Changing tastes led changing fortunes in Georgia’s food industries

Americans may be eating more cheese than ever before, but their collective appetite wasn’t big enough to keep a cheese factory here from laying off 115 people last week with the plant’s shutdown scheduled for early next year.

The cheesy paradox isn’t so surprising, though. Schreiber Foods makes processed cheese for Walmart, Sav-A-Lot and other purveyors of good, old American cheese. Consumers increasingly want Swiss, Pepper Jack, Mozzarella or perhaps an artisanal chèvre with shallots produced on a small Georgia farm.

Ever-changing palates hurt, and help, Georgia’s dynamic $9 billion food processing industry. Food is really no different than Georgia’s textile or automotive industries, which have seen their fortunes rise, fall and rise again as consumers worldwide demand new, improved and more appealing products.

A growing, diverse population in the Southeast, combined with a craving for healthier and more epicurean foods, should translate into more jobs and revenues. In the past few years a slew of companies — making Greek yogurt in Norcross, free-range pork in Dixie and non-homogenized milk in Cleveland — have sprouted across Georgia.

A half dozen tortilla makers, employing 800 peopole, now operate in the Atlanta area alone. Talenti Gelato, which makes premium ice creams in a Marietta factory, has seen sales soar from $1 million to $100 million in the last five years.

Poultry producers in Gainesville, aka the Poultry Capital of the World, can teach Schreiber a thing or two about satisfying fickle American tastes. A half-century ago, 80 percent of Americans bought a whole bird at the grocery store and cooked it at home. Today, only 10 percent of chickens are sold whole, mostly rotisserie birds sold in places like Publix or Kroger.

“To make money these days you’ve got to create something distinctive to appeal to consumers constantly changing tastes and preferences,” said Jeff Humphreys, a University of Georgia economist who studies the state’s food industry. “It’s always, ‘My food is better than your food.’ You’ve got to create a competitive advantage in, basically, a commodity market.”

Eighteen-wheelers roll into Schreiber’s plant in north Gainesville loaded with desk-sized blocks of American cheese to be sliced and diced into eight-ounce cubes, individually wrapped singles and bags of shredded cheese. Schreiber, the world’s largest employee-owned dairy company headquartered in Green Bay, Wisconsin, services restaurants, schools, hospitals and groceries.

It is the largest supplier of private label cheese for grocery stores and cheeseburger slices for fast food restaurants. Seven thousand employees work in 30 factories and distribution centers in the U.S., China, Mexico, Uruguay and Germany. Cream cheese, yogurt and string cheese helped revenues reach $4.5 billion last year, the company reported.

“Unfortunately,” said Schreiber spokesman Andrew Tobisch, “the products produced in our Gainesville plant are not expanding in the marketplace.”

Ultimately, 250 people will lose jobs by April 2014. Workers will receive severance packages and the opportunity to apply for jobs at other Schreiber plants. The closest one, though, is in Missouri.

The June unemployment rate in and around Gainesville was 7.6 percent, nearly two percentage points better than the Georgia average.

“We’re concerned with any business closing, small or large, but it’s not like Hall County doesn’t have 300 other manufacturers or distribution plants that can absorb workers,” said Kit Dunlap, president of the Greater Hall Chamber of Commerce.

Laid-off workers might apply at the nearby Wrigley chewing gum factory – the candy maker’s largest U.S. plant – or the Anheuser-Busch brewery in Cartersville. Many could end up at a Pilgrim’s, Tyson, Koch or Fieldale Farms chicken plant.

The chicken guys have turned Georgia into the nation’s top chicken producing state by giving meat-eating consumers what they want.

In 1960, Americans ate 28 pounds of chicken per person per year. Today, they devour 81 pounds, according to USDA. Beef consumption, by comparison, dropped from 95 pounds to 58 pounds.

“Almost half of chicken now is processed to make it more convenient for consumers,” said Mike Giles, president of the Gainesville-based Georgia Poultry Federation. “Breaded fast-food sandwiches. Chicken nuggets. Marinated chickens. Chicken wings. People are busier than ever and eating out more often or they don’t have as much time to cook at home. So they’re looking for taste and convenience.”

And they’re willing to pay for it too. Talenti Gelato sells Tahitian Vanilla Bean, Sea Salt Caramel, Southern Butter Pecan and more than a dozen other unique flavors for about $4.60 per pint.

Josh Hochschuler, working as bank analyst in Argentina in the late 1990s, fell in love with Italian gelatos. He opened a gelateria in Dallas in 2003 and began perfecting his mix of natural ingredients, granulated sugar and solid chocolate instead of syrup.

Talenti moved all production from Texas into an old Kroger ice cream plant in Marietta last year. Employment has since zoomed from 100 to 225. Talenti has cornered three-fourths of the U.S. gelato market and trails only Ben & Jerry’s and Haagen Dazs in the premium ice cream category.

“We do well in the grocery market channel, like Kroger and Publix, but we do exceptionally well in natural food stores like Whole Foods,” said CEO Steven Gill.

Gelato and specialty cheeses, though, are peanuts in a Georgia food processing industry that employs 63,000, according to the state’s labor department. Moody’s expects an additional 5,000 food-processing workers in Georgia by 2020.

Dairy products, including cheese, tallied only $333 million out of the $9 billion in food processing sales in Georgia last year.

Americans ate 33.5 pounds of cheese in 2011, according to USDA, up one third of a pound from the previous year. They’re eating more mozzarella — a record 11.43 pounds per person — and less processed American cheese, a trend that began in 1996.

“The No. 1 use of cheese in this country, and the No. 1 food we eat in this country, is a sandwich,” said Harry Balzer, chief industry analyst for the NPD Group, a food marketing research firm. “And the big change in sandwiches has been for more authentic or fresh products whether it’s fruit, vegetables, bread or different types of cheese you put on a sandwich these days.”

Added Humphreys, the UGA economist: “It’s hard to make money these days making white bread. You have to do artisan breads, cheese breads, specialty breads to make money. That’s a perfect example of turning a commodity into a market characterized by niche products.”

Something, ironically, Georgia’s small-batch cheese producers are doing. A cheese-making Leviathan like Schreiber may tumble, but up pop newcomers like Sweet Grass Dairy in Thomasville (with its buttery Tomme) or Many Fold Farm in Chattahoochee Hills (with its sheep’s milk Brebis).

“We are uniquely positioned in Georgia with good land, water, farmers, universities, population and transportation to build our local economies,” said Gary Black, the state’s agriculture commissioner. “We’re seeing lots of different types of culinary practices – some might be organic or pasture-raised – and these small companies will flourish.”