A rebounding economy should boost consumers' confidence and send more of them back to restaurants and grocery store cheese aisles.
On March 7, Federal Reserve Chairman Alan Greenspan announced that the recession was over and that an economic recovery was under way. The dairy industry responded to the news optimistically.
"All of this is vitally important to dairy farmers," says Penn State University dairy economist Ken Bailey. "A healthy economy means lots of busy workers eating lunch at fast-food places, and taking their families out for pizza. This increases the demand for dairy products, especially cheese, and firms up the price of milk. Cheese buyers are always willing to bid up dairy commodity prices if there is strong demand in the marketplace," he said.
Last year, cheese sales grew by a modest amount, but not to the same degree that everyone has grown accustomed to in recent years. According to the U.S. Department of Agriculture, commercial appearance of cheese was up a paltry 1.2 percent last year, compared to increases of 5.5 percent in 1999 and 3.3 percent in 2000.
Cheese sales slowed last year because of the "double whammy" effect brought on by rising cheese prices at the retail level and the sluggish economy, says Kevin Burkum, vice president of cheese marketing for Dairy Management Inc. Retail prices had been rising prior to the recession, but the recession made it even more difficult for consumers to deal with rising prices.
"As the economy picks up, we think cheese sales will pick up again," he adds.
Peter Vitaliano, vice president of policy and market research for the National Milk Producers Federation, was right on the money last November when he predicted that the recession would be short-lived. He pointed to the recession's impact on the "high-end food service industry," as well as business and recreational travel.
Now that the recession is over, the restaurant and travel industries should start to see more customers - and that bodes well for cheese consumption. Much of the growth in cheese consumption has come as a result of its popularity on restaurant menus.