SWISS BANKERS SHOULD LOOK TO CHEESE EXPORTS FOR ANSWER TO MODEL / BLOOMBERG ( RECOMMENDED READING )

Swiss Bankers Should Look to Cheese Exports for Answer to Model

By Jennifer M. Freedman

April 23 (Bloomberg) -- Michael Spycher, wearing a white cotton cap with a rolled up bill, stirs bacteria and rennet into a copper vat filled with warm milk, starting the process that creates his award-winning Gruyère.

Judged the world’s best cheese maker in 2008, the 39-year- old is involved in every step of the production process at Kaeserei Fritzenhaus in Wasen, Switzerland, from testing the milk to baptizing each wheel in a saltwater bath.

That attention to detail helped Swiss cheese makers boost exports last year as shipments from Germany, the Netherlands and France declined. The 1.6 percent increase in Swiss cheese exports was a bright spot for the Alpine nation at a time when foreign sales of chocolate and watches fell and the country’s money managers searched for new business models after an international attack on banking secrecy.

“There’s a trend in foodstuffs toward having something more authentic and natural,” said Jon Cox, an analyst at Kepler Capital Markets in Zurich. “Instead of your Cheez Whiz, you’re going to be looking for something distinctly Swiss,” he added, referring to the processed cheese sauce sold by Northfield, Illinois-based Kraft Foods Inc.

Swiss cheese exporters had their best year in 2009, selling 62,146 tons of Gruyère, Emmental, Appenzell, Tete de Moine, Tilsit and Vacherin to buyers in 73 countries, according to Switzerland Cheese Marketing AG in Bern. Shipments were valued at 567 million francs ($526 million), making them the nation’s third-biggest food export behind coffee and chocolate.

Swiss Slump

Overall, Swiss exports slumped 14.7 percent in real terms last year -- the sharpest decline since 1944. Watch shipments plunged 22 percent to a three-year low of 13.2 billion francs as demand for luxury timepieces slid amid the worst recession since the 1930s, according to the Federal Customs Office in Bern. Chocolate exports fell 9.9 percent to 832 million francs, the Association of Swiss Chocolate Manufacturers said.

Financial-services companies, which account for almost 12 percent of the economy, were battered last year as the U.S., Germany and France sought to weaken Switzerland’s banking- secrecy laws. UBS AG, the country’s biggest lender, has seen clients pull 391 billion francs from the Zurich-based bank since the beginning of 2008.

“It’s business as usual for me despite the problems in the financial industry,” Spycher said. “People are willing to pay more for a premium product, so the economic crisis pretty much passed me by.”

Swiss exports have begun to turn around, rising 4.3 percent from a year earlier in the first quarter as the strengthening global economy increased orders, the Federal Customs Officer said yesterday. Watch shipments advanced 9.5 percent.

World’s Best

Spycher got a boost last year after his Gruyère was judged the world’s best cheese in the 2008 edition of a biannual contest organized by the Wisconsin Cheese Makers Association. Another Swiss, Gruyère maker Cedric Fragniere, won the prize this year in Madison, Wisconsin.

“Swiss cheese is just beautiful,” said Julien Ledogar, owner of L’Art Du Fromage in London, the first specialty cheese restaurant in Britain. “The taste and the way it’s produced traditionally make it special. For the mountain cheeses, it’s the best in the world.”

At Spycher’s Kaeserei Fritzenhaus, nestled in the Emme valley southeast of Bern, 2,840 liters (749 gallons) of raw milk are used to produce seven wheels of Gruyère, each weighing 37 kilograms (82 pounds).

Cannabis Cheese

In the underground aging chamber, wheels of Gruyère mature on spruce planks alongside 500-gram chunks of cheese speckled with cannabis seeds. Spycher also makes Emmental, the most famous of Swiss cheeses, with its characteristic holes, and the creamy raclette that’s vital for the eponymous dish of melted cheese, potatoes and gherkins or pickled onions.

With four workers, Spycher’s operation is about average in the Swiss cheese industry, dominated by small, family producers, said Manuela Sonderegger of Switzerland Cheese Marketing. Swiss cheese makers employ about 2,400 people, mostly in rural areas such as Wasen and turn out more than 450 varieties.

Spycher makes about 16 tons of cheese a year, with 25 percent shipped abroad. That’s less than Nordmilch AG, Germany’s biggest dairy, produces in a day.

Cheese shipments from Germany, the euro region’s biggest exporter, fell 14 percent to 2.6 billion euros ($3.5 billion) last year, according to European Union statistics. French exports slipped 4.6 percent to 2.5 billion euros and Dutch shipments dropped 26 percent to 1.9 billion euros.

‘Artisanal’ Cheese

Nordmilch, Alois Mueller GmbH and Humana Milchunion account for about 40 percent of the 2.2 million tons of cheese produced last year in Germany, said Eckhard Heuser, director of Milchindustrie-Verband e.V. in Berlin. The biggest Dutch producer is Royal Friesland Foods NV, which reported that cheese and butter sales fell 18 percent to 2.1 billion euros in 2009.

“Cheese consumption fell last year because of the economic slowdown,” said Michael Brandl, managing director of the German Dairy Association in Berlin. “It’s growing this year, slowly, but consumption is coming back and our exports are now rising.”

Emmi AG, the biggest dairy producer in Switzerland, said net income rose 28 percent last year to 75.3 million francs, with cheese accounting for 35 percent of sales.
Switzerland’s “long history of our artisanal way to make cheese in little villages” and natural ingredients give it an edge over rivals, said Matthias Kunz, the executive in charge of international business at Lucerne-based Emmi.

Spycher puts it more simply.

“My customers like my cheese and 2010 looks like a good year so far,” he said.

Last Updated: April 22, 2010 18:01 EDT