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Cheese - UK - October 2016

“The cheese market is expected to see a value decline in 2016, largely due to heavy retail discounting. Continued decline in the dominant cheddar segment has been responsible for the overall fall in cheese volume sales, while bolstered recipe cheese performance suggests consumers’ interest in scratch cooking continues. Pressure from consumers and the fallout from Brexit could finally put an end to dwindling average cheese prices.”
– Alyson Parkes, Research Analyst

This report examines the following issues:

  • Fair pay for dairy farmers could build value for British cheese
  • Cheese needs new usage occasions as sliced bread sales fall
  • Scope for cheese to capitalise on protein trend

Cheddar’s share of the market by value is expected to continue falling, to less than half. Its key usage with bread looks to hamper growth as sliced bread sales struggle, underlining the ongoing need to expand other occasions. Processed and recipe cheese are expected to fare better with projected value and volume sales growth in 2016.

Pressure from consumers and increased global demand for dairy have halted the fall in farmgate milk prices, also starting to put upward pressure on cheese prices. With the Sterling weakening amidst the UK Brexit vote fallout, import prices look set for a sharp rise with export demand also bolstered. Cheese makers may see increased competition for milk resources.

With the PHE (Public Health England) cutting the dairy intake recommendation level in 2016, the protein content of cheese could offer a platform for operators to keep cheese on the menu for health-aware shoppers by tapping into the ongoing interest here. These can also appeal to the younger generation, who are particularly likely to look for protein-rich foods.

This Report examines the UK retail market for cheese. For the purposes of this Report, Mintel’s definition includes products sold through the grocery retail channel and direct to consumers including:

  • Fresh cheese and cream cheese
  • Hard cheese and semi-hard cheese
  • Processed cheese
  • Soft cheese and semi-soft cheese.

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Cheese market sees flat volumes and modest value growth over 2011-16
              • Volume decline forecast for cheese over 2016-21
                • Figure 1: UK retail value sales of cheese, 2011-21
              • Cheddar’s share of cheese continues its fall below half
                • Figure 2: UK retail sales of cheese, by type, by value and volume, 2016 (est)
              • Companies and brands
                • Own-label dominates but losing share, Cathedral City remains top brand
                  • Figure 3: Leading brands in the UK cheese market, by value, 2014/15 and 2015/16
                • Protein claim leaps ahead in 2016, Morrisons expands fair price to farmers
                  • Adspend up by 15% in 2015, fuelled by spreadable and continental cheese
                    • The consumer
                      • More Brits buy cheese than last year
                        • Figure 4: Purchasing of cheese, by type, 2014-16
                      • Stronger flavour appeals to nearly half
                        • Figure 5: Factors influencing choice when buying cheese, July 2016
                      • Over three quarters of users eat cheese in a sandwich
                        • Figure 6: Occasions for eating/using cheese, July 2016
                      • Education and sampling offer scope to win over new users
                        • Figure 7: Cheese buying and usage behaviours, July 2016
                      • Protein and usage suggestions can be selling points for cheese
                        • Figure 8: Attitudes towards cheese, July 2016
                      • Blue cheese seen most widely as special
                        • Figure 9: Correspondence analysis of qualities associated with different types of cheese, July 2016
                      • What we think
                      • Issues and Insights

                        • Fair pay for dairy farmers could build value for British cheese
                          • The facts
                            • The implications
                              • Cheese needs new usage occasions as sliced bread sales fall
                                • The facts
                                  • The implications
                                    • Scope for cheese to capitalise on protein trend
                                      • The facts
                                        • The implications
                                        • The Market – What You Need to Know

                                          • Volume decline forecast for cheese over 2016-21
                                            • Cheddar’s share of cheese continues its fall below half
                                              • Weakening Pound pushes import prices up
                                              • Market Size and Forecast

                                                • Cheese market sees flat volumes and marginal value decline over 2011-16
                                                  • Figure 10: UK retail value and volume sales of cheese, 2011-21
                                                • Volume decline expected for cheese over 2016-21
                                                  • Cheese prices expected to creep up
                                                    • Figure 11: UK retail value sales of cheese, 2011-21
                                                    • Figure 12: UK retail volume sales of cheese, 2011-21
                                                  • The impact of the EU referendum vote
                                                    • Cheese spend was resilient in the previous slowdown
                                                      • Figure 13: Alternative market scenarios for the post-Brexit UK retail cheese market, at current prices, 2016-21
                                                      • Figure 14: Detailed Post-Brexit scenarios for cheese, at current prices, 2016-21
                                                    • Little immediate reaction among grocery shoppers
                                                      • Consumers are already shopping savvily
                                                        • Squeeze on real incomes may benefit cheese
                                                          • Weakened Pound to affect milk and cheese imports
                                                            • Forecast methodology
                                                            • Market Segmentation

                                                              • Cheddar’s share of cheese continues its fall below half
                                                                • Recipe cheese sales keep rising
                                                                  • Soft white cheese’s share projected to shrink
                                                                    • Figure 15: UK retail sales of cheese, by type, 2014-16
                                                                  • Mature cheddar dominates market
                                                                    • Figure 16: UK retail sales of cheddar, by type, 2014-16
                                                                  • Mild cheddar loses out
                                                                  • Market Drivers

                                                                    • Rock-bottom milk prices lead to fall in the average price of cheese
                                                                      • Hike in milk prices could prove beneficial to big cheese brands
                                                                        • Weakening of the Pound will push up prices of imports
                                                                          • Falling sliced bread sales could cut through cheese sales
                                                                            • Reduced dairy intake recommendation could dampen demand for cheese
                                                                              • E. coli outbreak stands to knock unpasteurised cheese sales
                                                                                • Brexit could see British cheeses lose name protection
                                                                                • Companies and Brands – What You Need to Know

                                                                                  • Own-labels dominate but are losing share
                                                                                    • Cathedral City remains top brand despite falling value sales
                                                                                      • Protein claim leaps ahead in 2016
                                                                                        • Morrisons’ commitment to pay dairy farmers a fair price should appeal
                                                                                          • Adspend increased by 15% in 2015
                                                                                            • Spreadable and continental cheese overtake cheddar adspend
                                                                                            • Market Share

                                                                                              • Own-labels dominate but are losing share
                                                                                                • Cathedral City remains top brand despite falling value sales
                                                                                                  • Serious value decline for Seriously Strong
                                                                                                    • Figure 17: Leading brands in the UK cheese market, by value and volume, 2014/15 and 2015/16
                                                                                                  • Mondelēz holds onto second place despite diverse brand performance
                                                                                                    • Arla Foods loses market share as Anchor Cheddar sales plummet
                                                                                                      • Adams Foods overtakes Nestlé helped by ‘zany’ Pilgrims Choice ad
                                                                                                        • Figure 18: Leading manufacturers in the UK cheese market, by value and volume, 2014/15 and 2015/16
                                                                                                    • Launch Activity and Innovation

                                                                                                      • Brands and own-labels battle it out
                                                                                                        • Figure 19: New product launches in the cheese market, by private label and brands, 2012-16
                                                                                                      • Retailers lead cheese launches in 2015
                                                                                                        • Figure 20: New product launches in the cheese market, by top 10 companies (sorted by 2015), 2012-16
                                                                                                      • Companies make packaging more convenient
                                                                                                        • Figure 21: New product launches in the cheese market, by top 10 claims (sorted by 2015), 2012-16
                                                                                                      • Protein claim leaps ahead in 2016
                                                                                                        • Figure 22: New product launches in the cheese market with high-protein claim, 2012-16
                                                                                                      • Adult cheese snack launches continue
                                                                                                        • Bel looks to packaging innovation to drive interest
                                                                                                          • Cheestrings divides fans with new on-pack film promotion
                                                                                                            • Retailer looks to pay dairy farmers a fair price
                                                                                                            • Advertising and Marketing Activity

                                                                                                              • Adspend increases by 15% in 2015
                                                                                                                • Figure 23: Total above-the-line, online display and direct mail advertising expenditure on cheese, 2012-16
                                                                                                              • Adspend on cheddar falls
                                                                                                                • Spreadable and continental cheese overtake cheddar adspend
                                                                                                                  • Dairylea returns with promotion, boosting processed cheese and snacks/dips
                                                                                                                    • Figure 24: Total above-the-line, online display and direct mail advertising expenditure on cheese, by product type, 2012-16
                                                                                                                    • Figure 25: Share of above-the-line, online display and direct mail advertising expenditure on cheese, by product type, 2012-16
                                                                                                                  • Bel UK is top advertiser by spend
                                                                                                                    • Mondelēz continues to spend big on Philadelphia
                                                                                                                      • Savencia spends big on continental brands
                                                                                                                        • Figure 26: Total above-the-line, online display and direct mail advertising expenditure on cheese, by top five advertisers (sorted by 2015), 2012-16
                                                                                                                        • Figure 27: Share of above-the-line, online display and direct mail advertising expenditure on cheese, by top five advertisers (sorted by 2015), 2012-16
                                                                                                                        • Figure 28: Total above-the-line, online display and direct mail advertising expenditure on cheese, by top five brands (sorted by 2015), 2012-16
                                                                                                                        • Figure 29: Share of above-the-line, online display and direct mail advertising expenditure on cheese, by top five brands (sorted by 2015), 2012-16
                                                                                                                      • Nielsen Ad Intel coverage
                                                                                                                      • Brand Research

                                                                                                                          • Brand Research – What you need to know
                                                                                                                            • Brand map
                                                                                                                              • Figure 30: Attitudes towards and usage of selected brands, September 2016
                                                                                                                            • Key brand metrics
                                                                                                                              • Figure 31: Key metrics for selected brands, September 2016
                                                                                                                            • Brand attitudes: Cathedral City seen most widely as a brand with consistently high quality
                                                                                                                              • Figure 32: Attitudes, by brand, September 2016
                                                                                                                            • Brand personality: Babybel considered to be the most fun
                                                                                                                              • Figure 33: Brand personality – macro image, September 2016
                                                                                                                            • Dairylea is strong on family but many deem it unhealthy and basic
                                                                                                                              • Figure 34: Brand personality – micro image, September 2016
                                                                                                                            • Brand analysis
                                                                                                                              • Cathedral City has the best reputation
                                                                                                                                • Figure 35: User profile of Cathedral City, September 2016
                                                                                                                              • Seriously Strong has a more indulgent image than cheddar rivals
                                                                                                                                • Figure 36: User profile of Seriously Strong, September 2016
                                                                                                                              • Pilgrims Choice seen to stand out despite lack of diversity
                                                                                                                                • Figure 37: User profile of Pilgrims Choice, September 2016
                                                                                                                              • Philadelphia has a healthy and vibrant image
                                                                                                                                • Figure 38: User profile of Philadelphia, September 2016
                                                                                                                              • Babybel stands out as fun and cool
                                                                                                                                • Figure 39: User profile of Babybel, September 2016
                                                                                                                              • Dairylea has strong family ties
                                                                                                                                • Figure 40: User profile of Dairylea, September 2016
                                                                                                                            • The Consumer – What You Need To Know

                                                                                                                              • More Brits buy cheese than last year
                                                                                                                                • Younger consumers drive low-fat cheese sales
                                                                                                                                  • Stronger flavour appeals to nearly half
                                                                                                                                    • Over three quarters of users eat cheese in a sandwich
                                                                                                                                      • Consumers want cheese suitable for the whole family
                                                                                                                                        • Education and sampling offer scope to win over new users
                                                                                                                                          • Protein can be a selling point for cheese
                                                                                                                                            • High openness to usage suggestions
                                                                                                                                              • Blue cheese seen most widely as special
                                                                                                                                              • Cheese Purchase Habits

                                                                                                                                                • More Brits are buying cheese than last year
                                                                                                                                                  • Figure 41: Purchasing of cheese, by type, 2014-16
                                                                                                                                                • Continental hard cheese gains ground
                                                                                                                                                  • 85% of British consumers buy cheddar
                                                                                                                                                    • 16-24s less likely to see cheddar as versatile
                                                                                                                                                      • Spreadable cheddar extends into the snacking market
                                                                                                                                                        • Younger consumers drive low-fat cheese sales
                                                                                                                                                          • Three in four consumers eat cheddar at least once a week
                                                                                                                                                            • Figure 42: Frequency of eating cheese, by type, July 2016
                                                                                                                                                        • Factors Influencing Choice of Cheese

                                                                                                                                                          • Stronger flavour appeals to nearly half
                                                                                                                                                            • Figure 43: Factors influencing choice when buying cheese, July 2016
                                                                                                                                                          • Low brand loyalty in a market awash with price promotions
                                                                                                                                                            • Only a fifth of cheese buyers look for British ingredients
                                                                                                                                                              • More affluent groups more interested in product origin
                                                                                                                                                              • Occasions for Eating/Using Cheese

                                                                                                                                                                • Over three quarters of users eat cheese in a sandwich
                                                                                                                                                                  • Figure 44: Occasions for eating/using cheese, July 2016
                                                                                                                                                                • Three in five use cheese as an ingredient in hot meals
                                                                                                                                                                  • Half of parents buy cheese as a snack for children
                                                                                                                                                                    • Figure 45: Occasions for eating/using cheese – as a snack for my child(ren), by age of children, July 2016
                                                                                                                                                                  • Scope to capitalise on baking fever
                                                                                                                                                                  • Cheese Buying and Usage Behaviours

                                                                                                                                                                    • Consumers want cheese suitable for the whole family
                                                                                                                                                                      • Figure 46: Cheese buying and usage behaviours, July 2016
                                                                                                                                                                    • Cheese users want to try before they buy
                                                                                                                                                                      • Cheese knowledge lacking amongst half of cheese users
                                                                                                                                                                        • Figure 47: Agreement with the statement “I am knowledgeable about different types of cheese”, by socio-economic group, July 2016
                                                                                                                                                                    • Attitudes towards Cheese

                                                                                                                                                                      • Protein can be a selling point for cheese
                                                                                                                                                                        • Figure 48: Attitudes towards cheese, July 2016
                                                                                                                                                                      • Half of users/buyers deem cheese a healthy snack
                                                                                                                                                                        • Half think eating healthier cheese is better than reducing consumption
                                                                                                                                                                          • On-pack recipes would inspire more experimentation with cheese
                                                                                                                                                                          • Qualities Associated with Types of Cheese

                                                                                                                                                                            • Methodology
                                                                                                                                                                              • Cheese thought to be boring by only a minority
                                                                                                                                                                                • Figure 49: Correspondence analysis of qualities associated with different types of cheese, July 2016
                                                                                                                                                                              • Cream cheese seen most widely to go off quickly
                                                                                                                                                                                • Blue cheese seen most commonly as special
                                                                                                                                                                                  • Cream cheese may be losing out in the ‘clean label’ trend
                                                                                                                                                                                    • Figure 50: Qualities associated with different types of cheese, July 2016
                                                                                                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                    • Abbreviations
                                                                                                                                                                                      • Consumer research methodology
                                                                                                                                                                                      • Appendix – Market Size and Forecast

                                                                                                                                                                                          • Figure 51: Best- and worst-case forecast for UK retail value sales of cheese, 2016-21
                                                                                                                                                                                          • Figure 52: Best- and worst-case forecast for UK retail volume sales of cheese, 2016-21
                                                                                                                                                                                        • Forecast methodology

                                                                                                                                                                                        Companies Covered

                                                                                                                                                                                        To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                        Cheese - UK - October 2016

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