September 13, 2012 |

Cheese Prices

By Dave Ostrander

Did you ever get the feeling you were being overcharged for cheese? How does your supplier set the weekly price of cheese? How do the big chains buy their cheese? What does Block Plus stand for? Why does my cheese seem to be soft and wet sometimes and dry and hard at other times? What is the difference between Whole Milk and Part Skim Mozzarella? 

I get calls every month from clients who ask questions like these — particularly the questions center on whether they are being overcharged for cheese. After I get a little info on the brand, specs, weekly volume, supplier and whether it’s purchased in the loaf style or shredded or diced, I do a little detective work.

Most food service distributors set the price of cheese, specifically mozzarella, on a weekly basis. They determine the weekly selling price by adding up the costs of several items:

• Cost of cheese from the factory

• Transportation cost to get the cheese from the factory to their warehouse

• Administration and selling costs

• Delivery and handling costs to get the cheese to your back door

• Profit and commission on the account.

Believe it or not the majority of suppliers, if given the chance, would rather not sell cheese. They make only pennies per pound in profit. In their view of things, they are selling a ticking time bomb because all unfrozen mozzarella has a relatively small window where the product performs at its best before it over ripens. If the dairy buyer overstocks a specific brand in anticipation of volume and the cheese doesn’t move through their system, then they can’t (or shouldn’t) sell it. This is called distressed cheese and may end up in airline Lasagna or at the soup kitchen. It won’t perform well on pizza.

Look at one of your cases of cheese in the refrigerator. The date of manufacture should be printed on the box as well as dairy identification information.

Mozzarella is in a constant stage of ageing (or curing and ripening). Mozzarella ripens from the inside out. Mozzarella receives almost little or no ageing at the dairy. It is usually shipped within one week of manufacture and ageing occurs in the distribution channel and pizzeria. Loaf Mozzarella should be aged 14-32 days and used within that time. Gas flushed, shredded or diced cheese will last a little longer. This is assuming that the cheese has been refrigerated between 36-40 F. The higher the fat and moisture content, the faster the cheese ages. Higher salt levels slows down ageing.

Be an informed buyer. The U.S. Department of Agriculture (USDA) has created federal Standards of Identity for mozzarella based on moisture (water) and milkfat content. Whole milk and part skim mozzarella is allowed to contain moisture contents between 52-60 percent. Cheeses with moisture contents this high are hard to process, age quickly and don’t bake up well. Low moisture, whole milk and part skim mozzarella (LMWM, LMSP) contain moisture contents of 45-52 percent moisture. Pizza cheese can’t be called mozzarella if the moisture content is higher than allowed by the USDA. Cheese with 45 percent moisture is not the same as cheese with 52 percent moisture, even though they carry the same name. The higher moisture cheeses have a lower production cost because water is cheap. Bargain and economy cheese will most likely have these higher moisture contents and sell for a lower price.

Suppliers and manufactures should strive to make you an informed buyer. One of the most educational weeks of my career was spent touring dairy farms, cheese manufacturing facilities and following the milk from the milking barns to the dairies. The educational tour ended at the Center for Dairy Research at the University of Wisconsin-Madison. Yes, there really are cheese scientists. They demonstrated and explained how different mozzarella cheeses, seemingly labeled the same, performed quite differently in side-by-side bake offs. The hands-on lab tests showed how small tweaks in ingredients made all the difference in melting, browning, stretch, texture, color, flavor, coverage and oiling out.

Choosing the right cheese for your operation starts with comparing the baking and eating characteristics of equal portions of competing brands. Sometimes a higher cost per pound premium cheese will yield a pizza that is better tasting and better looking using 10-15 percent less cheese per pie. Instead of comparing price per pound or ounce from competing brands, you may want to compare cost per pizza using fewer ounces.

Quality cheese is not accidental. Quality manufacturers have set rigid specifications and make consistent cheese, batch after batch. The specifications are lab analyzed. The ideal target percentages of moisture, milkfat, salt, pH and shipping age are replicated with little deviation. This attention to detail will eliminate many of your headaches on inconsistent product. Premium cheese costs more to make than bargain cheese, so expect to pay more per pound. Often the most expensive cheese coming in your backdoor may be the least expensive cheese as it leaves with your customers out your front door. You should demand and expect consistency from your cheese company from week to week.

Once you have chosen which cheese makes the best pizza, in your oven, for your operation, you’ll want to negotiate price with your distributor.

The price of cheese is determined by many outside influences completely out of the control of the manufacturers and distributors. Since it takes 10 pounds of milk to make one pound of cheese, the cooking, evaporation and refrigeration energy costs to cheese manufactures is a big deal. The worldwide demand for non fat dry milk (NFDM) and the declining value of the U.S. Dollar on the international market influences selling costs. When the cost of feed exceeds the cost of maintaining a milking cow, farmers are often given no choice but to slaughter milkers and send them to hamburger heaven. The on again, off again Mad Cow disease scares and the opening and closing of the U.S. – Canadian border to cow movement affects pricing as well. In the end, cheese pricing ultimately boils down to this: it’s all about the milk. 

The Chicago Mercantile Exchange (CME) monitors and publishes a weekly price for many commodities, including cheese. Every Friday the weekly average of cheese is recoded at The Block and Barrel price of cheddar mirrors mozzarella. Many distributors purchase cheese based on the weekly average of cheddar’s block price.

So, what does “Block Plus” mean? It’s the number of cents over the published weekly price that the cheese is sold for. Most large-volume operators and mid-size chains enter into agreements with their suppliers to purchase all of their cheese from one distributor on a Block plus arrangement. A two week calendar lag is used to reflect the cost the supplied paid on date of purchase. When I implemented this system I stopped asking my sales rep the cost of cheese. I knew it would be so many cents over block. This eliminates the adversarial weekly gamesmanship of playing price tag. In order to get this preferential pricing one must be a loyal customer. If you cave in to lowball pricing from another supplier, your actions make the cheese buyer’s life stressful. Realizing that the profit margin on cheese is slim, you must also give your preferred supplier a chance to make a reasonable profit per drop by purchasing much, if not all, of your food from them. 

Final thoughts: It really doesn’t matter how much you pay your distributor for a pound of cheese if you don’t portion control the cheese on every pizza, every time. If you’re not weighing it, you’re winging it. Great pizza isn’t cheap and cheap pizza isn’t great.