Coming of Age
by Lynn Petrak
Converging market forces and trends lead to greater diversification in the category.
Like wine, cheese has always had a sentimental, romantic appeal, made with a centuries-old technique and reflecting a dedication to heritage and craftsmanship.
What was once a relatively basic foodstuff, however, now includes an ever-broadening spectrum of products designed to appeal to discriminating palates of all demographics. This is a category, in sum, that continues to expand in all directions, fueled by culinary trends, convenience demands, health and nutrition issues and plain old-fashioned taste.
How much do Americans love cheese? Literally, tons. In 2003, Americans consumed 8.8 billion pounds of natural cheese alone, according to research published by the Economic Research Service (ERS) arm of the United States Department of Agriculture (USDA). Average cheese consumption in this country nearly tripled between 1970 and 2003, to a current total of 30.6 pounds.
Cheesemakers can be encouraged by the fact that, although perennial favorites remain strong, non-traditional varieties are surging. “People are purchasing more and more specialty cheese, like aged cheeses, Blues, flavor-enhanced, Hispanic varieties and artisan styles, and yet cheddar and mozzarella dominate retail sales and the number of units sold,” says Mary Kay O’Connor, director of education for the International Dairy, Deli and Bakery Association (IDDBA), Madison, Wis.
According to O’Connor, from April 2003 through April 2004, retail sales of cheddar topped $1.1 billion and mozzarella reached $641 million. The specialty-cheese side, meanwhile, has grown to $572 million, compared to $306 million just five years ago. “Specialty-cheese growth has been in a double-digit stage for much of the past five years,” she says. “Last year, there was a 17 percent growth in sales and 15 percent growth in units.”
In other heartening news, Americans are becoming more loyal to cheeses made in this country. According to the California Milk Advisory Board (CMAB), Modesto, Calif., imported cheese has remained steady at about 5 percent of total U.S. consumption, as domestic intake continues to post strong gains. Of the nearly 2 billion additional pounds of cheese that consumers ate in 2003 versus 1994, 92 percent of that growth can be linked to American-based cheesemakers.
The Culinary Effect
As recent market research indicates, one of the most prominent category trends is the continued growth of specialty cheeses, which include ethnic cheeses, flavored cheeses and artisanal and farmstead cheeses produced in small batches. From washed-rind cheeses to cheeses infused with ingredients like lemon or chipotle peppers, today’s offerings are more diverse than ever.
In fact, a recent CMAB study showed that specialty-cheese consumption has grown five times as fast as regular cheese over the past several years. Meanwhile, according to IDDBA, the fastest-growing cheese varieties sold at the retail level last year included asiago, pepper jack, havarti, gorgonzola, gouda and Mexican.
TOP 10 natural cheese brands*
 $ Sales
(In Millions)
% Change
vs. Year Ago
$
share
Unit Sales
(In Millions)
% Change
vs. Year Ago
unit
share
Total Category$5,815.011.5%100.02,154.53.6100.0
Private Label2,097.67.136.1868.3-2.440.3
Kraft1,308.115.122.5511.010.423.7
Sargento390.613.06.7143.54.16.7
Tillamook194.912.13.443.85.52.0
Crystal Farms133.320.32.360.117.12.8
Sorrento105.218.51.832.614.71.5
Precious103.519.01.831.530.11.5
Frigo100.48.51.731.0-4.21.4
Polly-O92.714.51.626.49.41.2
Borden83.317.51.441.26.01.9
*Total sales of all forms of natural cheese in supermarkets, drug stores and mass merchandisers (excluding Wal-Mart) in the 52-week period ending December 26, 2004.
Source: Information Resources Inc.
TOP 10 natural shredded cheese brands*
 $ Sales
(In Millions)
% Change
vs. Year Ago
$
share
Unit Sales
(In Millions)
% Change
vs. Year Ago
unit
share
Total Category$1,973.79.4%100.0792.92.0%100.0
Private Label839.06.542.5349.7-2.044.1
Kraft553.018.028.0221.311.227.9
Sargento224.01.211.485.0-5.810.7
Crystal Farms78.918.64.030.514.53.9
Borden64.312.13.331.22.03.9
Kraft Classic Melts32.3-3.31.613.4-7.01.7
Kraft Free30.512.81.611.18.51.4
DiGiorno23.9-8.91.27.0-11.10.9
Sorrento15.0-11.40.86.3-5.00.8
Stella12.32.70.63.9-2.30.5
*Total sales of all forms of natural shredded cheese brands in supermarkets, drug stores and mass merchandisers (excluding Wal-Mart) in the 52-week period ending December 26, 2004.
Source: Information Resources Inc.
Industry experts offer various theories about the glow that’s been cast on specialty cheeses. “There are a lot of things driving that. The Hispanic population is growing fast and that accounts for growth in Hispanic cheese,” says Marilyn Wilkinson, director of national product communications for the Madison, Wis.-based Wisconsin Milk Marketing Board (WMMB). “There are other changes, too — people are getting older, so they have more discretionary income, and specialty cheeses are affordable for them.”
Nancy Fletcher, vice president of communications for CMAB, also underscores the impact of population changes. “People are starting with experiment with cheeses like Hispanic cheeses that they haven’t worked with before,” she says. “Now, you can find queso fresco in major mainstream supermarkets.”
As for the much-discussed perception of a more sophisticated consumer, Wilkinson says that it is a reality. “A lot of trends are led by foodservice. And people are very well traveled now, so their palates are getting adventuresome,” she says, adding that the popularity of television food shows, cookbooks and celebrity chefs also have had a significant effect.
O’Connor agrees there is a broader scope of sources these days when it comes to food and cooking. “The Food Network shows, the Internet dot-coms and consumer magazines educate thousands of people a minute and are popular influencers. Many of these vehicles tell consumers how to use the product, which is critical to purchasing decisions,” she says.
According to Fletcher, the trickle-down effect has been greater usage of specialty cheeses even in traditional dishes like grilled cheese sandwiches and macaroni and cheese. “There are several trends that contribute to the growth of specialty cheese, and one of them is casual gourmet, which are everyday foods that are of a little higher quality and flavor. If you use specialty cheese, it makes it that much more flavorful,” she says.
For specialty cheeses to really resonate among buyers, experts say, positioning is key. “Origin is very important. People say that all the time — ‘Tell us the story about the cheese,’” Wilkinson says. “They want that personal link to something.”
Many cheesemakers prominently promote usage information, including serving suggestions and recipe ideas, on the package, company Web sites and point-of-sale materials. “WMMB did a survey last year, and it indicated that people really want to try these specialty cheeses but are a little hesitant. It shows that retailers have to sample, because consumers need help in knowing what to do with them,” says Wilkinson.
O’Connor, too, says while consumers are interested in specialty cheeses, they tend to move forward cautiously with their applications. “Knowledge is the first basis on which most people make a decision to try a new product, and then it advances to tasting,” she explains. “We call it ‘moving up the cheese ladder’ — going from a mild cheddar to a 2-year aged cheddar to a 2-year cheddar with a specialty ingredient.”
One cheesemaker agrees that consumer satisfaction and education go hand in hand. “People are interested in higher-profile, more intense flavors. People’s interest is piqued, whether or not they know what the applications are,” says Fermo Jaeckle, chief executive officer of Monroe, Wis.-based Roth Kase Cheese Ltd., which has added more bolder and ethnic-inspired cheeses to its line.
A review of some new products from the past year supports the notion that specialty cheeses are gaining a foothold among culinary-minded consumers. Roth Kase, for instance, recently debuted a new GranQueso Spanish-style cheese under its Sole brand. “Certainly, the Hispanic cheeses are drawing a lot of interest, and many in the (foodservice) trade are trying to understand some of these products,” says Jaeckle.
Likewise, Oregon’s Tillamook County Creamery Association (TCCA) is focusing more on the specialty side of its business. In February, the company introduced its shredded Tuscan Blend, a combination of sharp cheddar, parmesan and mozzarella, a new product following on the heels of last year’s rollout of a new Special Reserve cheddar aged at least 15 months. “While our best-selling cheese remains the Tillamook medium cheddar Baby Loaf, our sharp and extra-sharp cheddars continue to grow in popularity and in sales as consumers are looking for more robust flavor in their cheese,” says Kathy Holstad, marketing director.
The category’s leading cheese manufacturers also are infusing more flavors into their cheeses to capture a bit of the specialty-cheese market. The Athenos brand from the Churny Co. division of Kraft Foods, Northfield, Ill., now includes two new bolder flavors — Athenos Lemon, Garlic and Oregano Feta and Roasted Bell Peppers and Garlic Feta.
“Interest in Mediterranean foods has continued to grow over the past several years and does not show any sign of slowing down. We continue to see an increase in restaurant menu mentions for feta, blue and gorgonzola cheeses, which is a leading indicator of growth,” says Kraft spokeswoman Alyssa Burns, adding that flavor is also married with convenience to meet consumer demands in the crumbled format. “The products are versatile because they can be used in so many ways.”
In addition to major national brands and well-known regional brands, small artisanal outfits and farmstead cheesemakers have made a name for themselves with uniquely flavored cheeses. And that is just the natural cheese segment — there are literally dozens of new food products available today with cheese as an ingredient, from pizzas to frozen meals to sandwiches.
The Diet-Health Link
The other big buzz in the category is the fact that the diet-health pendulum is swaying yet again. After more than two decades of good food-bad food discourse, there remains a strong demand for better-for-you cheese.
At the beginning of 2004, the cheese category benefited from the flood of publicity about reduced-carbohydrate, high-protein eating plans, many of which promoted cheese as a snack. Although that movement has since fizzled, consumers are more educated about the role of protein-rich foods in their diet. As Jaeckle says: “The carb thing was scarcely here a year, but we all learned something from it and I think it has improved the diet overall.”
In the big picture, those in the industry say a renewed focus on fat and calories, plus more positive research about the role of calcium in aiding weight loss, is good news for cheese. “Some of these diets come and go. But one of the recommendations from the newly released (USDA) food guide includes going from two to three servings of dairy a day,” Fletcher says.
According to O’Connor, manufacturers, retailers and industry organizations can work together to effectively convey the health benefits of their products. “Retail merchandisers are going to need to work harder to position the healthful aspects of cheese consumption — that, eaten in moderation, cheese provides essential nutrition. They also should talk about the connection of dairy calcium and weight loss and the new dietary standards,” she says.
At least one product format is well suited for this trend. “Healthful snacking is one focus that has tremendous marketing potential,” O’Connor says.
In fact, some of that potential is already being realized in the retail dairy case. Over the past year, several new types of snacking cheeses, including reduced-fat varieties, have been introduced. In February, Sorrento Lactalis, Buffalo, N.Y., rolled out Sorrento Reduced Fat Stringsters® All Natural String Cheese, which contains 25 percent less fat than regular Stringsters® String Cheese. “Reduced Fat Stringsters String Cheese provides a nutritious alternative to salty or sugar-filled snacks,” says Fred Hermann, the company’s corporate director of marketing.
Canada-based Saputo, with U.S. offices in Lincolnshire, Ill., also has introduced a lower-fat version of snacking cheese. “As part of the Frigo Cheese Heads® line, our light string cheese is targeted to children ages 2 to 12. However, research has shown that light string cheese is also frequently consumed by adults in the household,” says Janet L. McCullough, marketing manager.  
Specialty cheeses are lightening up as well. Bel/Kaukauna USA, Kaukauna, Wis., recently rolled out new Laughing Cow Light Gourmet Cheese Bites, with 1 gram of carbohydrates per serving and half the fat of regular varieties.
The Convenience Factor
Not to be overlooked as a category trend is the continued emphasis on convenience. A factor that led to the now-standard shredded, grated and sliced cheeses in easy-to-use resealable packaging, convenience remains a top-of-mind concern among shoppers.
“Our fastest-growing SKUs are our sliced and shredded products, so it seems that convenience is still a top priority for consumers,” says Tillamook’s Holstad.
O’Connor agrees that there has been no letup in the demand for consumer-friendly items. “Convenience is still king,” she says, adding that snacking cheeses in particular fit the bill for both health and convenience. “People are eating five to six times a day, not three square meals anymore, so there is lots of opportunity for cheese growth in this category.”
There are many examples of snacking cheeses now sold in easy-to-open and portable packages, including Sargento’s Cracker Snacks® and Saputo’s Frigo Cheesehead line.
Beyond offering items for grab-and-go consumption and ease of use at home, Burns says convenience includes making it easy for consumers to find cheeses where they shop. “Stocking products in multiple locations — for example, feta in the deli and in the produce section — will provide the opportunity to maximize volume and sales,” she says. “And it is important for retailers to carry a full range of products to meet consumers’ demands for form and flavor offerings. Retailers can also offer multiple sizes to attract consumers who are seeking larger sizes for party and frequent snacking occasions.”
Co-packaging cheeses with other foods is another way to give consumers what they want in a convenient format. For example, the Deli Select® line from the Hillshire Farm brand of Cincinnati-based Sara Lee Foods, now includes a “Combo” variety, with meats and cheeses packaged together in reusable containers.
Merchandising Matters
In addition to supplying convenience, cheese packages serve as a marketing tool for manufacturers to build brand identity and catch a customer’s eye at the increasingly chock-filled cheese case. For every zip-to-slide closure, there are bolder colors and more intense graphics on packages today.
Cheese organizations have also continued to fund various promotions at the retail and foodservice level. “We do a lot of demos because we think it’s really important to get consumers to taste the different types of cheeses,” notes Fletcher, adding that CMAB’s “Happy Cows” TV ad campaign (which included a spot in this year’s Super Bowl) continues to garner attention.
WMMB, too, has found grassroots marketing essential, especially in the specialty cheese arena. Last year, WMMB worked with a 100-plus store chain to increase cheese advertisements and merchandising materials that included the “Wisconsin pride” logo. During the promotional period, the stores experienced a 16.9 percent increase in cheese sales, according to Wilkinson.
Those in the industry have a captive audience in consumers who have long savored cheese in their meals and snacks, Wilkinson says. “There are lots of opportunities,” she says, “to tell them things about cheese that surprise them.”  
Lynn Petrak is a freelance journalist based in the Chicago area.
SPONSOR SPOTLIGHT
Cheese Flavor Development
How to help processors achieve the taste they’re seeking.
Degussa has a long history of working closely with cheese manufacturers to optimize cheese flavor development. Starting 60 years ago with the identification of lipase enzymes and their mode of action, and continuing with the development of the Continuous Use™ Bulk Culture systems and the creation of the Accelerated Cheese Ripening (ACR) systems, Degussa has been a consistent partner to the cheese industry. Continuous improvement is at the core of Degussa’s customer-intimacy philosophy.
While it is recognized that cheese flavor is incredibly complex, Degussa has gained experience in this arena from years of studying highly flavored cheese varieties around the world. This knowledge can be applied to acceleration of flavor development in a variety of cheeses including cheddar, parmesan and Swiss types.
When a cheese manufacturers is interested in accelerating or fine-tuning its cheese flavor, a Degussa technical salesperson is immediately engaged to determine the primary objectives behind the request:
Is it to reduce ripening time?
Is the current cheese flavor not acceptable?
Is the current flavor development inconsistent?
Is the current flavor acceptable but development of a signature flavor is desired?
In addition, it is important to understand the cheesemaker’s manufacturing flexibility and overall manufacturing capabilities.
The technical salesperson is a cheese expert with years of varied experience gathered from working at many cheese plants. This expert works confidentially with cheese manufacturers to zone in on the best strategy to meet the desired flavor requirement while minimizing trial and error.
Once the target has been clearly identified and reconciled, Degussa begins in-depth analysis to evaluate and measure the characteristics of the existing cheese in comparison to a target. If the desired target is not physically available but rather exists only in someone’s mind, this is also important to understand. This analysis will provide direction on which ingredients to employ to close the gap between the existing cheese and the target.
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Over the years, Degussa has acquired several companies with strong expertise in cheese flavor. These include Laboratories Roger, a French culture company that has been producing covering and ripening cultures for French-style cheeses for more than 100 years; and Dairyland Food Laboratories, a U.S.-based company whose founder discovered the origin of lipase flavor. From Dairyland also comes strong basic technology in acidifying cheese-culture systems.  This resulting synergy plus Degussa’s continuing development of cultures for all cheese types have provided a number of tools for the ACR system.
Degussa has employed the various components of the ACR systems to assist many cheese manufacturers in meeting their unique objectives. Some cheesemakers are using only ripening microorganisms isolated from traditional surface ripened cheeses.  Others are using convenient single-package combinations of ripening strains, enzymes and adjunct cultures.
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