Cheese Market: Expanding Fast Food Industry Boosts Demand for Cheese

The global cheese market is marked by a high degree of fragmentation with the presence of a host of small, medium, and large-sized players, reports Transparency Market Research (TMR) in a new study. Small companies are focused on catering to the regional demands, which has restricted the entry of leading players into new markets. Some top players in the global cheese market are Alra Foods, Fromageries Bel S.A, Fonterra Cooperative Group Ltd., and Mondelez International (Kraft Foods Group Inc.).

“Mergers and acquisitions top the growth charts of major vendors in this market,” says a TMR analyst. Companies are actively involved in matching their business expansion plans with other companies with synergies in the bid to increase business profitability. An example is Arla Foods Inc. In October 2012, Arla Foods Inc. merged with Milk Link, a British cheese producing company, in a deal valued at US$261.9 mn. Following this move, Arla Foods Inc. obtained a higher market share with reduced competition in the U.K. dairy segment.

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Strategic expansion is another growth model that top players in this market are focused on. Players are strategizing to enter into joint ventures and partnerships with existing players for increased revenue. Tapping into emerging economies and leveraging their growth potential is also what top-notch players in this market are engaged in. This is complemented with the expansion of distribution capabilities and increasing sales force in these countries for an increased presence.

Unstable economic conditions across the world adversely affect a plethora of industries, which includes food industry as well. The impact of unstable economic conditions has a significant impact on the demand for dairy products. Fluctuations in milk prices directly impact the price of cheese. So much so, a 1% increase in cheese price decreases the demand by 0.35%.

The shorter shelf life of cheese is also hampering the growth of the global cheese market. Cheese is highly perishable, which makes it shelf-life shorter throughout the supply chain. Increasing health concerns about the fat content of cheese is also leading to diminished demand for cheese.

The global cheese market is expected to reach a valuation of US$105.1 bn by 2019, states the study. Unprocessed cheese is the leading product type segment of the global cheese market. This is mainly due to the health benefits of unprocessed cheese, which includes its role as a good source of protein and calcium. The increasing use of unprocessed cheese in fast food and households will lead the unprocessed product type segment to display a high growth rate in the future.

Europe accounts as the leading regional segment of the global cheese market. In 2012, Europe held 38.8% of the global market. Asia Pacific is expected to display a robust growth rate in the cheese market.