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 | $5,815.0 | 11.5% | 100.0 | 2,154.5 | 3.6 | 100.0 | |
Private Label | 2,097.6 | 7.1 | 36.1 | 868.3 | -2.4 | 40.3 | |
Kraft | 1,308.1 | 15.1 | 22.5 | 511.0 | 10.4 | 23.7 | |
Sargento | 390.6 | 13.0 | 6.7 | 143.5 | 4.1 | 6.7 | |
Tillamook | 194.9 | 12.1 | 3.4 | 43.8 | 5.5 | 2.0 | |
Crystal Farms | 133.3 | 20.3 | 2.3 | 60.1 | 17.1 | 2.8 | |
Sorrento | 105.2 | 18.5 | 1.8 | 32.6 | 14.7 | 1.5 | |
Precious | 103.5 | 19.0 | 1.8 | 31.5 | 30.1 | 1.5 | |
Frigo | 100.4 | 8.5 | 1.7 | 31.0 | -4.2 | 1.4 | |
Polly-O | 92.7 | 14.5 | 1.6 | 26.4 | 9.4 | 1.2 | |
Borden | 83.3 | 17.5 | 1.4 | 41.2 | 6.0 | 1.9 | |
*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 | $1,973.7 | 9.4% | 100.0 | 792.9 | 2.0% | 100.0 |
Private Label | 839.0 | 6.5 | 42.5 | 349.7 | -2.0 | 44.1 |
Kraft | 553.0 | 18.0 | 28.0 | 221.3 | 11.2 | 27.9 |
Sargento | 224.0 | 1.2 | 11.4 | 85.0 | -5.8 | 10.7 |
Crystal Farms | 78.9 | 18.6 | 4.0 | 30.5 | 14.5 | 3.9 |
Borden | 64.3 | 12.1 | 3.3 | 31.2 | 2.0 | 3.9 |
Kraft Classic Melts | 32.3 | -3.3 | 1.6 | 13.4 | -7.0 | 1.7 |
Kraft Free | 30.5 | 12.8 | 1.6 | 11.1 | 8.5 | 1.4 |
DiGiorno | 23.9 | -8.9 | 1.2 | 7.0 | -11.1 | 0.9 |
Sorrento | 15.0 | -11.4 | 0.8 | 6.3 | -5.0 | 0.8 |
Stella | 12.3 | 2.7 | 0.6 | 3.9 | -2.3 | 0.5 |
*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.
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