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Chee$e - Kraft vs. English

I recently went to a local cheese shop, and was puzzled to find out that supposedly expensive imported cheeses where not that much more expensive than the ordinary stuff you get at the supermarket. I have grown to love XXX sharp cheddar, and was astonished to discover the interesting prices.

1) domestic brands (Tillamook, Kraft, Joseph's, etc.) at the local supermarket (Andronico’s), the prices where $4 for 8 oz, $6 for 12 oz, and $7 for 1 lb., of various brands.
2) local gourmet shop (Country Cheese), I found several brands of genuine cheddar from England and Ireland for $9-10 per lb.
Not surprisingly, the taste difference was dramatic. If you have never tasted genuine cheddar from England, you are really missing out on something great.

Question: I want someone who is familiar with the cost/pricing of cheese to explain this to me. You can get a superior imported cheese for only a couple of bucks per pound? I have worked in retail (kitchenware) before, and other assorted food service jobs (but never produce or supermarket), but this one baffles me.

I live in the SF-bay area. We have Laura Chenel, Cowgirl Creamery, Cheese Board Collective, etc. So, maybe I am jaded for good cheese, and there might be an obvious answer I cannot see. Still, I am curious.

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  1. There are actually some good domestic brands of cheddar, both larger distributors (like Cabot) and smaller/"artisinal" producers (Fiscalini here in California). I usually buy my cheddar at Trader Joe's, where it's usually in the $4-something/lb range. I like the NY Xtra Xtra sharp they carry.

    My main reason for posting though, is to quibble with the statement that cheddar from Ireland is "genuine" -- "genuine" cheddar comes from Cheddar, England (and the surrounding area). Cheddar from Ireland is no more genuine than cheddar from America (although it may be better).

    1. "Kraft" printed on a cheese label, regardless of what's under the wrapper, spells "processed cheese" to me. I am so disgusted with the very idea of processed cheese that I cannot bring myself to purchase anything with the name "Kraft" on the label.
      You have an excellent point about the fact that really good quality cheese isn't all that much more expensive than the lesser quality cheeses. I do tend to be a wine snob and I wouldn't want to add the title cheese snob to the list of my character traits but the differences in taste, texture, etc. between the cheap stuff and the good stuff is something I insist on when I'm in the kitchen.

      1 Reply
      1. re: todao

        Here's a little tidbit that you might find amusing. Many years ago, my company was doing business with Kraft. I nearly fell off my chair in a conference room when they started talking about their "Natural Cheese Division". I could only imagine what the choose sold by their other divisions was considered :)

      2. I can't answer the question directly, but I am moved to say there are good and poor domestic commercial brands - Cabot Three-Year Cheddar is awesome, to me.

        1 Reply
        1. I do buy and sell cheese at the retail level and perhaps I can shed a bit of light on the subject.
          First and foremost: Who's making the cheese? Commodity cheeses from the United States (different from "artisanal" which = handmade) are made quite similar to commodity cheeses in other parts of the world- milk from a variety of farms is pooled and processed into the big ol' basics like cheddar, jack, swiss, mozzarella, etc. Most of the work is being done by machines (we are talking about A LOT of milk and then A LOT of cheese). Local workers getting paid for operating machinery are relatively low on the pay scale.
          What kind of milk? (And how much does it cost?) For a while now, American milk prices have been rising faster than our European counterparts, due in part to the weakness of the US Dollar vs. the Euro. Much of the commodity cheese from the US comes from grass & grain fed cows that starts with a decent milk, then gets a bare minimum of aging- most of the flavor comes from the salt. English, Irish, and Australian commodity cheeses often (not always) come from animals that are either mostly or entirely grass fed and are frequently aged significantly longer than similar American Cheeses (this can include shipping!). The difference from species of cow to species of cow, plus diet, plus aging make significant differences in final product.
          Shipping is, of course, a step in this process. All in all, it may cost more per pound for UPS (American freight companies) to move a couple of thousand pounds from Wisconsin to your state than it costs for a cargo container with tens of thousands of pounds to cross the Atlantic or the Pacific.
          The final step is at the retail level- The store I work in has a National Margin Target, that is to say, our mark-up from wholesale to retail is determined at a corporate level that takes into account things like the sales margin mix- we can ask for more money for a hand made artisanal cheese than a machine made commodity cheese so we have to balance how much we can sell with how much profit we can make.
          An Example:
          American Made Wisconsin Commodity Cheddar- Wholesale milk prices above a buck a gallon, Cheese made by machines, aged 30 days, Cut & wrapped with our brand, shipped via truck to our distribution center, Shipped via truck to our retail location Hypothetical price per pound to us, $2.50/lb. our hypothetical margin target 50%, but Competition from larger grocery chains & big-box retailers on similar product means we take a bit of a margin hit and sell it at $4.50 instead of $5
          Australian Made Commodity Cheddar: Milk costs equivalent of less than one dollar, Workers paid fractionally less then US counterparts, Aged 30 days, then shipped via boat (more aging means more flavor) at less price, arrives at our distribution center with no additional packaging costs, then distributed to the stores- our cost about 2.25 a pound- we know the perception of "Foreign=Special quality" might be worth a few cents more, charge a little more than our margin target at $5 per pound
          American Cheese $4.50 vs Aussie Cheese $5.00- we make money on the Aussie to offset the money we lose on the US- both are essentially the same cheese. The opposite can be true, too- As the dollar falls and transportation costs rise, Foreign cheeses will only get more expensive (just go out to a specialty cheese shop and compare artisanal French cheeses to their prices a year ago)- American cheese distributors and sellers are already accepting profit margin losses to keep similar cheeses similarly priced- when push comes to shove, you'll see prices go up across the board as profit margins are enforced and true costs are passed on more fully to the customer.
          I'm a customer, too! I got into the biz because I love the product- I wish I could still get paid by keeping prices steady despite rising costs- instead, we have to dance an intricate dance of balancing tasty cheeses that cost too much with OK cheeses that make us money.

          4 Replies
          1. re: lunchbox

            Thanks for your beliefs. I genuinely appreciate your veracity. However, much of what you state raises more questions than it answers. It increases my suspicions that american consumers are being gouged by retailers selling recognized American cheese name brands, and that high quality, small, unknown, artisanal producers are having to sell their product at unnnecessarily reduced prices to match that of Kraft. If you have info to the contrary, please blog it; I would be very interested to see it.

            Some Comments:

            Local workers getting paid for operating machinery are relatively low on the pay scale. (so what? american machines are not less expensive than those made in the EU, neither is the labor per hour $$$)...
            ...American milk prices have been rising faster than our European counterparts, due in part to the weakness of the US Dollar vs. the Euro...(If this were true, the price per lb. of EU origin cheeses would have doubled in the past couple of years; this has not happened).

            Much of the commodity cheese from the US comes from grass & grain fed cows that starts with a decent milk, then gets a bare minimum of aging- most of the flavor comes from the salt. English, Irish, and Australian commodity cheeses often (not always) come from animals that are either mostly or entirely grass fed and are frequently aged significantly longer than similar American Cheeses (this can include shipping!). The difference from species of cow to species of cow, plus diet, plus aging make significant differences in final product. (OK, I will grant you this; however, how is it that American commodity cheese is almost as $$$ as English, Cheddar, artisnal cheese? ).

            Shipping is, of course, a step in this process. All in all, it may cost more per pound for UPS (American freight companies) to move a couple of thousand pounds from Wisconsin to your state than it costs for a cargo container with tens of thousands of pounds to cross the Atlantic or the Pacific. (Oh, nonsense. If the shipping cost for your current shipment makes your product not competitive, you store it until you have enough product to make one larger, more financially reasonably transaction).

            The final step is at the retail level- The store I work in has a National Margin Target, that is to say, our mark-up from wholesale to retail is determined at a corporate level that takes into account things like the sales margin mix- we can ask for more money for a hand made artisanal cheese than a machine made commodity cheese so we have to balance how much we can sell with how much profit we can make. (AH, HAH!!! So this is the answer I am searching for: not making a uniform profit % across the board, but charging what the market will bear! This is not a criticism, but a personal epiphany; there are many personal thoughts that will go with this, but that is for another thread)

            An Example:
            American Made Wisconsin Commodity Cheddar- Wholesale milk prices above a buck a gallon, Cheese made by machines, aged 30 days, Cut & wrapped with our brand, shipped via truck to our distribution center, Shipped via truck to our retail location Hypothetical price per pound to us, $2.50/lb. our hypothetical margin target 50%, but Competition from larger grocery chains & big-box retailers on similar product means we take a bit of a margin hit and sell it at $4.50 instead of $5
            Australian Made Commodity Cheddar: Milk costs equivalent of less than one dollar, Workers paid fractionally less then US counterparts, Aged 30 days, then shipped via boat (more aging means more flavor) at less price, arrives at our distribution center with no additional packaging costs, then distributed to the stores- our cost about 2.25 a pound- we know the perception of "Foreign=Special quality" might be worth a few cents more, charge a little more than our margin target at $5 per pound
            American Cheese $4.50 vs Aussie Cheese $5.00- we make money on the Aussie to offset the money we lose on the US- both are essentially the same cheese. The opposite can be true, too- As the dollar falls and transportation costs rise, Foreign cheeses will only get more expensive (just go out to a specialty cheese shop and compare artisanal French cheeses to their prices a year ago)- American cheese distributors and sellers are already accepting profit margin losses to keep similar cheeses similarly priced- when push comes to shove, you'll see prices go up across the board as profit margins are enforced and true costs are passed on more fully to the customer. (True as far as it goes, but how about this: you get 2 pallets of cheese on your loading dock (one is from Cheddar, England, and the other Kraft from Wisconson). Both are 500# and the invoice for both are identical. What do you charge per #?? Do you charge more for the Kraft since customers are more familiar and more comfortable with a familiar name brand, and you know it will sell, no matter it costs, even if more for the EU stuff? )

            I'm a customer, too! I got into the biz because I love the product- I wish I could still get paid by keeping prices steady despite rising costs- instead, we have to dance an intricate dance of balancing tasty cheeses that cost too much with OK cheeses that make us money. (So, you are admitting that you willing charge more $$$ for a lesser product that is not as good, because you now it sell because it is more familiar? More people will be willing to fork over $$$ for Kraft in a familiar package than 'English Coastal Cheddar' imported from the UK in a artsy-farsty package?).

            Sorry, do not mean to be critical or mean, but I am trying to understand the dynamics of how retail companies decide to set their prices for pricey, high quality, in-demand products.

            1. re: jerry i h

              Actually, jerry i h- you are mostly correct. I take no offense at all to your comments.
              My rather pedantic explanation was largely for the benefit of readers unfamiliar with retail pricing philosophies!
              I will correct you on a few of the conclusions you have drawn- The "gouging" (man, I feel dirty if you, the consumer, feels like we're gouging!) is really more of a balancing the scales- let me expand my hypothetical example, but substitute "Kerrygold Irish Cheddar" for "Australian Cheddar."

              ***The following numbers remain hypothetical, but analogous to real life***
              Premise (from the OP): Kerrygold and Kraft are both large producers of commodity cheese that distribute to typical grocery stores: How is it possible that Kerrygold Irish Cheddar is almost the same price as Kraft cheddar, even though it is a tastier cheese?
              All the stuff I said about machines, labor, cost of milk, shipping. I did want to point out that companies across the ocean usually have minimum thresholds before they ship- hence the "cargo container" vs truck load. Kraft makes money by selling a lot of cheese quickly- especially if they can sell it before the cost of the raw ingredients (milk, labor, gas) outpaces any potential profit. Kerrygold obviously wants to sell a lot of product, but knows it has to differentiate itself from typical American brands.
              Now comes the Math: Kraft makes many different products, and for the purposes of this example, it helps to think of their whole line of brick cheeses- cheddar, colby jack, swiss, meunster, etc... Kerrygold, however, makes the same number of cheeses, but in a totally different series of styles- Dubliner, Irish Swiss, Ivernia, 40# blocks, their sharp cheddar in wax- not bricks, etc... To me as a buyer, all Kraft bricks of cheese cost exactly the same (really, its true!) at about $2.50/lb., but the Kerrygold stuff varies quite a bit from type to type- Vintage Irish Cheddar in a 20kg block is about $2 and change/lb., Prepacked little bricks are about $3, while the black waxed 5# wheels are about $5/lb. All the same cheese. Basically the same as the Kraft. Here's the Margin "slight of hand"- I want to sell all Kerrygold cheddars, no matter what size or shape, for $5 a pound- I will make A LOT of profit on the big blocks and some on the prepacked bricks, but come close to losing money on the black-waxed wheels. For the Kraft, I know I can make a uniform profit by lowering my profit margin ever so slightly, charging $4.50, and making up the difference in volume.

              Believe it or not, Safeway, Albertsons, Kroeger, Walmart inc (Walmart, & Sam's), and CostCo have been keeping commodity products cheap by artificially lowering their profit margins (if you recall, I stated mine as a hypothetical 50%, theirs would be a hypothetical 25%)- they don't want cheddar to get too expensive for people to buy! I won't tempt the forum moderators by mentioning my company, but My store has abandoned these practices and has recalculated all of our retail prices so that we make our minimum margin target on ALL of our cheeses- in the Kerrygold example, we would sell the blocks at $4, and the black wax at $10- we think that our customers know about the quality of the Kerrygold cheddar and will willingly pay $10 for a better cheese than the $5 for a basic Kraft (we're not losing money on that one anymore, either).

              <<<BUT>>>
              Since the economy is tight, we KNOW we are losing some customers to Safeway, Kroeger, etc, etc who are selling Kraft at $4.50 instead of $5... so we will be launching a line of commodity cheeses that will bear our brand, but will sell BELOW our margin- we will effectively lose money on every piece of "our brand Kraft"- so it's up to me, as a buyer/salesman, to entice our customers to keep buying the $10 Irish cheddar- and that's why they pay me the big bucks! (sobs quietly to himself).

              There is a bit of fuzzy math here, and I am glossing over some details, but have I answered your questions? I really love my job, but if I think about what i knew about purchasing while I was a line cook vs. when I was a caterer, vs. when I was in wholesale sales, vs. my current position as a retail buyer, I can imagine that this stuff isn't transparent to the average consumer!

              1. re: lunchbox

                I missed a few of your excellent questions- I promise to keep this one shorter!
                Basically, the good stuff- artisanal cheeses- handmade by the hard-working labor intensive time-honored processes of squeezing cows/goats/sheep, then poking the coagulated milk with a series of sticks- starts more expensive, and stays more expensive- the cheese makers make sure they charge us the buyers enough to remain profitable (they know they have the good stuff that we'll pay through the nose to get) and we, in turn, decide how to pass on those costs to you, the consumer. Since were only talking about hundreds of pounds at a time, not thousands in containers crisscrossing the ocean, the price adjustment happens much more frequently- the question at my level is It costs me $12/lb, should I charge $23/lb (48% profit margin), $24 (50%) or $25 (52%) if my target is 50%... Will the customer pay $25 for Humboldt Fog because it is a round number, or will they just stop buying it?
                This is my torment- in reality, I am working on tenths and hundredths of a percent adjustments to my margins... and sometimes the answer is "customers won't pay that much." Then my store stops buying Humboldt Fog, Cypress Grove loses my business, then they stop making Humboldt Fog...
                NO! I must save the Fog! I'll take little bit of a margin hit and CG can go on making the cheese and selling it to me at a fair price, I sell Humboldt Fog to you at a "reduced price," but I do charge you 0.50 more for Kraft Cheddar and 0.50 more for Kraft Colby Jack.

                Does that example clear up that question?

                As for one of the original premises: Kraft is not inherently worse tasting than Kerrygold, but there are US commodity cheeses made the same way as Kraft that taste better- I sell those!

                1. re: lunchbox

                  Thanx, lunchbox, you anwered my question in spades (OK, an obscure bridge term; IIRC, as a result of underage drinking at college, I technically have 1/2 of a GM point, but that is a whole different BBS). I genuinely hope that your statement about artisnal cheese makers charging enough to keep them in business is true. I have seen far too many cheeses in the SF/Bay Area at prices I think are too low (wow; imagine that: $$$ per # is too LOW?). Either retailers are sacrificing margin, or the producers are not charging enough to assure long-term business survival.

                  There is enough consumer awareness (well, in my area, anyway) that good food just costs more. As a consumer (NOT as a buyer, since this is my job, but not for perishable commodities), I judge that price also reflects quality. So, if an artisnal cheese from the EU or Marin county costs nearly the same as Kraft, I assume that both are of more or less equal quality and taste.

                  I have been a buyer/salesman for cookware/kitchenware stores for more years of my life than I care to admit. The prices I was allowed to charge was greatly influenced by what other retailers were doing. Profit margins on All Clad were nil (actually a loss if you add in the standard business costs) because a couple of big retailers used it as a loss-leader. However, we would sell a few inexpensive kitchen tools that were cheap enough to qualify as impulse buys, and this sale would give us bigger profits than selling a $500 cookware set. I guess cheese is the same way.

                  BTW, I will buy yet even more cheese and more frequently from my local artisnal cheese/deli store, because the cheese they sell is heavenly, and not that much more expensive than the big-name cheeses at mass-market chain grocery stores.

          2. So, what are those cheddar cows eating and where are they eating it? And what effect do biocultural differences have on the end product?

            1. Couple of things to add.
              first, country cheese is a discounter, and a good one. they buy a great deal from purveyors of lots that the distributors can't work with anymore, still great cheese, but at a very low price. Secondly, as the part owner of cheese dairy, and someone in the business for years, it is important to understand that the cost of milk, labor and gas in the US are choking producers. Milk alone in 2007 was as high as 2.40 a lb, add to that the cost of ingredients, utilities, labor, marketing, support and the cost per lb. in the factory, for a medium sized artisan/specialty producer is over 4 dollars a lb. then you have to pay to truck it, plus the 25% margin a distributor generally adds to the cost to cover their expenses, and some profit, then the retailer has to pay not only for that piece of cheese, but for all the cheeses and groceries they carry, plus the promotions consumers demand, the utilities for what is essentially a giant open refrigerator.
              The largest factories live with these same expenses, plus, their goods are usually sold at a guaranteed sale, meaning, if it goes bad, they have to take it back and turn it into Velveeta.
              Truth is, most retailers live on less than 2% profit before taxes. It is an expensive business. Look at the ambiance of Andronico's, the selection, the number of people working, the liabilities.
              My advice, if price is what matters then Country Cheese is the place to buy!

              1. In England, cheese prices vary widely. At the local deli, you could pay £2 for brie, and get about twice as much for less at a supermarket. And certain brands are equal in terms of taste to my senses. And then you can get a big round of camembert for the same price. But the great thing about the deli is all the different cheeses. I don't eat a lot of cheddar, despite liveing about an hour from cheddar. What was my point? I don't know.

                1 Reply
                1. re: Soop

                  Well, bless your heart, Soop, you made that point very well!

                  While the differences between cheese at a good cheese shop and cheese from, say, Tesco out your way, or Safeway or Albertson's here, might seem to be simply a matter of price, there's also the question of how the cheese is kept and handled. Has it been held at its proper temperature, or been allowed to either overheat or freeze? My favorite market for cheese here is Trader Joe's, which has some excellent cheeses and very sharp pricing, but I've gotten hunks of good brands there, such as Cabot, that were moldy before I opened the package - and I'm not talking about blue cheese, either!

                  I can get the same brand of brie or camembert from my supermarket as I do from a good cheese shop, but I'll know that the one from the specialist will be neither unripe or overripe (or if it is he'll know why I'm bringing it back!). The one from Ralphs may be two-thirds the price, but it may also be as flavorful as a slab of wax.