fter the euphoria of the week of March 9, it was free-fall. As soon as the rules for confinement were announced, emergency purchasing racked up record sales. According to figures compiled by Nielsen, the last week before confinement saw consumer goods sales rise by 38% in a single week. “Numbers comparable to Christmas week,” according to many merchants, “We were stripped bare,” echoed producers. Then came the descent into successive levels of hell, following each announcement of yet stricter rules from the public authorities.
Schools were closed on Thursday March 12, then most stores (including restaurants) on Saturday the 14th , before the decision on Monday the 16th to reduce all movement to a minimum, all of which brought the dairy industry to its knees, despite the fact that food stores were allowed to remain open. The week of March 23, which saw even tighter restrictions for confinement, including the closure of both open-air and covered markets (with limited exceptions, mainly in small rural towns) was another brutal blow.
By the end of March, the solutions for delaying the inevitable – redirecting milk into products with longer life, reducing animal feed rations, lowering temperatures in affinage caves – came into conflict with the risk of overfilling storage and affinage capacity. Cheesemakers started closing their creameries, destroying fresh products that could no longer be sold, donating product to food banks, and finally dumping milk. A catastrophy that no one was prepared for…
Drops in activity on the order of one third the week of March 16, then more than half, even two-thirds the following week.
Consumer demand in freefall
The situation is evolving day by day, and no definitive numbers have been compiled as of the end of March by the statistical institutions serving the dairy industry to measure the extent of the damage. While the month of March may not be too catastrophic due to the boost in pre-confinement buying, the month of April is expected to be terrible, based on the patterns from the last week of March.
Companies serving the traditional cheese sector have reported a drop in activity on the order of a third as of the week of March 16, the first week of confinement (-25% for Lincet, -30% for the Fromagerie Delin, - 40% for the Frères Bernard, -35% for Maison Paccard…) then as much as half, even two-thirds the following week, when the rules were tightened (-50% for Delin, -60% for Paccard…). Certain cheese collectives have been hit hard. Rocamadour producers, for example, recorded a loss of 80% of sales after confinement took effect. The numbers vary depending on the market position of the business, the size of their selection, the type of clientele, the kind of products they produce. Because, in the space of two weeks, everything has changed.
The impact upstream
➜ The dairy farmers
For the moment their contracts are still in place, and the processors are still obliged to collect their milk. Several cheesemakers have noted the flexibility they have shown in being willing to slow milk production. But how long will the processors be able to continue collecting milk they can’t transform ? “We are looking at having to stop collecting milk pretty soon,” fears Gérard Calbrix. “We are facing a force majeur.”
One manager of a farmer’s group reached out to Emmanuel Besnier, CEO of Lactalis, asking him to intervene and not make them dump their milk. “We are in a paradoxical situation where some products like UHT milk, butter, and cream, are out of stock in the stores, and where, on the other hand, small producers who make cheese for the cut-to-order market are facing calamity.” And cited “the example of Sodiaal, which set an example in the Auvergne by taking up milk collection from a dozen small producers.”
➜ The farmstead producers
The farmstead producers are on the firing line, particularly those in short-chain distribution : direct farm sales, local restaurants… “It’s utter depression,” explains Sophie Espinosa, director of the French National Federation of Goat Farmers (FNEC). The producers who were working with the big grocery chains saw their products pulled to make room for rice, pasta….or they are being offered lower prices. Those who target the luxury market have no outlet. The closing of the markets was a huge blow.”
“It’s dramatic for the farmstead producers,” sums up Laurent Balmelle, goat producer in Ribes (Ardèche) and administrator for the FNEC. "For the moment they are filling their caves, but those will soon be full to bursting. Many farms are in kidding season, but the collectors aren’t taking them anymore. On some farms they are giving the milk to the kids, while on others they’ve already started dumping. We are encouraging them to freeze their curd before draining, or to make tommes, but you can’t just improvise all that from one day to the next, you have to know what you’re doing. The supermarkets are saying, ‘come to us, we want to help’ but it’s hard for farmers who don’t have the wherewithal to make labels or packaging that is required by this market sector.”
➜ Artisans and small-to-medium businesses
For single-product producers the situation is critical. “It’s very hard,” says Pierre Marty, of the Fromagerie du Val de Sienne. “We built up our stocks for the Easter holiday, now we are only transforming 50% of our milk. We are lucky that a neighboring industrial producer is able to take our excess milk.”
Small to medium businesses that make a wider range of products are trying to limit their waste by redirecting their production towards fresh products, in high demand (milk, cream, butter….) or towards pressed paste cheeses. But their export and food service markets have collapsed, the traditional network has slowed, and the chain stores have put a stop to specialty and ‘pleasure’ product lines. The numbers cited above are proof of the disaster. The Delin Fromagerie had to halve its production volume during the week of March 23 and was preparing to lower production to 25% of normal in early April.
We are only transforming 50% of our milk. We are lucky that a neighboring industrial producer is able to take our excess milk.
➜ The big producers
“Highly diversified, the big producers have more flexibility to redirect their production, to shift the milk to products that are less flooded or that are in growth mode,” underlines Gérard Calbrix. “But they are also suffering from the lack of restaurant trade and the border closures.”
The impact on retailers
In Lille, Philippe and Fabienne Armand closed one of their two boutiques because their shops were too narrow to ensure safe distancing.
➜ Retail boutiques
“Cheesemongers who work the markets and those with shops in neighborhoods that have emptied out, or in business centers or tourist centers are really suffering,” reports Claude Maret, President of the Fédération des Fromagers de France (FFF) (the French cheese retailers’ industry group). “Medium and small towns are doing a bit better. We regret the fact that everything is being done to promote chain stores to the detriment of small independent shops. We were told of a case of one person who was fined for going out to buy a baguette !” With the advice of the FFF, which has sent out fliers and daily updates, retailers very quickly found ways to conform to the rules : masks (when they can get them), marks on the pavement outside to ensure social distancing, restricting the number of customers (often as few as one) in the shop at a time, encouraging payment by contactless credit card (unless they have an automatic cash dispenser system)….hours have also been adapted, most often reduced to half-days, to comply with the semi-unemployment measures defined by the government.
Different retailers interviewed revealed a drop in revenues of 50% as of the week of March 16, and even more the following week, with lots of variation, again, depending on where they are located ; some have seen daily revenues only 5% of normal.
Some cheesemongers with very narrow shops like Philippe Armand in Old Lille, have purely and simply decided to shut their doors. This is also the case of Dominique Bouchait, who resolved to close his boutique-restaurant within the Leclerc supermarket’s Merchants Gallery in Saint-Gaudens. This Meilleur Ouvrier de France, very active in the open markets (see below), notes a drop of 75% - 80% of his normal revenues. In Champagnole, Marc Janin also saw 75% of his revenues melt away.
Business can be very different from neighborhood to neighborhood. Maxime Quatrehomme, who manages 4 shops in Paris, saw drops ranging from 15% to 75% depending on the location. “The shops in the less affluent neighborhoods in the eastern part of the city are doing better, only down by about 20%. Issy is down by more like 30%. Our boutique in the seventh arrondissement is the worst hit : the local residents left town for their country houses, and restaurants and caterers, who normally represent 40% of our sales, are simply closed.” Overall, he estimates his revenues have fallen by 70% - 80%.
In Annecy, Alain Michel claims 70% reduction in his shop in the center of town, while the boutiques on the outskirts are doing a bit better : between -40% and -50%. Luke Ségaux, for his part, announced a 60% drop from his eight Cloche à Fromage shops. “In our shop in the center of Strasbourg, it’s a bloodbath : not enough other food shops nearby and absolutely no tourists…”
In Toulouse, Stéphan Murcia decided to close two shops out of five, and is only opening every other day, with shortened hours. Result : a drop in revenues of 80% - 90%. In Nancy, Philippe Marchand as of the end of March only had two out of his nine shops still open, due to the closure of a number of indoor markets. His sales from his remaining shops in Nancy have dropped to 25% of normal. In the Hauts de France, Romain Olivier calculates an overall decrease in revenues of 80% - 90%. The boutique in Vieux Lille, hit hard by the absence of tourism, of office workers, and by the departure of residents to the country, has fallen to only 10% of it’s normal activity, while the shop in Boulogne was able to limit the damage to 50% thanks to a local clientele.
These numbers coincide with feedback from cheesemakers : “Our sales to the traditional cheese shops have decreased by 70%,” announced Didier Lincet at the end of March. The Bernard brothers reported a “reduction of about 50% of business from the traditional outlets.”
The number one cheese retailer in France, Pascal Beillevaire (some twenty shops and fifty markets) announced “the boutiques in town centers are holding on pretty well,” but “shops in tourist areas are having a harder time, like on the rue Mouffetard and the rue Saint-Antoine in Paris.”
➜ Moving markets
Pascal Beillevaire estimated at the end of March that only 10% of the markets he works in are still open. Dominique Bouchait counted 14 out of 50. “Even where they are still open, only half the people are coming,” adds Laurent Balmelle. “We are doing everything possible within the FNEC to put pressure on the municipalities, with the support of the Chambers of Agriculture and the local deputies. The fact that we are in between two parts of the election cycle complicates things. The mayors who were not reelected in the first round of voting are tending to tread carefully and not take any risks.”
As a matter of fact, at the national level, the public is not so hot on reopening the markets : “In the pages of Forum du Ouest-France,” observes Véronique Cauvin, “80% of people who are writing in about the markets are very hostile to reopening them, there is a lot of opposition.” Images in the media on March 15 following the closure of ‘non-essential places’ badly tarnished their image : markets packed with people, no social distancing at all. “The world of the open markets is traditionally very independent, most of their members don’t belong to any professional organization,” underlines Claude Maret, “there is no collective cohesion.”
“In my département of the Ardèche,” continues Laurent Balmelle, “we are lucky to have a very generous prefect, she has supported all the mayoralties that have asked for an exception to reopen markets, as long as the safety measures are being respected. At the moment we are fighting for the larger ones to reopen, then we’ll get to work for the smaller ones.”
The FFF, for its part, has been working closely with the FNSEA (French national federation representing agricultural unions and regional federations) in hand with the FNEC and the FNPL (French national milk producer’s union) and the Federation of French Markets to develop a health safety protocol for market sellers in order to get the approval of the mayors. It is available to the Prefects. The FFF also supports the emergency interim proceedings ‘Liberté des Marchés de France’ which was filed with the Conseil d’Etat against the market closures decree.
In the big cities, the mayors’ offices are inflexible and are only rarely granting exceptions : consumers have plenty of other means to buy basic necessities in the cities without having to risk creating any single focus point. Certain towns have reopened markets under the most draconian of conditions and allowing only limited merchant slots. For instance, in Arras, only 18 merchants will be allowed to open at the weekend market as opposed to the normal hundred or so.
In Brittany, in Vannes, the mayoralty reopened the central indoor markets after a single day of interruption. “Our market building was exemplary,” attests Véronique Cauvin. “From the start we put up barriers outside to limit the number of people inside to 100, including the workers, which normally number about 32. The mayor’s office delegated a staffer to keep the count outside, and we have one entry door and a separate exit, and we all put markers on the floor.”
The National Association of Farmstead Dairy Producers (ANPLF) expressed its “surprise and incomprehension” after the decision to close the markets. “It’s no riskier to shop in a market than to shop in a supermarket,” asserts the association, pleading for reopening. “To be in the open air is less risky than to have lots of people in a closed environment,” they argue. “To be served by a single seller who cleans their hands between each client offers more safety than to pick stuff off of self-service shelves, items which may have been handled by who knows how many other people. Only using one’s own shopping bag or caddy, rather than a public shopping cart that has been used by others is another advantage that our market clients are accustomed to.”
The ANPLF also underscores “the measures that have been put into place to ensure sufficient distance between people, as well as the respect for barrier distances, for example increasing the distance between the stalls (up to 3 to 5 meters apart). (…) It is essential that our markets can reopen because it will offer more options for shopping, and thus reduce the crowding in the supermarkets.”
The mayors who were not reelected in the first round of voting are tending to tread carefully and not take any risks.
➜ Restaurants
All out-of-home food service closed in two stages : first the school lunch programs on March 13 and then all restaurants two days later. A brutal chop for the companies that depend on them. “According to the reports coming in to one of the Federations of restaurateurs, the food service sector will see a drop of 60% : only food service in hospitals, retirement and nursing homes, and prisons is left,” explains Mélanie Richard, Director of dairy sector economies for the Maison du Lait.
Some producers have now realized to what extent they have depended, directly or indirectly, on the food service sector. “I’ve realized that food service surely represents 30% - 35% of our revenues, though I would have thought before that it was only about 10%,” confides Jean-François Paccard, of the eponymous affinage business, “via the wholesalers and specialty retailers that resell to that market.”
➜ Supermarket chains
Large and medium supermarkets (GMS) have been the preferred fallback for consumers, who are encouraged to move about as little as possible : they are easily accessible, have a wide variety of merchandise without having to go from shop to shop, and self-service keeps queuing to a minimum…. “When working from home was encouraged, then once confinement was enacted, they benefitted from the hoarding reflex,” observes Mélanie Richard. “By weeks 9 to 12, their revenues had gone up by 30% for grocery, but also 20% in self-service dairy, according to the market research firm IRI. This especially reflects butter, cream, liquid milk, yogurts, ingredient cheeses (grated, sliced…) ; however traditional cheeses didn’t benefit.”
The confinement measures have translated into a reduction in staffing and logistical problems between warehouses and store shelves. Immediate reflex : only keep stocking the 20% of items that make up 80% of sales and leave behind all the rest.
Didier Lincet since noted a “loss of some 40% on cut to order products, while our self-serve sales only went down about 5% - 10%. We are thinking about switching more cheese to pre-cut for self-serve because customers don’t want to wait in line, they are going for the pre-packed cheese.” The large format cheeses, traditionally cut to order, have taken a nose-dive, along with all the ‘little’ local specialties.
We are thinking about switching more cheese to pre-cut for self-serve because customers don’t want to wait in line, they are going for the pre-packed cheese.
➜ Export markets
Confinement measures have also hit consumption and thus demand from traditional import countries. “40% of all French milk production is exported in the form of dairy products,” cites Mélanie Richard, measuring up the challenges associated with this market. “The markets haven’t closed, even though they are tending to be a bit less open. The real issue is logistics. So, China, which represents 12% to 13% of worldwide dairy purchases, has blocked imports ; the merchandise is sitting in the ports, with repercussions on international freight : there is a lack of available containers around the world. Italy stopped wholesale purchases in favor of national production. Then, administrative functions have also started to break down, it’s becoming hard to get export certificates.”
Producers focused on nearby markets such as Germany or England have managed to hold onto a margin of activity, 30% more than usual for Lincet for example.
➜ Wholesalers
Wholesalers, fulcrum for demand and accustomed to working on a ‘just-in-time’ inventory management system, immediately slowed their incoming shipments. Suddenly for those principally oriented towards the food-service and export markets, more gradually for those who work mainly with the traditional dairy retailers. Thus, SCAPA, a cooperative distributor in Saint-Genis Laval outside Lyon, that only serves cheese retailers, saw its numbers drop by 40% after the closure of the outdoor markets, which represent a third of its clients. Also serving the traditional dairy retail sector, Affinord announced “50% fewer orders during week 13. We are accustomed to working with short stocks, so we are still buying but in smaller quantities, we now have 5 tonnes of product in stock instead of our usual 7 tonnes,” observes Charles Beauquesne.
The wholesale market at Rungis has launched the site “Rungis delivered to you” for consumers, to launch in early April. “They will find fresh products mainly coming from the Ile-de-France, delivered by Chronopost,”explains its President Stéphane Layani.
Emergency solutions
Before resorting to radical solutions, producers facing a drop in demand have tried to put off the inevitable by using several strategies.
➜ Different value-add propositions
Cheesemakers already supplying liquid milk and ultra-fresh products have redirected some of their milk to this sector which has seen an increase in demand. Delin Fromagerie, for example, increased production of its product labeled “Our Milk from Bourgogne Franche-Comté”…before having to stop production for two weeks due to a lack of packaging.
Lacking this option, milk is being sold on the spot market, at a rate of 200 euros per 1,000 liters by the end of March – very far from its value as a raw ingredient for cheese. “We are selling milk at half its value,” confided Didier Lincet at the end of March. “We are accustomed to doing this at this time of year, but not to this extent : we are currently selling as liquid 40% of the milk we are bringing in.”
We are currently selling as liquid 40% of the milk we are bringing in, at half its value.
➜ Producing less milk
A number of cheesemakers have encouraged their milk producers to try to reduce lactation by using fewer concentrates and supplements, or even drying off part of their herds. These steps must be taken very carefully as it can disrupt the animals’ future lactation cycles. This is particularly important with goats. “If we feed them less,” explains Sophie Espinosa, “they will deplete their bodies’ reserves and weaken, it may be easier for cows to reestablish their lactation levels once this crisis has passed.”
“Our milk producers,” explains Didier Lancer, “are committed to producing 10% less milk in April and May compared to the same time last year, with a system of penalties for producing excess milk.”
In the Haute-Savoie, the affinage house Paccard underlines that “the farmers are with the program, they are feeding fewer supplements so that production will drop by 20%. But it’s important to be careful, as there is a risk of destabilizing the animals.” “We are encouraging our farmers to reduce their milk production, even while we are approaching lactation peaks, the goats having just given birth,” recounts Dominique Chambon, Vice-President of the governing organization for the Rocamadour AOP. “It’s a delicate thing, because underfeeding the goats or shifting them to a single milking each day risks throwing the lactation cycle off. We are mainly encouraging the farmers to reduce volumes, not necessarily overnight, but over the course of the season. It’s easier when the herds are on staggered cycles.”
Paul Georgelet stopped feeding concentrates and moved a part of his herd to drying off a month earlier. The daily milk collection was reduced from 1,150 liters a day to 900.
Orders awaiting delivery in Stéphane Mollians’ shop, whose online shop has been boosted by the crisis.
➜ Donate, don’t dump
Several producers have donated perishable product to food banks (providing the banks have sufficient personnel to receive and redistribute) or to healthcare facilities. Dongé cheesemakers delivered “several thousand Bries de Meaux to the food bank in Nancy, the Restaurants du Coeur in Bar-le-Duc and Paris, and to the staffs at Bar le Duc’s hospital and Clinique du Parc.” Philippe Delin has given product to the hospitals in Beaune and Dijon. In Rambouillet, MOF cheesemonger Ludovic Bisot has joined up with the the Chefs with Healers project. All of these initiatives, numerous and spontaneous, have not necessarily had much media coverage on social media or the local press.
➜ Delaying tactics
Freezing curd, already underway in certain sectors to better coordinate lactation peaks with sales rhythms, is coming back into style. Several AOP’s, which have until now forbidden the practice, have brought the idea for consideration to the INAO (the governing body for all AOP’s in France). Both Morbier and Reblochon have done so, as the idea was raised to their respective governing bodies by several member producers. Since 1999, the governing specifications stopped authorizing frozen curd, following quality issues. The technique requires a great deal of expertise, as well as specialized equipment and storage space to hold the curd for many months. The Savoyard governing body is considering reauthorization with a stricter set of rules to ensure product quality (technical assistance ? Approval by a tasting committee ?...) and a concerted guidance program for marketing the products to avoid disruption.
The Rocamadour governing body has organized the curd-freezing effort : “We make the cheese from pre-drained curd, that’s already in place,” explains Dominique Chambon. “We’ve put together a weekly collection of frozen curd, the cheesemakers are freezing the curd at the farm. We then manage the storage in a private refrigerated warehouse. It’s a backup, we won’t necessarily be making Rocamadour from the frozen curd.” More traditionally, it’s used to make pressed paste cheeses that can be aged for a long time. “We have started to make a lot more tommes,” recounts Paul Georgelet, “they are now making up two thirds of our production, whereas before it was only 10%. We have a very large drying room where we can hold them. When that’s full, we will freeze the pre-drained curd and vacuum-pack it. We are fortunate to have a refrigerated tunnel at Saint-Maixent, where we can hold the product.” “You need the space and the ability to invest !” reacts Sophie Espinosa. “We are asking the pubic authorities for spaces where we can store product. It could be sites of businesses that have had to cease operations, restaurants, or food-service businesses that are closed.”
We are making two-thirds of our milk into tommes ; before it was only 10%.
➜ Affinage : suspended animation
Another option : putting the cheese into a state of hibernation in affinage caves. “We have lowered the temperature in our caves to 2°C for soft paste and lactic cheeses,” confides Romain Olivier, “but we’re worried that they will dry out too much. There will certainly be losses.” In Nancy, the Marchand brothers have similarly reduced their entire stock to 3°C.
➜ More radical solutions
When the market dries up, or staffing is no longer available (for sick leave, exercising the right to not work, or lack of willing personnel) there is no other option but to stop production. The Delin Fromagerie closed the sites at Nuits-Saint-Georges and Fromagers de Chevillon, before the Laitière de Bourgogne can reopen. Patrick Mercier, of the Ferme Champsecret, stopped making cheese the week of March 23 because he already had too much stock, before restarting three days a week at 50% of his usual volume.
Distancing measures at the entrance to the indoor market in Vannes.
A future, mortgaged
Will the cheese industry hit bottom by the end of March ? Several members of the industry are daring to hope so. The food service industry can’t get worse, exports can hardly decrease further, supermarket chains are promoting fresh-precut until they can reopen their cut-to-order counters, specialty cheese shops are in slow motion and are hoping to turn things around by offering home-delivery….there is also some hope of more open markets reopening which would give some scope for farmstead producers and mobile retailers.
More fundamentally, the industry is hoping for a return to more normal purchasing habits as the weeks of confinement continue, and that customers will begin to emerge from a sense of war-time austerity and decide to buy for pleasure as they work through their stockpiles, the fear of empty shelves having disappeared. “Instead of going to the supermarket, customers will gradually come back to us,” hopes Alain Michel.
The long-term repercussions are hard to predict. Will every business reopen ? “The small-to-mid-size businesses are in the greatest danger,” believes Gérard Calbrix. “Everything will depend on how long this crisis lasts.” For some, the government’s measures of pushing back deadlines for paying social and fiscal charges, or the willingness of bankers to be flexible with loan repayments may not be enough to offset the loss of business, for which the government has made no offer of compensation. The current crisis risks reinforcing the trend towards consolidation.
At the farm, already on the brink, this hemorrhage may be significant and cause more farms to shut down. “Nonfat dry milk powder prices are collapsing,” notes Gérard Calbrix, “this will inevitably impact the price of milk, and much longer than the actual crisis : the time it takes to run through all the inventory, undoubtedly several months.”
All the businesses that have been hard hit are going to have to analyze their vulnerabilities and review their strategies to withstand any future catastrophy : develop their e-commerce, diversify their clientele, develop holding capacity….and in addition, after digging deep into their own pockets, find ways to reinvest… ◼
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