Blame cream cheese shortage on cyberattack – Press Telegram

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By Elizabeth Elkin and Deena Shanker | Bloomberg

The cream cheese shortage that is wreaking havoc in bagel stores and bakeries is, in part, due to a cyberattack on America’s largest cheese maker.

Schreiber Foods in Wisconsin, which makes cheese slices for most of America’s best burger chains and has a cream cheese business rivaling that of Kraft, shut down for days in October after pirates compromised its factories and distribution centers. While it might not seem like a long time, the company is big enough that the loss of production rocked the US markets.

To make matters worse, the shutdown came at the height of demand for cream cheese.

Americans are baking more for the holidays and buying more cakes, and cream cheese is a common ingredient in desserts. People are still working and having breakfast at home, so they buy more cream cheese in grocery stores for their morning bagels. Add to that all the labor constraints and logistical headaches caused by the pandemic, and the fact that the cream cheese is fresh, so there aren’t huge reserves. There just wasn’t enough schmear to go around.

“All of this has made the cream cheese situation in the country worse,” said Emma Aer, CEO of competing cream cheese producer Franklin Foods. “We just can’t keep up with the demand,” she said of the industry.

Cyber ​​attacks have compounded the chaos plaguing global food supply chains in the age of Covid-19, with inflation pushing prices to roughly ten-year highs. Hackers also targeted meat giant JBS SA and an Iowa grain cooperative this year.

Cream cheese is particularly vulnerable to supply chain problems. Some manufacturers have had problems obtaining starch, a thickening agent used in cream cheese, as well as packaging like plastic films and cardboard boxes, according to Andrew Novakovic, an agricultural economist at Cornell University.

Cream cheese is a fresh product, which means that it is not plausible to keep a large inventory on hand. In addition to the widespread labor shortage across all industries, finding truck drivers is hitting the dairy industry particularly hard due to the additional license needed to collect milk from farms, Novakovic said.

Boxes of cream cheese are delivered to a Manhattan store on December 6, 2021 in New York City. (Photo by Spencer Platt / Getty Images)

Meanwhile, demand continues to soar. Schreiber Foods was operating at full capacity at the time of the cyberattack. Although the company was able to get its factories back up and running in a matter of days, the event had an impact on production and the high demand for cream cheese has not changed, a spokesperson for Schreiber said in an email. Production of cream cheese in October fell 6.9% from a year ago, according to government data.

Home cream cheese consumption is up 18% from 2019 and foodservice demand in November is up 75% from 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 in business, Junior’s Cheesecake in New York City ran out of cream cheese. The business closed its bakery for a day and a half to travel from the New York City area to Philadelphia to pick up cream cheese, rather than wait for delivery.

“Without it, we can’t make cheesecake,” owner Alan Rosen said in a telephone interview. “There is no substitute.”

Rosen said demand is growing even more than usual during the company’s busiest season as people seek comfort food during the pandemic. The company, which bakes around 5 million cakes a year using 4 million pounds of cream cheese, sees its grocery business grow 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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