Cream cheese supply chain spread thin

by Troy Bishopp

The news story came over the barn radio: “Cream cheese is in short supply.” For purveyors of cheesecakes and schmeared bagels, this is an unfolding tragedy that cuts into the enjoyment of a favorite dairy product. What gives? Isn’t there plenty of milk to make the luscious spread? Turns out, there’s more to the story.

News outlets are apparently blaming the shortage on an October cyberattack against the biggest U.S. cheese manufacturer, Schreiber Foods in Wisconsin. According to Bloomberg News, “The company was closed for days after hackers compromised its plants and distribution centers. The lost production shook U.S. markets. Making the situation worse, the shutdown occurred at the height of cream cheese demand from Americans doing more holiday baking and still working and eating breakfast at home.”

Cream cheese supply chain spread thin

The schmear is unclear. Photo by Troy Bishopp

“Add to that all the labor constraints and logistics headaches caused by the pandemic, and the fact that cream cheese is fresh, so there aren’t huge reserves. There just hasn’t been enough schmear to go around … All this together has aggravated the cream cheese situation in the country,” said Emma Aer, CEO of competing cream cheese producer Franklin Foods. “We just can’t keep up with the demand.”

“Cream cheese happens to be particularly vulnerable to the supply chain issues. Some manufacturers have had problems getting starch, a thickening agent used in cream cheese, as well as packaging like plastic film and cardboard boxes,” according to Andrew Novakovic, Cornell University’s ag economist. Cream cheese is a fresh product, meaning that keeping a large inventory on hand isn’t plausible. On top of widespread labor shortages across industries, the lack of truck drivers is hitting the dairy industry particularly hard because of the extra license needed to pick up milk from farm, Novakovic said.

Cream cheese production in October also fell 6.9% from a year ago, according to government data.

The saga continued as New York City bagel shops started experiencing shortages of their favorite Philadelphia Cream Cheese brand made by Lowville’s Kraft Heinz plant. With millions of cream cheese connoisseurs not happy, headlines started to circulate around the country that led to arduous panic buying habits.

According to the North Country’s WWNYTV Channel 7 News, “As for what’s happening at the plant in Lowville, company officials have been quoted as saying demand is so high that it’s shipping 35% more product than it was last year. In the north country, that has a ripple effect.”

“As you know, Kraft supports our local co-ops and farms in Jefferson and Lewis County, which in turn supports all of these supporting industries and small businesses. So, this increase in sales will definitely have a positive ripple effect locally,” said Brittany Davis, Lewis County Economic Development executive director.

“At-home cream cheese consumption is up 18% compared to 2019, and foodservice demand in November was up 75% compared to last year,” said Kathy Krenger, spokesperson for Kraft Heinz. “We are maximizing our production to meet the unprecedented demand.”

Philadelphia Marketing Director Basak Oguz said their product has become an American favorite for the past 150 years. He said, “As we continue to see elevated and sustained demand, we want to ensure that there’s enough cream cheese for bagels, cheesecakes and everything in between. We’re excited to share that we’re investing millions of dollars so Philadelphia Cream Cheese will be available to anyone that wants it, wherever they like to shop, for the next 150 years and beyond.”

However, no shortage went unnoticed by the marketing arm of Kraft Heinz. As of this writing, there’s a novel approach to assure there’s enough cream cheese to go around for those who need it. The campaign essentially “pays people to not make cheesecake.”

In a 45-second YouTube video (spreadthefeeling.com), Kraft’s marketing team asked, “If you can’t spread Philly, spread the feeling” toward reserving a $20 dessert substitute. The Kraft Heinz brand announced during the past holiday season it reimbursed over 18,000 consumers for a holiday dessert through its Philadelphia “Spread the Feeling” offer.

It wanted customers to buy “cream cheese substitutes and dairy-free desserts” from its company’s other dessert offerings. This move contradicts support for local dairy farmers.

Another inconsistency comes from the Milkweed’s editor, Pete Hardin, who reported in the December 2021 issue “that Kraft Heinz will be terminating Agri-Mark, the Preble Milk Co-op and the Cayuga Milk Co-op as milk suppliers at the Lowville, NY, cheese plant effective Jan. 1, 2022.” It leads one to question what the real truth is about the cream cheese shortage.

A Dunkin Donuts franchise manager was asked about the supply strain and responded, “What shortage? We haven’t heard anything about it.”

Oddly, as of Jan. 10, 2022, there was no mention of any cream cheese supply chain shortages on the Kraft Heinz website. It appears the schmear shortage is becoming less clear.

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