High Hopes

by Julie Cook Ramirez
Bolstered by the low-carb craze, cottage-cheese processors radiate optimism.
Ask any processor and they’ll tell you virtually the same thing: People love dairy products. From cheese cravers and milk lovers to yogurt enthusiasts and ice cream fanatics, consumers just can’t seem to get enough dairy — with one notable exception.
When it comes to cottage cheese, that’s where the insatiability stops.
Granted, there are certain segments of the population who consume more cottage cheese than the rest. It’s not unusual to find a small cup of the white stuff on a lunch tray at a nursing home, for example. Among the population at large, however, cottage cheese isn’t exactly top of mind. In fact, most consumers would readily admit they don’t even consider placing it on their shopping list when planning a trip to the supermarket.
In recent years, processors have struggled to figure out why cottage cheese has failed to achieve the same kind of following as its more popular cousins. As might be expected, the answer is multi-faceted, as the category has found itself plagued by numerous challenges. While there’s no silver-bullet solution to the problem, a quick look at the demographic make-up of the average cottage-cheese consumer provides a wealth of insight into the category and begins to address the question of why it’s likely faltering.
Jed Davis, director of marketing for Cabot, Vt.-based Cabot Creamery Cooperative, cites data showing the greatest percentage of cottage-cheese consumption takes place in two-person households and among people age 65 and up. Although life expectancy continues to rise, the fact that most cottage-cheese consumers are closer to the grave than the majority of the population does not bode well for the future of the category.
“If your current consumer is dying off, you have two choices: You can let the product die off with them or you can try to find some new customers,” says Bill Haines, vice president of product innovation, Dairy Management Inc. (DMI), Rosemont, Ill. “Unfortunately, in recent history, cottage cheese hasn’t been particularly exciting to young consumers.”
What’s more, says Dave Holdsworth, vice president of sales and marketing, Old Home Foods Inc., St. Paul, Minn., many of today’s children and young adults didn’t grow up with cottage cheese in the ‘fridge, as their parents and grandparents did. As a result, they are unfamiliar with the product. According to Holdsworth, this necessitates an all-out education effort on the part of processors, an endeavor few are eager to undertake — or finance.
“People want to educate the younger generation about cottage cheese, but when they look at their dollar allocation and where they want to invest their resources, they realize it’s a very difficult undertaking,” Holdsworth says. “That’s why they are going to be very slow to move down that path.”
Naturally, there’s an exception to every rule. In this case, it’s Phoenix-based Shamrock Farms, which seeks to make moms aware of the nutritional benefits of cottage cheese. In particular, says Sandy Kelly, director of marketing, Shamrock strives to communicate the fact that cottage cheese contains significantly less sugar than another dairy product with an enormous kid following — yogurt.
Just recently, in fact, Shamrock rolled out two no-sugar-added varieties of 5.5-ounce single-serve cottage cheese with fruit mix-ins. New Strawberry Banana and Apple Cinnamon both contain nearly 75 percent less sugar than traditional yogurt, along with 13 grams of protein and 10 net carbohydrates per serving.
Counting Carbs
Increasingly, the carbohydrate content of cottage cheese is becoming a key selling point, as consumers seek out foods that are considered an acceptable part of the popular “low-carb” diets. Fortunately, this is one area where cottage cheese has an inherent advantage over many foods, as it’s naturally low in carbohydrates. After years of struggling to find a competitive edge, processors are understandably excited about the potential for growth that the low-carb craze has brought to the cottage-cheese category.
As part of its alliance with Dr. Arthur Agatston, author of “The South Beach Diet,” Northfield, Ill.-based Kraft Foods recently began featuring a “South Beach Diet Recommended” button on a number of its products, including Light N’ Lively Cottage Cheese.
Old Home Foods, meanwhile, has taken to promoting its cottage cheese as “the original low-carb food” in FSIs and on billboards. The company also added flags to its cottage-cheese packaging, touting the low carbohydrate content.
“Some of our competitors have launched a low-carb cottage cheese, kind of a knock-off of their own product,” Holdsworth says. “We made a conscious decision not to do that, but to just market our cottage cheese and point out the fact that it’s a low-carb product.”
Holdsworth likely is alluding to the R&D efforts of companies like Wells’ Dairy Inc., Le Mars, Iowa, which recently rolled out Blue Bunny Carb Freedom cottage cheese, containing 3 grams of net carbs, 25 percent fewer than its traditional cottage cheese, at 4 grams.
Even though cottage cheese is already considered a low-carb food, Troy Davis, Wells’ marketing manager for retail dairy, says a further reduced-carb product was called for because “low-carb dieters count every gram of carbohydrates.”
Apparently, the low-carb appeal of cottage cheese is drawing consumers to the category. A number of processors report significant sales increases that cannot be attributed to any other factors but the low-carb nature of the product.
According to Ron Schroder, director of marketing for Davenport, Iowa-based Swiss Valley Farms, his company has experienced double-digit growth in cottage-cheese sales during the past year, despite a lack of new products or promotional activity. A similar phenomenon has been reported by Betsy Watson, marketing director for Anderson Erickson Dairy Co., Des Moines, Iowa, as well as Cabot’s Davis and Old Home’s Holdsworth.
“With the low-carb phenomenon, a lot of people have been coming into the cottage-cheese category,” Holdsworth says. “Either they were lapsed users or they are trying it for the first time and. hopefully, they will see it’s a good tasting product, it’s good for them and it provides a lot of nutrients.”
While individual processors may be reaping the rewards of the low-carb craze, the cottage-cheese category as a whole remains relatively flat. According to Chicago-based Information Resources Inc. (IRI), dollar sales of cottage cheese rose a meager 1.2 percent, while unit sales inched up just 0.3 percent in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, during the 52-week period ending September 5, 2004.
While such lackluster performance would be frowned upon in many categories, it’s actually a “minor victory” that cottage-cheese sales are flat, rather than down, according to Marc Silverstein, marketing manager, Friendship Dairies Inc., Jericho, N.Y.
“When I first started at Friendship in 1997, the category was coming off 20-plus years of negative movement,” he says. “The fact that it has leveled off is actually positive news.”
Top 10 Cottage Cheese Brands*
 
  $ Sales % Change Dollar Unit Sales % Change
  (In Millions) vs. Year Ago Share (In Millions) vs. Year Ago
Total Category $864.5 1.2 100.0 414.5 0.3
Private Label 309.5 -1.0 35.8 158.8 -1.0
Breakstone 82.5 9.9 9.5 32.0 9.4
Knudsen 75.9 -0.4 8.8 28.7 -3.4
Friendship 26.8 0.9 3.1 13.0 0.2
Breakstone Cottage Dbls 26.5 3.6 3.1 23.8 5.6
Dean’s 26.1 -1.8 3.0 12.2 -3.4
Hood 22.7 53.6 2.6 10.7 44.9
Light ‘n Lively 18.9 -2.7 2.2 7.3 -3.5
Prairie Farms 18.3 9.5 2.1 9.0 12.2
Hiland 15.7 -14.4 1.8 7.9 -15.6
 
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending September 5, 2004.
SOURCE: Information Resources Inc.
Looking to the Future
Even as analysis have begun to predict the demise of Atkins, South Beach and other similar diets, dairy processors believe that the low-carb craze may actually have a long-term positive effect on the cottage-cheese category. That’s because it has provided a very badly needed impetus for investing in product development and marketing.
“It’s drawn people back to that part of the dairy case, and they’ve suddenly discovered, ‘Here’s something we haven’t had in a long time, and guess what? We like it,’” Haines says. “In order for that to have a lasting effect, the industry can’t just let that lie. They’ve got to use that as a platform, get behind it and push it.”
Indeed, a number of processors have rolled out new cottage-cheese products in recent months. Anderson Erickson introduced Mr. E’s Garden Vegetable Cottage Cheese, Old Home unveiled peach-flavored cottage cheese and Swiss Valley came out with a single-serve lowfat cottage cheese. In addition, a number of dairies have given their cottage-cheese packaging a long overdue facelift in an effort to capture consumers’ attention as they peruse the dairy case.
For its part, DMI sponsored a research project that sought to develop a method for manufacturing cottage cheese in an enclosed horizontal cheese vat. According to Lloyd Metzger, director of the Minnesota/South Dakota Dairy Foods Research Center and assistant professor in the Department of Food Science and Nutrition at the University of Minnesota at St. Paul, the idea behind the project was to automate the manufacture of cottage cheese, thus resulting in a more consistent product.
“Even within the same brand, you can get small curds one day and large curds the next,” Metzger says. “Hopefully, with this process, we’re producing a consistent, quality product that will give consumers what they expect every time.”
Cabot Creamery hosted a successful trial run in early 2004, which ultimately led the company to purchase two enclosed vats for cottage-cheese production. Metzger is currently in the process of negotiating with other processors. While he believes what he and his colleagues have been able to accomplish is an important first step, he feels strongly that further innovation will be necessary if cottage cheese is ever going to live up to its potential.
“In order for the category to really grow, there really needs to be a big manufacturer, whether it’s a General Mills or Kraft, that takes it to the next level with flavors and changing the sweetness profile like they did with yogurt,” Metzger says. “Thirty years ago, nobody liked plain yogurt, but go to a grocery store now and you’ve got 60 or 70 different flavors of yogurt. I would hope that the same thing could happen with cottage cheese and we could really see the category take off.”  df
Julie Cook Ramirez is a freelance journalist based in the Chicago area.