The cream cheese shortage wreaking havoc on bagel shops and bakeries is, in part, due to a cyberattack on the biggest U.S. cheese manufacturer.
Schreiber Foods in Wisconsin, which makes cheese slices for most of the top burger chains in America and has a cream cheese business rivaling Kraft’s, closed for days in October after hackers compromised its plants and distribution centers. While that may not sound like a long time, the company is big enough that the lost production shook U.S. markets.
Making the situation worse, the shutdown occurred at the height of cream cheese demand. Americans are doing more holiday baking and buying more cakes, and cream cheese is a common dessert ingredient. People are still working and eating breakfast at home, so they’re buying more cream cheese from grocery stores for their morning bagels. 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, chief executive officer of competing cream cheese producer Franklin Foods. “We just can’t keep up with the demand,” she said of the industry.
Cyberattacks have added to the chaos afflicting global food supply chains in the Covid-19 era, with inflation driving prices to around decade highs. Hackers also targeted meat giant JBS SA and an Iowa grain cooperative this year.
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, an agricultural economist at Cornell University. Cream cheese is a fresh product, meaning that keeping a large inventory on hand isn’t plausible. On top of the widespread labor shortage across industries, finding truck drivers is hitting the dairy industry particularly hard because of the extra license needed to pick up milk from farms, Novakovic said.
Meanwhile, demand keeps soaring. Schreiber Foods was running at full capacity at the time of the cyberattack. Though the company was able to get its plants back up and running within days, the event did impact production, and high demand for cream cheese hasn’t changed, a spokesperson for Schreiber said in an email. Cream cheese production in October fell 6.9% from a year ago, according to government data.
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,” she said in an email.
For the first time in 71 years of business, Junior’s Cheesecake in New York City ran out of cream cheese. The business closed down its baking for a day and a half to drive from the New York area to Philadelphia to pick up cream cheese, rather than wait for delivery.
“Without it we can’t make a cheesecake,” owner Alan Rosen said in a phone interview. “There’s no substitute.”
Rosen said demand is increasing even more than usual in the company’s busiest season as people look for comfort food in the pandemic. The company, which bakes about 5 million cakes a year using 4 million pounds of cream cheese, is seeing its grocery business increase across the board and is up 43% year to date in wholesale.
“Bagels on a Sunday with a schmear is one thing, but Christmas without cheesecake is another,” Rosen said.
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