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A Home for U.S. Cheddar in the United Kingdom
By Brian Goggin
Why would anyone ship Cheddar
cheese to England, the home of the original Cheddar cheese?
"Why not?" asks Charlie Green, Senior Vice President of Sales for Vermont-based Cabot Creamery.
"We have a naturally aged product that meets all European Union (EU) requirements, a unique flavor profile similar to British Cheddar and competitive prices."
It was this "can do" attitude, lower tariffs and some help from an experienced United Kingdom (U.K.) cheese distributor that launched the first successful introduction of U.S. Cheddar to U.K. consumers in the fall of 1997. Assistance from two Market Access Program participants continues to help Cabot establish its naturally aged Cheddar in the U.K. market.
Sales from Cabot's first shipment of 41,000 pounds of aged Cheddar to the U.K. were stronger than expected. Another shipment was quickly prepared and shipped to re-stock the shelves. Cabot hopes to export 500,000 pounds during its first year in the U.K. and expand its distribution from two to five supermarket chains.
This is Cabot's first attempt to export cheese. The dairy was founded as a cooperative by farmers of Cabot, Vermont, in 1919, to produce milk and other dairy products for the surrounding communities and for shipment to Boston. Over the years, the dairy expanded to produce a full product line, including a variety of naturally aged cheeses, butter and yogurt.
In 1992, the Cabot Creamery merged with Agri-Mark, a large New England dairy cooperative owned by 1,600 farmer members. Agri-Mark markets its products under the Cabot brand primarily through retail and major supermarket chains throughout the eastern United States and West Coast.
Its U.K. market success began
with a call from a British tourist: not just any tourist, though.
Allan Crook, International Business Manager of Mendip Dairy
Crest, Britain's largest cheese distributor, tasted some Cabot
Cheddar back in 1994 on a visit to Wyoming and was immediately
hooked on the taste. The naturally aged cheese had just the right
balance of creaminess and sharpness that the British palate
expects from Cheddar. He used the toll-free number on the package
label to get in touch with Cabot.
That call led him to Charlie Green and, as it turned out, to a productive partnership that would provide many U.K. consumers with their first taste of a naturally aged Vermont Cheddar.
Crook and Green and other marketing managers began their analysis of the sales opportunities in the U.K. with a very simple question: How much do consumers there pay for a high-quality aged Cheddar? Once that was determined, they went on to analyze distribution, shipping, packaging costs and the new lower import tariffs to determine that, yes, Cabot could ship at competitive rates.
Cabot was able to get its products into the U.K. at competitive prices primarily due to the Uruguay Round Agreement. The agreement, which was put into effect in July 1995, required the EU member countries to provide a specific level of market access for imported products.
Under the terms of the agreement, the first 7,800 metric tons of cheese imported must be allowed into the U.K. and other EU member countries at a tariff rate of 10-and-one-half cents per pound. Imports above this amount are levied at a much higher rate. With these reasonably low tariff rates, many of Cabot's products can compete on more or less equal terms with European-produced cheeses.
The licenses that grant the importer the access to the lower tariffs, however, were extremely difficult to acquire. "It's not like you simply pay the tariff to the customs officials," said Green.
"The licenses, which represent the legal right to import into the EU, must be requested well in advance in Brussels. That was our biggest bureaucratic hurdle. It is never easy dealing with the European Commission, but through persistence and some help from our importer, we were able to get cheese into the U.K."
Getting the product into the U.K. was only half the battle. Developing a marketing strategy that would make the product stand out from the hundreds of Cheddars offered in the U.K. market was a daunting task.
Mendip Dairy Crest, which distributes Cabot products in the U.K., was a crucial link in the marketing chain. According to Green, Mendip Dairy Crest, the single largest cheese distributor in the U.K., has extensive experience in dealing with the major supermarket chains--exactly the market segment Cabot wanted to reach.
They were able to get the project off to a good start by negotiating a commitment for shelf space in Waitrose and Safeway, two large U.K. supermarket chains.
With these commitments in place, a marketing strategy began to take shape. To help build consumer recognition, Cabot highlighted Vermont's favorable image in their marketing effort and actively encouraged Vermont-based businesses to get involved. Cabot developed partnerships with state and local interests to help produce a unique image for the product.
In addition, the Vermont
Department of Travel and Tourism agreed to cooperate with Cabot
to develop a contest; prizes include a tour of Vermont. An
association of Vermont bed and breakfast lodging will provide the
accommodations while Vermont ski resorts will provide lift
tickets.
The contest springboards on an established cachet--Vermont already draws U.K. visitors to skiing and autumn farm and foliage tours. Even the Cabot dairy has a constituency in the U.K.; many tour groups have already paid visits.
It was Cabot's enthusiastic cooperation with two other internationally focused organizations, however, that helped establish the Cabot brand in the U.K. supermarket chains. In-store promotions, demonstrations and point-of-sales displays, sponsored in part by the U.S. Dairy Export Council and the Eastern U.S. Agricultural and Food Export Council (EUSAFEC), help differentiate Cabot brand products from English Cheddars.
Both groups participate in USDA's Market Access Program, which provides marketing and advertising support to industry associations, small businesses, and cooperatives. Print advertising in British in-store circulars rounds out the marketing effort.
"We knew we had to do something to get the British customers to give it a try. Although exporting was new to us, Cheddar is not a new product to British consumers," said Green.
"As the world's largest consumers of Cheddar cheese on a per capita basis, they are sophisticated buyers. The assistance we received from the Dairy Export Council and EUSAFEC was crucial to our success. They helped put together the in-store promotions and gave us lots of good advice about getting started in exporting."
A packaging makeover was also necessary, not only to meet government packaging requirements, but to make the product more attractive to U.K. consumers. The basic product and production process, however, were not altered for export. Cabot chose to introduce a mature Cheddar, aged 15 to 18 months, to the U.K. market.
With initial success under its belt, Cabot's "why not?" view of international marketing may lead to further export successes. Plans for expansion include two more large supermarket chains: Sainesbury and Tesco. The expansion would allow Cabot to reach its 500,000-pound sales goal.
An increased demand for milk from the cooperative's membership is another benefit from the new export business. Expansion to the Middle East is on the horizon.
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The author is a marketing specialist in FAS' Dairy, Livestock
and Poultry Division. Tel.:(202) 720-4884; Fax: (202) 720-0617; E-mail:goggin@fas.usda.gov
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