Processed Cheese Market

Market Outlook for Processed Cheese (2022-2032)

In FY 2021, the processed cheese market reached a valuation of US$ 17.76 Billion, and is likely to register a Y-o-Y growth rate of 4.0% in 2022, closing at US$ 18.51 Billion. Furthermore, across the 2022-2032 period of assessment, growth is expected to accelerate at a whopping 4.2% CAGR, reaching US$ 27.92 Billion.

Processed cheese, in addition to its constant use in fast food products, is used in local cuisines because of its distinct flavor profile. In addition, the rise of private brands in developing nations, as well as demand for western cuisine, has bolstered the market for processed cheese.

Moreover, the online market for the buying of food items, including cheese, has grown rapidly in the previous 3-4 years as internet access has increased. This area has attracted a number of vertical experts, like as Amazon, Walmart, Carrefour, and others, who are riding the wave of e-commerce growth and vying for a piece of the online cheese pie.

Report Attribute	Details
Anticipated Base Year Value (2021)	US$ 17.76 Billion
Expected Market Value (2022)	US$ 18.51 Billion
Projected Forecast Value (2032)	US$ 27.92 Billion
Global Growth Rate (2022-2032)	4.2% CAGR
Expected Growth Rate of the US Market (2022-2032)	4.1% CAGR
Anticipated Growth Rate of UK Market (2022-2032)	4.0% CAGR
Prominent Processed Cheese Service Providers	Kraft Heinz Foods Arla food ingredients Lactalis group Fonterra Foods Savencia Fromage & Dairy The Bel Group, Associated Milk Producers, Inc. Mondelez International Inc. Sargento Foods Inc. Almarai-Joint Stock Company etc.

The global fast-food business, often known as Quick Service Restaurants (QSRs), is seeing rapid growth. Cheese is in significant demand as a key ingredient in these industries' numerous food products. As a result, big fast-food franchises such as Domino's Pizza, Inc. (US), Pizza Hut of Yum! Brands (US), and Papa John's International, Inc. are driving up cheese demand (US).

Changing lifestyles, such as an increased reliance on ready-made or ready-to-eat meals due to busier schedules and an increase in global demand for packaged goods, have spurred demand for fast food products, which has fueled demand for cheese.

2017-2021 Revenue Analysis of Processed Cheese Market vs. Growth Outlook 2022-2032

According to market research and competitive intelligence provider Fact.MR, the Processed Cheese market experienced noteworthy growth, growing at a value CAGR of 2.1% from 2017 to 2021.

The growing demand for cheese in pizzas, burgers, and other popular food products has given a thrust to market growth. Besides, cheese is also used across a range of domestic cooking applications. The easy availability of processed cheese has compelled the domestic cooking sector to be inclined to the product. Besides, the unprecedented demand for cheese in various Italian and Turkish cuisines has also given a push to market growth.

The presence of a large industry for cheese processing is a viable stream for food manufacturers to fall back upon. Food items and products where cheese is a necessary ingredient have gained popularity in recent times. This trend shall play a prominent role in the growth of the global processed cheese market.

Although processed cheese constitutes a small part of the total cheese production worldwide, the increasing fast-food culture has been playing a major role in increasing the demand of processed cheese and continue to impact in the foreseeable future. Due to the unique flavor profile of processed cheese, it is utilized in local cuisines as well apart from the obvious application in fast food products.

This is observed especially in developing countries from APAC and Latin America where the consumers are acquiring a newfound taste for processed food in their local cuisines. India has been displaying the effect of consumer demand for processed cheese through its major cheese producers which are ramping up the production capacities recently.

Key Market Drivers Influencing Processed Cheese Industry Expansion

Abolition of Milk Quotas in the EU to Foster Market Growth Prospects

The milk market in EU was regulated by the quota system that was legislated on 2 April 1984, under the Dairy Produce Quota Regulations 1984. Under this system, all the member states of EU were given national milk production quotas and any nation exceeding the limits was liable for a penalty known as ‘super levy’.

There were five kinds of quotas: direct sales quota, wholesale quota, purchaser quota, purchaser special quota, and SLOM quota. Such a restriction on the production of milk in the EU had limited the quantity of milk that can be used as an ingredient by the cheese manufacturers. Reduced milk production has also resulted in loss to the European cheese exporters.

Abolition of the milk quotas on 31 March 2015 had outpaced the production and supply of milk in the European region. According to EUROPA, the abolition of milk quotas is expected to increase the milk production by ~5.0%, while lowering the farm milk prices by 10.3%. The cheese manufacturers can now procure the key raw material in higher quantities at a lower price.

This provides great opportunity to the cheese manufacturers and farmers to increase their production and generate exports.

Increased Demand for Nutritious Food Products to Accelerate the Market Growth

Cheese is one of the primary ingredients used for food products such as sandwiches, pizza, and similar products. In the U.S., the popularity of such food products led to increased sales of cheese products. As per data provided by The Food XP, the U.S. ranks second amongst the most pizza-consuming nations globally. Moreover, the various restaurants and food chains also introduced a wide selection of cheese-based snacks and food products in the market for cheese lovers.

Some cheese manufacturers undertake initiatives such as promotional campaigns, free trial opportunities, and discounts to entice customers to buy their products and increase sales of cheese products in the market. Launching special cheese products for festive occasions also boosts the sales of cheese products and leads to the market’s growth.

Key Challenges encountered by Processed Cheese Industry

Adverse Health Impact Due to Over Consumption of Processed Cheese to Impede the Market Prospects

There are several negative health implications associated with the consumption of processed and ultra-processed cheese products. As these products contain high salt and calorie content, the over-consumption of cheese cause atherosclerosis, increased cholesterol, and cardiovascular disease risk.

Thus, consumers suffering from chronic ailments prefer to consume fewer cheese-based products as a part of their diet. Furthermore, the younger generation who adopted a health-conscious diet also prefers natural cheese products leading to a decline in sales of processed cheese products.

Furthermore, the production cost of cheese products is also very high. Small scale manufacturers suffer from low brand image compared to major market players, due to which they suffer from lower profit margins. As the storage of cheese products is difficult, the use of expensive packaging materials led to an addition in production cost. A certain segment of consumers is thus reluctant to pay a premium price for these products leading to reduced sales and market growth.

Rise in Awareness Regarding the Ill Health Effects of Cheese to Limit the Market Growth

Consumption of cheese made from raw milk poses a great challenge to the growth of the global cheese ingredients market owing to association of various microbial contaminations leading to health issues. Obesity, high cholesterol levels, and heart diseases are the major conditions associated with the consumption of processed cheese.

In addition, studies also suggest that consumption of cheddar cheese may also pose an increased risk of breast cancer by increasing the production of galactose from lactose. The ripening process of cheese includes the production of a toxic alkaloid and toxic amines that brings changes to the nervous system resulting in high blood pressure, headaches, palpitations, and migraines.

The rennet, preservatives, emulsifiers, and other chemical agents used in the production process of cheese can have harmful effect on the body. In the US, certain kinds of cheese have resulted in outbreaks of food-borne gastroenteritis, food sensitivities, lactose intolerance, allergies, and high calorie content.

The consumers have now become aware about the association of these diseases with cheese. This factor is posing as a challenge for various cheese and ingredient manufacturers to overcome and meet the customer demand for healthy food.

Country-wise Analysis

How will the Growth of Processed Cheese Market Escalate across the U.S?

Strong Demand for Cheese Products in the Country to Enhance the Market Prospects

As per Fact.MR, the US processed cheese market is slated to flourish at a CAGR of 4.1% until 2032. The dietary pattern of developing economies is changing rapidly. With rapid industrialization and urbanization, the disposable income of the population has increased significantly. Hence, a large segment of consumers is spending on food items that are convenient and readily available. This has increased sales of cheese slices to prepare sandwiches, salads, and other similar easy-to-prepare food products.

The rising adoption of western food habits in China and India has resulted in the growth of the region's pizza and fast-food restaurant market. As these products are made of cheese, the export of US-based cheese products increased significantly in those regions. As per data provided by the U.S. Dairy Export Council, around 356,185 metric tons of cheese were exported to other countries from the US in 2020.

How will U.K Perform in the Global Processed Cheese Industry Landscape?

Increase in Sheep Rearing in UK to Boost the Market Growth

According to Fact.MR’s projections, the Processed Cheese Market in UK is forecast to expand at an impressive 4.0% value CAGR from 2022 to 2032. In the UK, around 15% of animal farms are sheep farms, where the average number of sheep per farm is over 120, with numbers steadily increasing. An increase in sheep rearing has bolstered the supply of milk, ultimately leading to an uptick in production of cheese and whey.

While the country, having increased their sheep and goat milk production significantly in the recent past, UK remains one of the largest sheep and goat milk producers in Europe. Consumers’ discretionary spending levels and milk prices have remained largely consistent, resulting in increased sales of processed cheese variations. The rising use of cheese in various processed meals has boosted demand in the food service business in the country.

Country-wise Forecast CAGRs for the Processed Cheese Market

Country	CAGR
US	4.1%
China	4.1%
Japan	4.1%
India	4.0%
U.K	4.0%

Category-wise Insights

Which is the Most Sought-after Cheese Type Category?

Cheddar Cheese Segment to Dominate the Processed Cheese Market

According to projections published by Fact.MR, by cheese type, the cheddar cheese segment is forecast to register a whopping 4.1% value CAGR across the 2022-2032.

Cheddar, the most popular processed cheese, has a good sales performance due to its wide range of uses and adoption in a variety of cuisines and culinary products. Exotic cuisines, such as pizza and pasta, may see strong demand in the food service industry, boosting segmental growth.

Additionally, the quickly growing food businesses throughout the world contribute to the rising use of cheese in a variety of culinary products such as drinks, desserts, and baked goods. In the approaching years, the growing popularity of on-the-go snacks and culinary products may increase the use of cheddar.

Will Cheese Blocks segment remain Dominant in the Form Category?

Cheese Blocks Segment to Enhance Growth Prospects

By form, demand for Cheese Blocks segment is likely to accelerate the fastest, documenting a value CAGR worth 4.1% from 2022 to 2032, according to Fact.MR. The shape of cheese products largely depends on the type of cow milk used, manufacturing process, moisture absorption, and cost of production. Among these shapes, the block cheese segment accounted for the largest share during the analysis period.

Manufacturing cheese in blocks makes it easier to stack and transport the products over long distances. This makes block cheese a favorable choice in the foodservice industry. Such industries purchase billion pounds of products that are used for preparing various food products.

Apart from blocks, the demand for convenience food products has increased sales of other cheese forms, such as spreadable cheese. As different cheese shapes can be easily used to prepare on-the-go snacks products, the demand for spreadable cheese, slices, shreds, and crumbles is rising steadily among the younger cohorts. Hence, these products are made available to consumer through various distribution channels which include both online and offline channels.

The Start-Up Ecosystem: How key Players are opening Frontiers for Future Growth?

Processed Cheese Market players such as Grounded Foods, Stockeld Dreamery, Change Foods, Spero Foods’, Climax Foods, and Treeline Cheese, among others, are adopting various marketing strategies such as new product launches, geographical expansion, merger and acquisitions, partnerships and collaboration to identify the interest of potential buyers and create a larger customer base. For instance,

• Establishment in 2019, Swedish startup Stockeld Dreamery has chosen pea protein and fava beans as its star ingredients. The first product, a plant-based feta cheese, took hundreds of iterations to develop and is made through a fermentation process. The end product is a totally nut-free, vegan feta alternative that rivals the nutrition, taste, and look of the real deal, and will soon be making its first debut in Stockholm via a foodservice launch.
• The first and only fermentation dairy startup with a base of operations in Asia-Pacific, Change Foods, founded in 2019, is a U.S.-Australian food tech using microbial precision fermentation or recombinant technology to make their animal-free cheese. The startup is working to create lactose-free dairy alternatives that are bio-identical to real dairy-based cheeses.
• Founded in 2012, Treeline Cheese makes dairy-free cheese made of cashew nuts. The process followed turns the cashews into a cream by grinding them and adding the flavorings and probiotic culture of lactobacillus acidolphus to that cream, which then causes a fermentation process that turns it into the cheese. Sells products through offline supermarkets (like Whole Foods) and is selling in 1,000 stores in all 50 states as of Feb 2016.

Processed Cheese Market- Competitive Landscape

Prominent players in the Processed Cheese Industry are taking advantage of the rapidly increasing demand for the Processed Cheese in various applications. To further their outreach, players are relying on collaborations, partnerships and acquisitions with existing small, medium and large-scale vendors. Some prominent market developments are as follows:

• In August 2021, Dairy Farmers of America, Inc. introduced a new cheddar cheese curd flavor in the market, namely, green onion. This product helps the company to target squeaky cheese lovers in the market.
• In October 2020, Fonterra has signed a sales and marketing agreement with Land O'Lakes, Inc., one of America's leading daily cooperatives, to expand its U.S. Foodservice business. The agreement will allow Fonterra's foodservice products to be distributed in the additional U.S. foodservice outlets.
• In May 2020, St. Paul Group acquired the processed cheese, analogue cheese, grated cheese, and air-dried cheese activities of Givaudan/Vika. This acquisition would help the company to strengthen its position in the industry and offers a diverse range of cheese-based, analogue, and vegan food products for the global consumers in the food industry.

Key Segments Covered in the Processed Cheese Industry Survey

• By Cheese Type :

  • Blue Cheese
  • Brick Cheese
  • Camembert Cheese
  • Cheddar Cheese
  • Cottage Cheese
  • Cream Cheese
  • Mozarella Cheese
  • Romano Cheese
  • Swiss Cheese
  • Other Processed Cheese

• By Form :

  • Cheese Blocks
  • Traingle
  • Rectangle
  • Circle
  • Square
  • Cheese Slice
  • Cheese Spread
  • Cheese Spray

• By Milk Source :

  • Cattle Milk
  • Goat Milk
  • Sheep Milk

• By End-Use :

  • Retail / Household
  • HoReCa
  • F&B Processors
  • Snacks Manufacturers
  • Bakery and Confectionery Product Manufacturers
  • Sauces and Condiment Manufacturers
  • Ready Meal Manufacturers
  • Packaged Food Manufacturers
  • Other F&B Processors

• By Distribution :

  • Direct Sales (B2B)
  • Hypermarkets and Supermarkets
  • Club Stores
  • Discounters
  • Grocery Retailers
  • Convenience Stores
  • Online Stores

• By Region :

  • North America
  • Latin America
  • Europe
  • East Asia
  • South Asia
  • Oceania
  • Middle East Africa