Falling demand for traditional cheeses, such as cheddar, and increasing sales of specialty cheeses, including feta and goat’s cheese, has seen supermarkets increase their marketing for private-label specialty cheese.
Research from IBISWorld indicates that this movement is creating competition among cheese manufacturers who must compete for private-label contracts to maintain market share.
Domestic cheese consumption has fallen in the past five years, but consumer concerns over health and quality have driven sales of fresh cheese, many of which are specialty cheeses. These cheeses enjoy higher profit margins than traditional variations, attracting supermarket private labels.
The increasing number of private-label products is heightening competition and encouraging consolidation among cheese manufacturers. It is also resulting in cheese manufacturers requiring these private-label contracts to ensure consistent demand and secure their position in the supply chain.
Murray Goulburn was recently awarded a lucrative contract to produce private-label cheese for Coles, effective January 2017. Bega Cheese had held this contract since April 2012, but the end of this relationship was announced in February 2016. The new deal is expected to be worth $130 million for Murray Goulburn over five years and will boost the company’s market share in the cheese manufacturing industry.
The trend towards specialty cheeses is expected to continue, as will the increase in private-label offerings. According to IBISWorld, competition for these contracts will remain fierce, encouraging mergers and acquisitions among cheese manufacturers over the next few years.
