The Fondue Conspiracy : Planet Money Today on the show: How a cheese cartel abandoned the rules of economics and convinced the world to eat fondue.

The Fondue Conspiracy

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Last week, I was in Switzerland - Geneva, specifically - and, of course, while I was there, I do what you are expected to do when you go to Switzerland. I ordered fondue.

Just the plain fondue. Perfect. Thank you.

It is a weird meal when you think about it, especially as a main dish. It is just melted cheese and stale bread. Like, that is it. It's like something a divorced dad thought up to feed his 8-year-old. In fact, my waiter even came over with a spoon so I could scrape out the bottom of the pot.

UNIDENTIFIED PERSON #1: The end of the fondue is the best part of the fondue.

SMITH: Just to scrape off the cheese on the bottom?

UNIDENTIFIED PERSON #1: Yes, because so famous in Switzerland.

SMITH: Since I was, sadly, eating alone, I sat there goofing around on my phone trying to answer this question. I was googling history of fondue, and that's when I learned that this whole fondue thing is not what it seems. The reason I was eating fondue, the reason that I even know about fondue, the reason I actually own an unused fondue pot that I got as a wedding gift, all of this goes back to a shadowy association of Swiss cheese dealers, a cheese cartel that basically ruled the Swiss economy for 80 years until fairly recently - the Schweizer Kaseunion, which sounds scary until you hear the English translation, the Swiss Cheese Union. The Swiss Cheese Union is at the root of a fondue conspiracy.


SMITH: Hello, and welcome to PLANET MONEY. I'm Robert Smith. Today on the show, Swiss cheese. A story about what happens when sweet, well-meaning folks decide that the rules of economics do not apply to them, who screw up so badly that they have to force the world to eat gobs of melted fat. By the way, this episode was originally reported in 2014.

As I said at that fondue restaurant, I discovered that there is not much on the internet about the Swiss Cheese Union - four lines on Wikipedia. It was a group of all-powerful cheesemakers. It controlled prices and supply. I actually went into the kitchen of the restaurant I was at, a place that looks like it buys cheese by the ton, and I asked to speak to one of the managers.

Have you ever heard of the Swiss Cheese Union?


SMITH: No one talks about the Swiss Cheese Union?


SMITH: I almost thought the whole thing was a hoax until I started to call various cheese groups in Switzerland, and the response was sort of like when you're in Italy and you ask people about the mafia. They said, oh, we have nothing to do with the Swiss Cheese Union. That organization is defunct. The guys who ran it, they're probably really, really old. We can't help you. I finally reached a guy, a food historian named Dominik Flammer, in Zurich and he said, no, no, I wasn't imagining it.

DOMINIK FLAMMER: No, they don't want to talk to you because they are the survivors of the Swiss Cheese Union, more or less.

SMITH: And they know it has a bad reputation when I say - when I say I want to talk to you about Swiss Cheese Union.

FLAMMER: Yeah, yeah, they don't want to talk about that.

SMITH: Dominik wrote this giant book on the history of Swiss cheese, and even just a small chapter on the Swiss Cheese Union got people upset.

FLAMMER: And was attacked by old members of the Swiss Cheese Union because I criticized them. But, you know, this is...

SMITH: Wait, what did they say to you?

FLAMMER: They said I'm not patriotic enough to write about Swiss cheese and that I would not be allowed to tell this story because I would not help the Swiss cheese makers. But in the end, it's accepted today that I wrote the truth and nothing but the truth.

SMITH: Here is the truth according to Dominik. Like everything in Europe, the story begins with World War I - destruction, death, crippled economies. But the Swiss had a very different problem than the rest of the continent. They were neutral on the war. They survived World War I just fine. They had this awesome cheese industry still intact, but their customers were gone. The customers had been devastated.

FLAMMER: Switzerland exported a lot of cheese before. But in the end of the First World War, there was - wasn't any exportation anymore. And this lasted nearly till the end of the Second World War, too.

SMITH: Yeah, the time between the wars was tough. Countries all over Europe were starting to put up trade barriers, the global economy collapsed, the flow of cheese stopped, and Switzerland had to suddenly get by on just selling cheese to themselves - to Swiss customers. Now, usually this would mean that a lot of Swiss dairy farmers and cheesemakers would probably go bankrupt. But Switzerland came up with a way that everyone could stay in business, a way to protect themselves.

That was the Swiss Cheese Union. It's what's known as a cartel, an agreement among competitors to stop competing. You've heard of OPEC. It was like that for cheese. Now the key to operating a cartel is to get everyone onboard. You have to make sure everyone - every cheesemaker - follows the rules. So the Swiss Cheese Union took charge. The union set the price for milk. It told dairymen how much milk to produce and who they could sell it to. They told the cheesemakers how much cheese to make and then set the prices for the cheese.

SMITH: And it was all so complicated, this cheese business, that they actually narrowed down the number of cheeses that people could produce. Switzerland used to make over a thousand different kinds of cheeses. The Cheese Union supported seven - seven kinds of cheese. The big two?

FLAMMER: One is the Emmental. It's the biggest one with the holes. The other - the second one, the biggest one and the oldest one is the Gruyere.

SMITH: And all this was done, by the way, with the approval of the Swiss government. They even kicked in taxpayer dollars. They subsidized the cheese. The Swiss Cheese Union basically ran every little part of the industry. And no one could afford to cross them, but people did. Dominik showed me the picture of a guy named Sepp Barmettler. He - he was the cheese rebel. And Dominik says, you know, he only lives an hour away. You should go visit him.


SMITH: OK, I'm going to be completely honest with you, this surprised me about Switzerland. I knew that cowbells existed, but I didn't think they were actually attached to the cows, like, not these days, in the days of GPS. But it is true. They do wear the bells, and Switzerland really does look like it does on the chocolate wrapper. You know, the rolling green hills, the chalets, brown and white spotted cows. It is insanely beautiful. Cows that, at this moment, seem very much in love with the cheese rebel.

SEPP BARMETTLER: These are my girls.

SMITH: Your girls (laughter).

The cheese rebel brought along his son, Lucas, to help translate. I told him I was still stunned by how beautiful this area was.

This is exactly how people picture Switzerland, you know, right?

LUCAS BARMETTLER: Yeah, yeah, I guess. That's touristic marketing thing.

SMITH: Lucas's father, Sepp, had his run-in with the Swiss Cheese Union decades ago, but he still likes to tell the story. This area of Switzerland was always known for its particular cheeses. There's a special frying cheese that I can't really pronounce, also Sbrinz, which Lucas describes as a little like Parmesan from Italy. The cheese rebel says no, no, it is better than Parmesan. They take me down into their cheese house, down a spiral staircase and into the cellar, and there are the cheeses. However you picture Swiss cheese - and I know how you picture Swiss cheese, it's the hard stuff with the holes - this is different. They're tiny wheels of soft cheese - looks like something out of France. And then there are these deep, golden brown aged wheels. This - this right here, this was the problem. Sepp wasn't into making the really big popular cheeses. At the time, he wanted to make Sbrinz.

S. BARMETTLER: (Foreign language spoken).

L. BARMETTLER: Yeah, it was his favorite to produce it.

S. BARMETTLER: I like Sbrinz forever (laughter).

SMITH: This was not for the cheese rebel to decide. Only the Swiss Cheese Union was allowed to make the decision about who made what in Switzerland. A large part of the country was now producing just those two classic cheeses - Emmental and Gruyere. Sbrinz was allowed, but Sepp had to apply to the Swiss Cheese Union in Bern for a license to make the cheese.

L. BARMETTLER: And it took about eight years until he received final information from them.

SMITH: Eight years?

L. BARMETTLER: Yes, eight years.

S. BARMETTLER: (Foreign language spoken)

L. BARMETTLER: A lot of applications, yeah.

S. BARMETTLER: Paper and return and return.

SMITH: Eight years of applications and appeals, and the answer from the Swiss Cheese Union was no, you cannot make Sbrinz. You can't sell it, you can't export it. Why exactly? It's hard to know. In the letter, they said only, quote, "you do not fit into the envisaged structures."

S. BARMETTLER: They say you are too little. I - I'm too small.

SMITH: It's worth noting here that Switzerland is, and was at the time, a modern liberal democracy. By this time, it had open competition in banking and high-tech industries. But if you wanted to make Sbrinz, then you had to apply for eight years and you had to accept no for an answer. That is the power of a cartel. As for the cheese rebel, at this point, he had nothing to lose. He started to experiment, to make these tiny, soft, traditional cheeses that no one had seen or tried for years in Switzerland. And since he couldn't sell to the big distributors or export it, he sold them one by one to hotels and small restaurants.

This cheese was called Stanser Flada, and it would later become famous after the cheese cartel was destroyed and Sepp could export again. But I'm getting ahead of the story because we haven't gotten to the fondue yet. We'll have that part of the story after the break.

By the 1950s, Switzerland started to export cheese again. And with all these subsidies and everyone making the same identical cheese, the Swiss Cheese Union needed to come up with something new. A cheese cartel does not prosper selling little slices for ham sandwiches or crackers. They needed to find a way to get people to eat cheese by the bucket. Dominik Flammer says they looked around, and there was this one dish that some small towns in the Alps used to eat.

FLAMMER: Well, you know, melted cheese always, though, was very popular in the Alps. It was when you were producing, on an Alpine slope, cheese. In the evening, you had to melt some cheese if you wanted to have something warm to eat. And in the '50s, they found out that if they want to sell the overproduction of Swiss cheese they started to search for recipes that could - it could help to sell more Swiss cheese.

SMITH: I'm sure you've already guessed, a big pot of Emmental, perhaps, and Gruyere, stale bread? Fondue was the answer.

FLAMMER: We could sell it with a traditional story behind it to show that cheese was a very healthy food from the Alps. They were using the images of Heidi - Heidiland, too, because this was a story everybody knew worldwide because this book was translated. And they took this image of Heidi. They used it also to make publicity for fondue. But I don't think that Heidi ever ate fondue if she ever existed.

SMITH: I checked. Heidi is not real, and neither is this over-the-top enthusiasm for fondue. Dominik told me that Swiss people maybe have fondue a few times a year, definitely in the winter or maybe at a party. But in the Swiss cheese ads, fondue is the life of every party. The Swiss were good looking, they were healthy, shoveling cheese into their mouths. Who didn't want to be Swiss? And I think we can agree that by the 1970s, we were in a period of peak fondue. If you grew up in the '70s, maybe you remember it. That little red fondue pot with the color-coded forks, the can of Sterno, whole contraption gathering dust up in the shelves.

This was the glory days for Swiss cheese. The cartel had won. I don't know, I picture them all having, like, a Swiss fondue party celebrating the victory of Swiss cheese around the world. And perhaps when they're having this party, they did not notice that Switzerland itself was changing. Switzerland was no longer just dairy farmers raising cows. They were scientists making cancer drugs. They were engineers making these cool tunneling machines. And the notion that the Swiss government was spending so much effort and money to help out the Cheese Union started to bug people.

FLAMMER: I guess in the '60s and '70s, the cheesemaking in Switzerland, milk producing in Switzerland, cost the Swiss state more than the whole cost for the army of Switzerland.

SMITH: They were spending more on cheese than on the army.

FLAMMER: Yeah, yeah, that's what they did.

SMITH: OK, the Swiss Army is not that big. But the point here is that agricultural subsidies were taking up a huge share of the budget.

FLAMMER: And then we had a kind of series of corruption problems within the Swiss Cheese Union. Big surprise, yeah - as always, you have in a monopoly now.

SMITH: So there were literally people who were caught stealing money?

FLAMMER: Yeah, there were some. There were some.

SMITH: People went to jail?

FLAMMER: Yeah, they went to jail.

SMITH: By the end of the 1990s, the Swiss Cheese Union was gone. It was disbanded. The Swiss government continued to subsidize dairies and farmers, but cheesemakers, all of a sudden, had to compete with each other. I wasn't able to get in touch with any former officials from the Swiss Cheese Union. I did find some cheesemakers who used to be inside the union. Areen (ph) and Peter Haslebacher (ph) made Emmental during the glory days. They still do make Emmental, but now they only make the cheese every other day. The price has plummeted. A lot of their neighbors used to run cheese operations known as cheese houses. Now...

AREEN HASLEBACHER: One-hundred-and-fifty house who makes Emmental cheese.

SMITH: Used to be much more.

A. HASLEBACHER: (Foreign language spoken).

PETER HASLEBACHER: (Foreign language spoken).

A. HASLEBACHER: Four - 500 house, yeah.

SMITH: Out of business?

A. HASLEBACHER: Yes, out of business.

SMITH: Needless to say, they do miss the subsidies. They miss the steady price of the cartel. Now, she says almost with amazement, cheese distributors will only buy from her at very low prices. And if she doesn't sell to them, her neighbors will. That's competition. Meanwhile, the cheese rebel is now just another Swiss cheesemaker. When the cartel collapsed, Sepp was suddenly allowed to sell the unique cheese he had been working on. He could export them anywhere he wanted to. I can buy them here in Manhattan. In fact, just yesterday, I stopped into Fairway - it's a local supermarket - and I talked to the cheese guy, James Coogan. It's amazing, he says. There has been an explosion of new cheeses from Switzerland.

JAMES COOGAN: We have now available to us some really cool stuff other than Gruyere and Emmental, you know, which are your everyday, absolutely important cheeses. But this stuff is beautiful, sexy, delicious, not something you're going to see everywhere.

SMITH: He told me he had vaguely heard of the Swiss cheese cartel, but it doesn't really come up much anymore.


SMITH: Before you write in to tell me how much you love fondue, I will say, for the record, I finished the entire pot of fondue. I'm not proud of it, but I finished it. It was actually pretty good. If you'd like to write in about anything on PLANET MONEY, you can email us - Thea Bennen produced today's show and Jess Jiang helped out with a lot of the information and finding Swiss cheesemakers. Now that you're at the end the episode, NPR recommends that you check out Pop Culture Happy Hour to find out about new shows, new music. It's NPR's Pop Culture Happy Hour on iTunes under podcasts. I'm Robert Smith. Thanks for listening.


TOM PETTY AND THE HEARTBREAKERS: (Singing) I was born a rebel down in Dixie on a Sunday morning. Yeah, with one foot in the grave and one foot on the pedal, I was born a rebel. I was born a rebel.

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