Filling the Hole in the Dutch Cheese Market - Regaining Healthier Margins

Dutch cheese production has recorded exceptional growth since 2012, outpacing the limited consumption growth in northwestern Europe. This has diluted margins and weakened the position of cheese producers in the value chain. Northwestern Europe (the Netherlands, Germany, and Belgium) is the main consumer market for Dutch (semi-)hard cheeses such as Gouda. However, Dutch cheese production is still forecast to increase to nearly 930,000 metric tons by 2022, based on increased liquid milk imports and investments in additional processing capacity.

Although the Dutch cheese industry is currently based on trade rather than on domestic consumption, nearly 50% of the additional cheese production since 2012 was absorbed by exports to Germany and Belgium. About 75% of Dutch cheese is consumed within 500km of the Dutch border, indicating the importance of margin growth in (northwestern) Europe. 

Consumer preferences are changing, and we see increasing demand for convenience and personalized nutrition, including online sales, local products, and specialties. Focusing on the added value along the value chain, along with these new preferences, still provides opportunities for cheese producers to secure healthier margins. 

Outside of the EU, expanded trade agreements such as the Economic Partnership Agreement, implemented on February 1, 2019 with Japan – the largest export destination for Dutch cheese outside of Europe – are expected to improve the export position in many regions. 

Developing markets provide better opportunities for volume growth, while the premiumization of (specialty) hard cheese segments in developed regions provides opportunities for value growth. However, opportunities in overseas markets and distribution channels are not limitless, and they often require a customized marketing approach.