Cheese
The UK cheese retail market continues to grow, and is now worth nearly £2.3 billion. The market grew by 13% in value and 0.6% in volume in the 52 weeks to March 2009. The cheddar category grew by 17% in value (1.5% in volume). Within this, branded cheddar continued to outperform and increased its market share, growing by 9% in volume and 21% in value to £503 million.
Our flagship brand, Cathedral City, is the leading cheese brand in the UK. It is made at our well-invested creamery in Davidstow, Cornwall and delivered to retailers from our national distribution centre in Nuneaton. In addition some of the cheddar made at Davidstow is sold under the Davidstow label as a retailer brand. We also have a cheddar factory in Wexford, Republic of Ireland, producing both branded and unbranded cheese.
Cathedral City has again outperformed the category, with volume sales up 9% and value up 22%. The brand now sells £192 million at retail prices, has a 15% share of total cheddar (38% of branded), and is ranked 21st in Nielsen’s top 100 UK grocery brands. This performance reflects our brand-building investment, as well as a successful promotional program.
We continue to prove that we can add real consumer value to everyday cheese. Sales of Cathedral City Lighter, our reduced-fat cheese, have increased by 91% by value in the year. In September 2008 we launched Cathedral City Vintage 20, and at the Nantwich international cheese show a Davidstow recipe won Supreme Champion – for the second year in a row.
The Davidstow named creamery brand has performed less well as increased Cathedral City sales allowed us to reduce the high levels of Davidstow brand promotions from the previous year. Overall sales were down 21% by volume and 3% by value.
During the first half of the year the cheese business benefited from selling cheese made with lower milk prices in the previous year, but by the second half that situation had reversed. With a strong increase in Irish cheddar imports, promotional pressure increased significantly. We responded by increasing marketing and promotional expenditure to ensure the continued strong performance of Cathedral City.
In the last quarter of the year we started to commission our new, highly automated, cheese cutting and packing facility at our national distribution centre and maturation store in Nuneaton. We remain on track for full-scale production by mid 2009. This completes our plans to achieve a world-class supply chain for cheese linked to our state-of-the-art creamery at Davidstow, served by a dedicated pool of local dairy farmers.
As with our butters and spreads range, we have been successful in launching alternative cheese recipes to suit health-conscious consumers. The Cathedral City Lighter variant has been extremely successful and enjoys around 90% of the branded lower-fat segment. The launch of a lighter variant of the Davidstow brand will further enhance our range in the coming year.