What will the cheese sector look like after Covid?

Download the full report, Artisan Cheese: Life After Covid, here.

In the 2020 edition of Speciality Food’s Cheese Report, the effects of Covid-19 were only beginning to be felt across the dairy sector. While worrisome challenges were presenting themselves – in the form of shuttered hospitality markets, a hamstrung supply chain, mismatched supply and demand and staff shortages – glimmers of hope were beginning to appear, too. “At the very outset, the sudden closure of hospitality and out-of-home foodservice was an issue,” explains Dr Judith Bryans, chief executive of Dairy UK. “However, the increased retail demand as people ate and cooked at home was helpful in offsetting some of the negative effects. As time went on, both retail demand and then takeaway demand were helpful.”

Indeed, Amy Price, senior food and drink analyst at Mintel, says in the group’s most recent cheese market research that for the sector overall, Covid-19 provided a boost to cheese sales. For the year ending January 2021, the AHDB found that total retail sales of cheese increased in both volume and value terms, providing a record year. Regionals, speciality and Continental cheeses as well as soft white cheese saw volume uplifts of more than 20%, while Cheddar rose by 15%.

“All in all, the dairy industry coped well with Covid, kept product moving and ensured supplies to customers and consumers in difficult circumstances. We proved to be a flexible and resilient sector,” Judith says.

Changing behaviours

Despite these positive statistics, smaller producers in particular have faced challenging circumstances. “Any farmer supplying a processor who has been involved in the foodservice sector has been affected, smaller niche processing businesses on farms have in many cases been badly affected, as any product they had produced was difficult to place in their normal market and they did not have access to the supermarkets where demand was strong,” Peter Alvis, chairman of the Royal Association of British Dairy Farmers (RABDF) explains.

Yet changing consumer behaviours have buoyed speciality cheesemakers who could successfully shift their products to retailers. “Many farm shops have thrived during this time, with local shoppers supporting local products,” Peter says. And this newfound taste for locally made cheese is likely to last. “Dairy is faring very well with consumers,” Judith says. “The first lockdown saw consumers move towards indulgence, then to comfort food and foods that were versatile and good for cooking with. After that, health came back on the agenda. In all instances, dairy has tracked well with consumers.”

The Brexit challenge

As the impacts of Covid fade, there are still other challenges that the cheese sector must learn to cope with, including the impact of Brexit. The most recent data from the Food and Drink Federation (FDF) showed that exports to the EU almost halved in the first three months of the year compared to the same period in 2020. Cheese sales were the hardest hit, down a whopping 72% in the first quarter of 2021 compared with 2019. “The additional processes and the burden of administration in terms of exporting to the EU has caused issues for companies,” Judith said. “The cost burden associated with all of the additional admin is also an issue affecting the bottom line. Some smaller companies have said they will no longer export, or at least not for now, because the costs have had quite an impact on their businesses.”

Whether for small producers exporting their cheeses or retailers looking to import artisan Continental varieties, Brexit has disrupted the usual flow of business between the UK and the rest of Europe. Peter agrees that many smaller exporters have “effectively stopped exporting” due to new Brexit rules. On the flip side, however, worldwide demand for dairy has been strong. “Despite the trade figures for export to the EU being down, dairy has great export potential globally,” Judith says. Indeed, the Asian market for cheese is growing, and interest in British-made cheese is high.

Beyond imports and exports, Brexit is also impacting labour on dairy farms. Dairy workers are not recognised as skilled or in short supply, yet a report by RABDF highlights the importance of skilled EU dairy workers on UK farms. Following its most recent survey, almost half of dairy farmers said they employed foreign workers in the last five years, and of those, 74% said they did so because they couldn’t recruit from the UK, up from 63% who said the same in 2016. “Access to foreign labour is extremely important for the continued function of our industry,” the group said in its report. “The tasks dairy workers undertake on-farm require skill, experience and in some cases formal qualifications. It is important the Government understands this and can distinguish dairy workers from workers in other agricultural sectors.”

A brighter future

While the cheese industry works to adapt to a new trading environment caused by Covid and Brexit, one area posing opportunities for those who are ready to act is sustainability. Consumers can expect the dairy sector to be more front and centre in discussions about environmental credentials in the years to come, says Judith, including explaining “how we’re tackling our environmental impacts and our commitments to continuous sustainable development, but also showcasing more about the positive contribution we make to biodiversity, the circular economy and to all pillars of sustainability. This is something that’s important to the whole sector and also to our consumers.”

The sector has already had successes in this regard. “UK dairy farmers have been part of a major effort to successfully reduce antibiotic use in food production, and we need to take this drive forward in reducing emissions to meet the challenges of the Government’s Clean Air Strategy,” Peter says. “There is a lot of work currently being done to ensure we have the correct data and practices in UK dairy farming to reduce emissions, increase sustainability and still produce wholesome and nutritious food for the UK population.”

It is clear that improving production practices in line with sustainability targets will not only guarantee a more environmentally friendly way of producing cheese, but it will also align with the continuously shifting desires of customers. “Opportunities will continue to present themselves for UK dairy farmers as consumer demands change in the UK and export customers want to purchase the high-quality produce made by UK dairy farmers to some of the highest animal welfare and environmental standards in the world,” Peter says.