Sector Trend Analysis – Cheese trends in Western Europe

Introduction

Western Europe is home to 510 million people and it is known for its high standards of living, with noticeably high income levels. It is the wealthiest region on the European continent, with a per capita gross domestic product (GDP) that is more than four times as high as in Eastern Europe.

Western Europe is characterised by a strong cheese per capita consumption, and it is the biggest market in the world for cheese, worth US$ 44.8 billion in retail sales value (compared to US$13.0 billion in Eastern Europe). Consumption varies widely from country to country, as can be seen in the chart below, but in general, production in the region is strong and benchmarked throughout the world. Cheeses from Italy and France, for example, are widely recognised and exported around the globe.

From 2013 to 2017, retail sales have been growing at a CAGR of 0,.7% in the region, and this value is expected to keep increasing at a CAGR of 2.6% from 2018 to 2022. According to Euromonitor International (2017), this growth has been sustained by lowering costs and because Europeans are now seeing cheese increasingly as a potential snack.

Trade overview

European countries rank amongst the world's top importers of cheese. In 2016, the European Union (EU) imported $US451.9 million worth of cheese from non-EU suppliers alone. During that year, a share of US$906.7 thousand was reportedly imported from Canada, down from US$7.4 million in 2013, showing a declining trend at a −41% compound annual growth rate (CAGR). A share of 96% of the total cheese supplied by Canada to the EU went to the United Kingdom (U.K.). Most competitors also registered a declining trend, with the exception of Serbia and Turkey. Switzerland is the largest competitor for cheese in the EU and controls 91% of non-EU supply market.

Canada-European Union Comprehensive Economic and Trade Agreement (CETA)

CETA has been provisionally applied since September 21^st, 2017. Under CETA, the European Unions provides duty-free and quota-free market access for all dairy and dairy-containing products.

Retail sales and trends

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Country	Retail sales value (US$ billions)
United States	23.4
France	9.4
Germany	7.7
Russia	7.1
Brazil	6.5
Italy	6.5
Mexico	4.7
United Kingdom	4.1
Argentina	3.8
Japan	3.6
Canada	3.1
Spain	2.7

Source: Euromonitor International, 2018.

Western Europe is the biggest market in the world for cheese. In 2017, retail sales of cheese products were valued at US$44.8 billions. From 2013 to 2017, retail sales have been growing at a CAGR of 0.7% in the region, and this value is expected to keep increasing at a CAGR of 2.6% from 2018 to 2022. According to Euromonitor International (2017), this growth has been sustained by lowering costs and because Europeans are now increasingly seeing cheese as a potential snack.

Despite Western Europe being a mature market, there is still room for growth, for example through premiumisation – such as packaging cheese products in a premium, on-the-go snack that at the same time offers nutritional benefit (such as protein, vitamin B and calcium), over confectionery. Despite its high content in fat and salt, cheese still enjoys a natural image and is regaining its reputation as a healthy yet indulgent product. Another opportunity could lie in pairing cheese with wine through the retail channel, which could allow manufacturers to benefit from consumers uptrading in the wine sector (Euromonitor International, 2016).

Retail sales by country

The top five markets for cheese products retail sales are Germany, France, the U.K., Italy and Spain. These five countries together made up 68% of the total cheese retail sales in 2017 in Western Europe.

Cheese is sometimes perceived as being less healthy, due to its high fat content, which may explain the slowdown of the market in certain countries. Italy is the country that registered the largest decline from 2013 to 2017, as local consumers were decreasing their lactose consumption and shifiting to non-dairy, whether for allergy and intolerance reasons or to reduce fat and salt consumption. Another important factor is the variation of milk prices which can impact the retail price of cheese products, pushing local consumers to search for other more affordable options (Euromonitor International, 2017).

Retail sales by category

From 2013 to 2017, cheese retail sales have been growing at moderate rates ranging from 0 to 2% CAGR, and are expected to keep growing at slightly higher rates (2-3%) up to 2022. Unprocessed cheese is much more popular in Western Europe than processed cheese and accounts for 87% of the retail sales. Within that category, Western Europeans tend to prefer hard cheese over soft cheese. Packaged hard cheese made up more than half (65%) of the retail sales in the hard cheese subcategory in 2017.

Health and wellness cheese

With the emergence of snacking in Western Europe and consumers recognising dairy foods as nutritious and natural snacks, many companies are now looking to gain a foothold in dairy, including cheese, as a new generator of growth within the health arena (Euromonitor International, 2017). Reduced fat cheese still dominates the health and wellness cheese market, but is gradually falling out of favour, whereas cheeses that are less processed, such as organic, are appealing to an increasing number of consumers. Cheese is now being perceived as a "good saturated fat", an excellent source of calcium and protein, and considered as an "authentic" and probiotic food, naturally fermented under the action of bacteria.

The free from lactose cheese subcategory is also growing in popularity. In several Western European countries, it is becoming fashionable to avoid dairy without having a specific food intolerance. More local and international players are starting to invest in new product development in response to this trend (i.e. lactose-free products and free from dairy "cheeses"^{Footnote 1}, such as vegan slices, coconut-based alternatives, fermented nut "cheese", or mozzarella-flavoured block for pizza).

In Spain, it is expected that dairy sales will continue to be driven by health and wellness categories, such as free-from lactose dairy and organic products, which are perceived as having higher added value, as well as greater potential for penetration in the market due to their lower sales bases (Euromonitor International, 2017).

Product launch analysis

There were 3,502 cheese products launched in Western Europe in 2017. Of these, 925 were new products and 1,390 were new varieties/range extensions, while the remaining 1,187 products were relaunches, including 967 products with a new packaging and 17 products with a new formulation. The vast majority of products were designed to be stored chilled, while only 48 products were shelf stable and two were offered frozen. Private label holds an important share in cheese (36.7% of total launches), although more than half of the products launched in 2017 were branded (2,220). Plastic (unspecified) was the packaging material used for most products (2,087).

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Country	Number of launches
Germany	668
France	606
Italy	405
United Kingdom	365
Spain	213
Netherlands	188
Austria	173
Sweden	140
Switzerland	134
Greece	130
Turkey	119
Denmark	112
Norway	92
Belgium	64
Finland	56
Ireland	20
Portugal	17

Source: Mintel, 2018

The country/region of origin of cheese is an essential part of product marketing. According to Mintel (2018), France was the only country among the top five markets that had more product launches without an import status in 2017. By contrast, Spaniards tend to prefer imported cheese, due to the wide variety and high quality of products coming from across Europe – especially from France, Italy, the Netherlands, Germany, and Switzerland.

Distribution channels and top brands

Cheese in Western Europe is being sold primarily in stores, through grocery retailers, especially supermarkets, hypermarkets and discounters; however, only the share of discounters has been growing from 2013 to 2017, at a 1.6% CAGR.

The other growing channels are mixed retailers at 2.4% CAGR and most significantly, the non-store Internet-based retailing outlet with a strong 9.5% CAGR. Indeed, Internet retailing achieved a strong positive CAGR in all five main markets for cheese (12% in France, 11% in Germany, 7% in Italy and the U.K. and 6% in Spain).

With the growth of internet retailing, new possibilities arise, even for smaller manufacturers who can benefit from a wider distribution chain such as Amazon Fresh, through their inclusion of local cheese manufacturers in their product range (Euromonitor International, 2017).

In 2017, Lactalis, Groupe dominated on the Western Europe cheese market with a 10.3% overall market share, followed by Bel, Groupe (5.1%), Savencia Fromage & Dairy (5.0%), Arla Foods Amba (4.1%) and Mondelez International Inc. (2.9%). Major brands are presented in the table below. It is worth mentioning that one quarter (24.9%) of the cheese products launched in Western Europe in 2017 had a private label.

Examples of new products

Mini Soft Cheese Portions with Truffle

Company	Fromagerie Guilloteau
Brand	Pavé d'Affinois
Country	France
Store Name	Lidl
Date published	December 2017
Launch type	New packaging
Price in US dollars	3.28

Pavé d'Affinois 4 Minis Truffes Noires du Périgord (mini soft cheese portions with truffle) is a soft pasteurised cheese made from cow's milk that contains 31% fat and 60% fat in dry matter. It now retails in a newly designed 100 gram (g) pack containing four 25g individually wrapped units.

Walnut Fine Cheese Spread

Company	Lidl
Brand	Deluxe
Country	Denmark
Country of manufacture	Germany
Date published	December 2017
Launch type	New packaging
Price in US dollars	3.95

Deluxe Smelteost med Hakkede Valnøddekerner has been repackaged and is now retailed in a 150g pack. It contains 28.5% fat, is made with chopped walnuts and is decorated with walnut halves. The walnut is said to make this cheese spread a delicacy.

Beer Cheese

Company	Udea
Brand	Weidepracht
Country	Netherlands
Date published	December 2017
Launch type	New product
Price in US dollars	4.31

Weidepracht Borrelkaas retails in a 365g pack, featuring the EU Green Leaf logo.

Vintage Canadian Cheddar

Company	Tesco
Brand	Tesco Finest
Country	United Kingdom
Country of manufacture	Canada
Date published	January 2017
Launch type	New packaging
Price in US dollars	2.46

Tesco Finest Vintage Canadian Cheddar is now available in a redesigned 150g pack. This vegetarian, strength five, full fat hard cheese is made with unpasteurised milk, is said to be distinctively sweet, and is made in the St Lawrence valley in Canada.

Chestnut Wood Smoked Cheese

Company	Marks & Spencer
Brand	Marks & Spencer The Collection
Country	Ireland
Country of manufacture	United Kingdom
Date published	December 2017
Launch type	New variety/range extension
Price in US dollars	8.69

Marks & Spencer The Collection Chestnut Wood Smoked Cheese is suitable for vegetarians. This Lancashire cheese retails in a 200g pack.

Organic Sheep's Curd

Company	Recuits de l'Empordà
Brand	Terra i Tast
Country	Spain
Date published	December 2017
Launch type	New product
Price in US dollars	1.54

Terra i Tast Recuit d'Ovella Ecològic retails in a 140g pack featuring the CCAPAE and EU Green Leaf logos.

Cheese Cubes with Thyme and Rosemary

Company	Wijngaard Kaas
Brand	Wyngaard Kaas
Country	Spain
Date published	December 2017
Launch type	New product
Price in US dollars	4.65

Wyngaard Kaas Cubitos de Queso con Tomillo y Romero (cheese cubes with thyme and rosemary) contain 48% fat. The product retails in an 85g pack.

Cottage Cheese

Company	Falkenberg Dairy
Brand	Arla Protein
Country	Italy
Date published	December 2017
Launch type	New product
Price in US dollars	2.34

Arla Protein Fiocchi di Latte (Cottage Cheese) provides 30g of protein per pot. The product retails in a 200g pack featuring the Farmer Owned logo.

Goat Cheese Tower with Cranberry

Company	Lidl
Brand	Delicieux
Country	Netherlands
Country of manufacture	Netherlands
Date published	December 2017
Launch type	New variety/range extension
Price in US dollars	2.14

Delicieux Geitenkaas Torentje met Cranberry (goat cheese tower with cranberry) is described as a creamy goat cheese with the sweetness of cranberry. This product retails in a 90g pack.

Lactose-Free Fresh Cheese

Company	Lidl
Brand	Milbona Free From
Country	Italy
Date published	November 2017
Launch type	New product
Price in US dollars	1.04

Milbona Free From Formaggio Fresco Senza Lattosio retails in a 175g pack.

Nablusi Cheese with Nigella Seed

Company	Nablus Mejerier
Brand	Nablus Ost
Country	Sweden
Date published	October 2017
Launch type	New variety/range extension
Price in US dollars	4.91

Nablus Ost Nablusi Ost med Nigellafrön is a hand crafted product is made with Scanian milk in Malmö, Sweden, according to genuine recipes from Nablus, Palestine. It is said to be tasty when grilled and fried, and to leave a good aftertaste, and it retails in a 200g pack.

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

• Overview of Trade Commissioner Services in Europe
• Find a Trade Commissioner

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be found on the International agri-food market intelligence page, arranged by region.

Resources

• Global Trade Tracker, 2018.
• Euromonitor International, 2017. Pet care global industry overview 2017.
• Euromonitor International, September 2017. Premiumisation.
• Euromonitor International, April 2017. Opportunities for cheese in slowing mature markets – thinkings outside the box
• Euromonitor International, June 2016. Cheese: From Heart Attack Snack to Health Food?.
• Mintel Global New Products Database, 2018.

Sector Trend Analysis – Cheese trends in Western Europe
Global Analysis Report

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