The prior post covered domestic consumption of cheese, fluid milk, and butter. One of the concerning factors was the slowing growth in cheese consumption. This post will cover the retail prices of those commodities to see if prices changes are causing consumption changes. Fluid milk and butter prices are based on domestic retail prices. The Cheese retail price is based on Cheddar cheese which is representative of the cheese market. All prices are based on 12-month moving averages to reduce monthly volatility. The charts below cover six years to minimize the impact of the “COVID” years in the long-term trends.
CHEESE
Cheese uses 54% of producer milk and will be covered first. The prior post showed a slowing of cheese increases in domestic consumption. In 2022 and 2023, cheese consumption was increasing at an annual rate of 2%. In 2024, the growth rate was only .5%. Is cheese getting too pricey for consumers? Has cheese consumption reached a saturation point?
Chart I follows the retail price of cheddar cheese over six years. Over that time span, the price of Cheddar cheese has increased by 10%, an increase of 1.5% per year. That is well below the overall food inflation rate. In late 2023 and 2024 the retail price of Cheddar cheese has declined
Conclusion: The price of Cheddar cheese is not impacting consumption.
Table I below compares the per capita consumption of cheese in cheese consuming countries. The U.S. per capita consumption of cheese is 1/3 less than France. The U.S. is ranked 12th among the cheese consuming countries.
Conclusion: Consumption of cheese has not reached a point of saturation in U.S. diets.
FLUID MILK
Chart II tracks the changes in the retail price of whole milk which is growing in consumption after decades of declines. The price has grown steadily with a 38% increase over six years, well above the overall food price index. After significant increases in 2022, the price has dropped and is currently growing at a pace like the long -term pricing increase. Despite the price increase, consumption of Whole milk is growing in 2023 and 2024.
Conclusion: The higher price of milk is not slowing the increase in milk consumption.
BUTTER
Chart III follows the retail price of butter. The price dropped significantly during the “COVID” years but has now stabilized around $4.65 per pound. As covered in the prior post, domestic consumption of butter was increasing in 2023 and 2024 at a rate of 8% annually.
Conclusion: The higher price of butter is not slowing consumption.
SUMMARY
Price elasticity of demand would show that higher prices reduce consumption. In all three cases above, exactly the opposite is happening. Cheese consumption is slowing with lower prices. Fluid milk is growing with higher prices. And butter is growing very fast with higher prices.
Conclusion: The consumption rate is not influenced by the recent retail prices.
