German organic cheese is a tricky market

Rocketing growth of the organic milk sector in Germany at the beginning of the millennium – an increase of 230% in the first nine years to 600 m kg/year – encouraged many dairies to start their own product lines of organic milk and cheese. Most have been very successful. But the soaring bio sales curve seems to be flattening out now, with a little over 650 m kg/year organic milk produced and processed in the last two years. This hiccup has hit hard any new enterprises. A good example is Neukirchen dairy in Hesse, central Germany. This 20m kg/year business was a successful producer of branded processed spreading cheese when owned by one of Germany’s largest cheese producers Hochwald Foods. Two years ago the plant and processing business was up for sale and a group of dairy farmers in the same state snapped it up with plans of producing organic cheese. The farmers group already owned 80% of the successful organic dairy product processor Upländer Milch in Hesse (48m kg milk/year) and wanted to increase its product line to include cheese.

“What we did not realise at the time, “ reports the farmer group chairman Josef Jacobi, “is that the market for bio-cheese is a very hard one to break into.” The cheeses produced in the newly bought plant were described as excellent by independent experts. But they were launched onto a market not only slowing down but also being inundated with quality organic dairy products from outside – mainly Denmark and Austria. Last year a loss of €3.6 million was announced for the Neukirchen business and this spring it registered as insolvent and is now for sale. The Upländer sister-business has survived the crash and continues to concentrate mainly on organic drinking milk, dairy drinks, cream and butter.

Meanwhile, the former owner of the Neukirchen plant, Hochwald Foods, is increasing output of conventionally produced cheeses (mainly mozzarella and pasta filata) at nearby Hünfeld to a reported 25,000 tonnes per year.