about the same amount of American- and Italian-type cheeses.

Consumption of cheeses other than American- or Italian-types is on the rise, with per capita consumption in this category growing to 5.46 pounds in 2004. Cheeses in this category include Swiss, Blue and Hispanic-type cheeses. While some of this natural cheese is consumed in the form of processed cheese, cheese spreads and other cheese products, it is important to note that per capita consumption of these products has been slipping, from a peak of 8.76 pounds in 1996 to only 7.67 pounds in 2004.

Changes in the patterns of cheese consumption are reflected in changes in U.S. cheese production trends. Since 1999, total U.S. production of American-type cheese grew less than 5% to 3.74 billion pounds in 2004. During the same time period, production of Italian-type cheese grew by 16% to 3.66 billion pounds. With Americans consuming a greater quantity of other types of cheeses, the U.S. dairy industry has responded; production of Swiss cheese has grown by 28% since 1999 to 281 million pounds, and the production of Hispanic cheeses has increased to 142 million pounds in 2004, up 65% since 1999.

Many industry analysts believe that the American population's ever-expanding taste for a variety of cheeses will continue to drive growth for many years to come. Even with USDA's most recent data showing that U.S. per capita cheese consumption has reached 31+ pounds, this is still well below the level of consumption in other countries. In Europe, per capita consumption of cheese averages more than 41 pounds, and Iceland's is estimated to be 50+ pounds.

Posted July 25, 2005