Natural Cheese Market Analysis

Natural Cheese Market (Global, 2023)

Introduction

The natural cheese market has emerged as a dynamic new sub-sector of the dairy industry, characterized by a growing consumer demand for authentic and minimally processed food products. Natural cheeses are in great demand as a result of the perceived nutritional value and superior taste compared to other types of cheese. The natural cheese market is also influenced by new culinary trends, which have led to an increased use of natural cheeses, not only for their traditional uses, but also as a versatile ingredient in gourmet and artisanal food preparations. The increasing number of specialist cheese producers and the wider range of cheese varieties available in the retail and food service channels have contributed to a more diverse and competitive market. As the natural cheese market develops, it is important for the industry to understand the trends in consumer preferences, production methods and distribution channels in order to capitalize on the opportunities presented by this vibrant sub-sector.

PESTLE Analysis

Political

In 2023, the natural cheese market is influenced by a variety of political factors, including the trade policy and the subsidies to agriculture. In the United States, for example, the Department of Agriculture allocated about $ 1 billion in subsidies to the dairy industry, in particular to natural cheese and other dairy products. In addition, the ongoing negotiations on the North American Free Trade Agreement (NAFTA) are affecting the export of cheese. In 2022, the United States exported about 400 million pounds of cheese to Canada and Mexico. The importance of political stability in international trade relations is emphasized.

Economic

The economy of 2023, in relation to the natural cheese market, is characterized by the following macroeconomic indicators: The first one is the inflation rate. The second one is the trend in the expenditure of the consumers. The third one is the employment rate. The United States in early 2024 reported an inflation rate of 3.2 percent, which affects the purchasing power of consumers. In the past year, the average retail price of natural cheese has increased by 5%, and the average retail price is now 5.50 per pound. This price increase is due to the rising costs of production and transportation, which are important factors for market participants.

Social

Social trends are increasingly favouring natural and organic foodstuffs, including cheese. In 2023, a survey showed that some 65% of consumers prefer natural cheese to processed cheese, mainly because of their health concerns and dietary preferences. In addition, the market for lactose-free cheese has soared, with natural lactose-free cheeses seeing a year-on-year increase in sales of 20%. This is a reflection of the growing trend towards a more inclusive diet.

Technological

Natural cheese is a market in which technological progress plays a decisive role, especially in the areas of production and distribution. In 2023, the automation of milk factories has increased the productivity of the sector, and some reports have indicated that this automation can reduce the costs of labour by up to thirty per cent. And in the area of packaging, the use of new materials has reduced spoilage by fifteen per cent, lengthening the life of the product and reducing the waste of a product which is essential to the profitability of a product which is already very competitive.

Legal

The legal framework regulating the market for natural cheeses is characterized by strict food hygiene regulations. In 2023, the new labeling requirements of the Food and Drug Administration (FDA) were introduced, requiring a clear declaration of ingredients and possible allergens, which would affect 80% of cheeses on the market. The manufacturers must therefore invest in quality control measures that can increase operating costs, but ultimately ensure greater consumer trust and product safety.

Environmental

Environmental considerations are increasingly influencing the natural cheese market, especially in terms of the methods of production used. By 2023, dairy farmers are expected to have adopted more sustainable practices, with around 40% of American dairies reducing their greenhouse gas emissions. As for water consumption, it has been calculated that the average cheese factory uses up to 2,000 litres of water per kilo of cheese. This has led to a call for more efficient water use.

Porter's Five Forces

Threat of New Entrants

The natural cheese market is characterized by a moderate barrier to entry, including the need for significant capital investment in the equipment and facilities required for production, and the need to comply with food safety regulations. However, the growing demand for natural and organic products may attract new players to the market, making the threat of new entrants moderate.

Bargaining Power of Suppliers

The suppliers’ power in the natural cheese market is relatively weak, because of the wide availability of raw materials, such as milk. Moreover, many of the cheese-makers have long-term contracts with the dairy farmers, which weakens the suppliers’ power still further.

Bargaining Power of Buyers

The buyers in the natural cheese market have high bargaining power. They are increasingly health conscious and have a wide choice of products. They can easily change to other brands or products, which puts a lot of pressure on producers to stay competitive in terms of quality and price.

Threat of Substitutes

The threat of substitutes in the natural cheese market is medium, since there are a number of substitutes available, including milk-based cheeses and processed cheese products. These substitutes are gaining in popularity, but natural cheese still has a strong market position because of its unique taste and culinary versatility.

Competitive Rivalry

The competition is intense in the natural cheese market, with many established brands and new entrants vying for market share. To entice consumers, companies constantly develop new products and use aggressive marketing strategies, including price competition.

SWOT Analysis

Strengths

• High nutritional value and health benefits associated with natural cheese.
• Growing consumer preference for natural and organic food products.
• Diverse range of flavors and varieties catering to different consumer tastes.

Weaknesses

• Higher production costs compared to processed cheese.
• Limited shelf life, leading to potential waste and inventory challenges.
• Perception issues related to fat content and dietary restrictions.

Opportunities

• Expansion into emerging markets with increasing dairy consumption.
• Innovations in packaging and preservation to enhance shelf life.
• Growing trend of plant-based diets creating opportunities for dairy alternatives.

Threats

• Intense competition from processed cheese and alternative dairy products.
• Fluctuations in milk prices affecting production costs.
• Regulatory challenges and changing food safety standards.

Summary

The natural cheese market in 2023 is characterized by a strong nutritional profile and a growing demand for natural products. It is also characterized by a higher production cost and a shorter shelf life. Opportunities for growth in emerging markets and innovations exist, while competition and regulatory changes could affect market dynamics. Strategic focus on quality, sustainability and consumer education is necessary to capitalize on the strengths and overcome the weaknesses.