With consumers demanding great taste and convenience, cheese companies have made it their mission to deliver unique new products.

There’s no doubt about it — Americans love cheese. Regardless of how they choose to eat it — on pizza, tacos or pasta, or merely on a plate with some crackers — consumers are gobbling up cheese like never before. According to the U.S. Department of Agriculture, per capita consumption of cheese reached 31.4 pounds in 2005. By 2014, that figure is expected to rise to 34 pounds.

That’s pretty impressive, considering that cheese is a very mature category which has long boasted household penetration of nearly 100 percent. For cheesemakers, however, such high demand and continued growth comes as no surprise.

“Cheese is a good healthy product that people believe in,” says Jay Allison, national sales manager for Tillamook County Creamery Association, Tillamook, Ore. “When it comes to further growth of the category, there really seems to be no end in sight.”

The highest growth areas within the cheese category include specialty cheeses, natural slices and convenience/snack cheese, according to Jim Montel, vice president of business development for cheese at Dairy Management Inc. (DMI), Rosemont, Ill. He points to innovations related to different shapes and sizes, and unique flavor profiles — particularly ethnic cheeses — as well as encouraging different usage occasions as having played a pivotal role in recent years.

While no one could criticize the cheese category as being slow-growth, Montel says quite frankly that DMI is not satisfied with the category’s current pace of growth — and they are determined to do something about it.

“The difference between ’05 and ’04 was not quite what we had hoped,” he says. “We want it to grow faster, and we believe that by giving consumers what they want — when and how they want it — we can accelerate the growth in the cheese category. Ultimately, the future lies in innovation, and that is what we’re focused on — that’s our mission.”

These days, it seems that it’s not enough to merely deliver taste and convenience. Consumers want cheese, but they want it on their own terms. Increasingly, that means new formats and flavor profiles that make it easy to consume cheese either on the run or to incorporate it into their favorite recipe. As a result, sales of natural chunk cheese have faltered — down 0.3 percent in dollars and 0.9 percent in units throughout supermarkets, drugstores and mass merchandisers, excluding Wal-Mart, during the 52-week period ending June 17, 2007, according to Chicago-based Information Resources Inc. (IRI). Meanwhile, sales of natural shredded cheese remain strong, up 1.3 percent and 4.4 percent, respectively.

Clearly, consumers believe it’s worth paying a bit more to cut one or more steps out of their meal preparation process. Recognizing that need, processors have stepped up to the plate, unveiling a wealth of innovative new products that give consumers what they want, while possibly providing the cheese maker with an added value as well.

“What you’re seeing is people putting some sort of value on that additional level of convenience, such as not having to crumble their own cheese,” says Jed Davis, director of marketing, Cabot Creamery Cooperative, Cabot, Vt. “For some companies, that may provide an innovative way for them to deal with some of their product that otherwise would be considered more off-grade and actually spin it out as a product that has some residual value.”

As recently as the 1980s, Montel says, people probably thought it odd that some consumers were willing to shell out more money for pre-shredded cheese. In hindsight, of course, it’s obvious that shredded cheese quickly became one of the top-selling segments within the natural cheese category.

These days, the true driver of cheese category sales is natural slices, which are “hot as a firecracker,” according to Mark Korsmeyer, president of Kansas City-based American Dairy Brands (ADB), a division of Dairy Farmers of America and maker of Borden cheese. Indeed, IRI reports that sales of natural sliced cheese skyrocketed over the past year — up 11.7 percent in dollars and 14.8 percent in units. Meanwhile, processed slice sales continued their downward slide, falling 5.6 percent and 5.1 percent, respectively.

Montel believes many consumers have switched from processed to natural cheese slices because a growing number of major brands have entered the category, among them Kraft, Sargento, Tillamook and Borden. Along with their brand name comes significant marketing budgets, not to mention clout with retailers, resulting in a greater shelf presence and greater trial among consumers.

Tillamook has been working with its retail partners to get “incremental displays” of natural cheese in areas of the store that make strategic sense — alongside ground beef, for example. According to Allison, this strategy proves particularly useful during the summer when cook-outs are in full swing: “When we’re able to get our sliced cheeses in the hamburger section, consumers are better able to make that connection between hamburger and cheese for their picnics.” He reports that Tillamook’s Memorial Day displays proved extremely successful.

For those consumers seeking a cheese that will give their burger — or any other food — a little extra kick, Plymouth, Wis.-based Sargento Foods Inc. unveiled Chipotle Cheddar earlier this year. In addition to slices, Chipotle Cheddar is also available in shreds and snack sticks.

“This is a new way for Sargento to be thinking about marketing cheese,” says Barbara Gannon, vice president of corporate and marketing communications. “Before, we had been kind of silo’ed in thinking, ‘OK, this is going to be a shred item,’ or ‘This is going to be a sliced item. What has been new in 2007 is we’re looking at a cheese variety going across all forms.”

That is also the case with Sargento’s new Limited Edition line of natural cheeses. Designed to allow consumers to experiment with unique cheeses from across the country, Sargento’s Limited Edition line is said to be the first of its kind. Beginning with Vermont Sharp White Cheddar earlier this year, Sargento moved on to Aged Provolone this spring (a third variety will hit stores this fall). While each variety was originally expected to be available for six months, Gannon says demand has been so high that they’ve been selling out in four months.

Gannon concedes it would be unlikely that Sargento would be able to procure a large enough supply to make any of the Limited Edition varieties available on a year-round basis. However, she says the company will gauge reaction to the various cheeses to determine which ones will circle back around and be available on a limited edition basis once again in the future.

Montel calls this new approach to cheese marketing brilliant. “When you see the limited time offer kind of messaging on the package, it drives a sense of urgency to the consumer,” he says. “That’s a call to action and it encourages people to experiment and try some of these new flavors.”

When it comes to Sargento’s target consumer, Gannon describes them as the “food adventurer” — someone who eats out in restaurants, travels extensively and, increasingly, watches The Food Network. Across the board, cheese makers agree that TV cooking shows have had a big impact on home meal preparation in general and cheese usage, in particular.

“If someone like Emeril [Lagasse] uses something like a parmesan oregano, the consumer will say, ‘It’s probably pretty good,’” says Becky Ryan, managing director of retail, Sartori Foods, Plymouth, Wis. “It brings awareness that there are other options out there and it takes the mystery out of some of the cheeses people aren’t familiar with, making it easier for them to go try it.”

Likewise, consumers frequently seek to replicate a favorite restaurant dish at home. In recent years, they’ve been exposed to more cheese-laden dishes than ever before, thanks in part to the efforts of DMI, which has partnered in the past with numerous major chains — including Wendy’s, Pizza Hut, Burger King and others — to develop cheese-laden offerings. As a result, says Gannon, even fast—food restaurants have spread their wings and are now offering consumers their choice of cheeses on a burger or sandwich.

“Quick-service restaurants are nudging into the territory that used to be casual dining,” she says. “They want to offer higher quality, slightly more upscale choices, and one of the ways they can do that is by upgrading the cheese on their sandwiches.”

While Montel declines to reveal specifics, he says DMI currently has “application research work underway for pizza cheese.” Currently, he says, 49 percent of all U.S.-produced mozzarella is used to pizza applications — an impressive number for sure. However, Montel says DMI “would like to see it grow faster.”

Granted, pizza’s popularity remains high, even as news breaks that pizzerias are increasing their prices in response to rising cheese prices, which have soared 55 percent just since the beginning of 2007. Dallas-based Pizza Hut, which uses a whopping 300 million pounds of cheese each year, recently raised the price of a regular cheese pizza to nearly that of a regular one-topping pizza. Company spokesperson Jennifer Little has been reported as saying the chain has decided to treat cheese “almost like an extra topping,” adding, “It’s an extremely important ingredient and we have to constantly monitor and evaluate it.”

Responding to the desire to replicate restaurant-style meals at home, cheesemakers have rolled out a plethora of products designed to help home cooks incorporate cheese into their menus. When it comes to Borden’s Shred Medleys, introduced last year, Korsmeyer admits “the jury is still out.” While he says repeat purchases are higher than some of Borden’s other recent new product introductions, Korsmeyer says Shred Medleys’ problem lies in the fact that consumers are somewhat befuddled by the inclusion of a seasoning packet, which is designed to give consumers flexibility in how much spice they want in the finished product.

Shred Medleys were introduced following the success of Sargento’s Bistro Blends line of shredded-cheese blends pre-mixed with various seasonings; several new varieties are slated to join the line-up this fall. Like Korsmeyer, Sargento’s Gannon says a certain amount of education is required when selling this kind of product at retail. In Sargento’s case, however, it’s the retailers, rather than the consumers, who require a little education about the product.

“Some of the retailers expected Bistro Blends to have the same velocity as a mozz or a cheddar, but we never expected that because they are not used in the same way as more of a commodity type of cheese,” Gannon says. “We’re finding that we need to do a bit more education as we introduce specialty kinds of cheeses, so that retailers’ expectations are not unreasonably high.”

To aid consumers in figuring out how best to use Bistro Blends, Sargento provides them with recipes on the company’s Web site. Granted, this is not unusual for the cheese category, which relies heavily on recipes to boost usage and increase sales. Tillamook, for example, works with a team of regional chefs to develop new recipes for inclusion on its Web site.

“We’ve put quite a focus on recipe development over the last couple of years,” Allison says. “We do it by dish, by style of cuisine, just trying to give people, if they want to make a special dish with cheese, some ideas.”

In recognition of America’s fondness for macaroni and cheese, Tillamook sponsors an annual macaroni and cheese recipe contest, wherein amateur cooks submit their favorite mac-and-cheese recipes. Held in six cities across the country, the contest culminates in Tillamook’s home state with a cookoff held in Portland, with the grand-prize winner receiving a $5,000 check.

According to Gannon, comfort foods like macaroni and cheese are playing a significant role in bolstering cheese consumption. She points to one restaurant in New York that serves nothing but macaroni and cheese. A multitude of varieties are available, ranging from concoctions incorporate such upscale ingredients as lobster into the mix to those that merely use more exotic cheeses in place of cheddar.

“There are a lot of different varieties of cheese that people will sample in a restaurant environment,” Gannon says, “and after a while, they’ll want to search those out and have them at home.”

Whether they are whipping up a batch of macaroni and cheese or some other cheesy delight, Tillamook customers have three new varieties of flavored cheddar cheese to experiment with. Introduced in January, Garlic White Cheddar, Garlic Chili Pepper Cheddar and Smoked Black Pepper White Cheddar are all naturally aged and produced from cows not treated with artificial growth hormones.

Marketing director Kathy Holstad says she felt the timing was right for these products due to the burgeoning artisan cheese movement, which demonstrates that American consumers are increasingly open to new cheeses.

Ryan agrees that Americans’ palates are becoming more sophisticated. “Consumers’ tastes are definitely on the upscale,” she says. “As people have traveled, restaurants have gotten more adventurous and The Food Network has emerged, people have been introduced to a whole lot of new and different tastes. As a result, they are looking for cheeses that are a little bit different and more interesting.”

A long-time foodservice provider, Sartori has recently embarked on a line of artisinal cheeses for the specialty retail food segment. One of the first introductions was Bellavitano, described as “a hard cheese with creamy, rich flavor.”

Recognizing the growing interest in artisinal cheese, Sargento recently worked in conjunction with a select group of Artisan cheese makers from across the United States, as well as internationally, to develop a line of “Artisan blend cheeses.” The line will begin shipping in August.

Montel says such products are likely to be especially popular among Baby Boomers: “They have disposable income, which allows them to try new things.”

While artisinal cheeses make up a small segment of the overall cheese category, specialty cheeses in general have garnered a great deal of attention from consumers and retailers alike. In Canada, Kraft Foods recently rolled out Kraft LiveActive, said to be the first cheddar cheese product with probiotics, beneficial cultures which have been shown to improve digestive health, enhance the immune system and promote regularity. Boasting 1 billion probiotic cultures per serving, Available in a block format or as individually wrapped cheese snacks, as well as cubes, Kraft LiveActive is expected to hit U.S. dairy cases this fall.

Preceding Kraft in pulling cheese into the wellness arena was California-based Omega Farms, which offers a selection of natural cheeses (along with milk and yogurt) enhanced with omega-3 fatty acids.

Meanwhile, research continues into the functionality of cheese as a wellness food product. There’s no doubt that such innovations will play a key role in helping boost consumption in an extremely mature category.

“We’ve had tremendous success in the past and we will have tremendous success into the future,” Montel says. “If we keep our eye on the ball, which is the consumer, and we deliver products that meet their needs, the future will be very bright for the cheese industry.”

TOP 10 INDIVIDUAL NATURAL CHUNK CHEESE BRANDS*
	$ Sales (In Millions)	% Change vs. Year Ago	Dollar Share	Unit Sales (In Millions)	% Change vs. Year Ago
Total Category	$2,254.6	-0.3%	100.0%	734.0	-0.9%
Private Label	799.4	-3.0	35.5	293.9	-2.0
Kraft	218.1	-2.8	9.7	94.5	-4.2
Tillamook	159.8	0.7	7.1	33.9	1.0
Kraft Cracker Barrel	106.0	-2.3	4.7	37.5	-1.7
Cabot Vermont	61.4	5.3	2.7	22.6	2.8
Cacique Ranchero	41.9	12.0	1.9	11.7	12.9
Heluva Good	41.9	-4.7	1.9	18.2	1.3
Polly-O	40.5	-4.8	1.8	11.8	-4.8
Land O’Lakes	39.1	-13.6	1.7	12.6	-16.3
BelGioioso	38.8	20.5	1.7	8.5	20.7
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending June 17, 2007. SOURCE: Information Resources Inc.

TOP 10 NATURAL SHREDDED CHEESE BRANDS*
	$ Sales (In Millions)	% Change vs. Year Ago	Dollar Share	Unit Sales (In Millions)	% Change vs. Year Ago
Total Category	$2,120.6	1.3%	100.0%	904.1	4.4%
Private Label	963.2	3.3	45.4	437.2	8.0
Kraft	582.8	-1.0	27.5	239.5	0.5
Sargento	194.1	9.5	9.2	80.9	12.8
Crystal Farms	84.0	-2.5	4.0	35.2	1.5
Borden	47.2	-12.0	2.2	23.3	-8.2
Sargento Chef Style	39.2	5.9	1.9	15.2	10.1
Kraft Free	32.4	4.5	1.5	12.5	6.3
DiGiorno	32.1	6.3	1.5	8.6	4.5
Kraft Classic Melts	18.3	-23.1	0.9	8.1	-21.2
Stella	15.9	6.9	0.8	4.7	4.0
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending June 17, 2007. SOURCE: Information Resources Inc.

TOP 10 INDIVIDUAL NATURAL sliced CHEESE BRANDS*
	$ Sales (In Millions)	% Change vs. Year Ago	Dollar Share	Unit Sales (In Millions)	% Change vs. Year Ago
Total Category	$755.7	11.7%	100.0%	264.8	14.8%
Private Label	218.1	12.0	28.9	93.3	17.9
Sargento	91.9	26.1	12.2	33.3	31.2
Kraft Deli Deluxe	64.8	10.0	8.6	21.3	6.8
Sargento Deli Style	62.0	36.4	8.2	22.1	41.0
Tillamook	56.7	36.3	7.5	14.4	53.4
Kraft	30.4	-6.2	4.0	11.0	-5.5
Alpine Lace	26.8	-2.9	3.6	6.6	-4.8
Kraft Cracker Cuts	23.7	0.8	3.1	10.6	3.2
Kraft Cracker Barrel Cracker Cuts	23.4	29.8	3.1	7.9	29.3
Land O’Lakes	17.1	6.5	2.3	5.0	3.5
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending June 17, 2007. SOURCE: Information Resources Inc.

TOP 10 INDIVIDUAL PROCESSED CHEESE SLICES BRANDS*
	$ Sales (In Millions)	% Change vs. Year Ago	Dollar Share	Unit Sales (In Millions)	% Change vs. Year Ago
Total Category	$1,273.0	-5.6%	100.0%	509.3	-5.1%
Kraft Singles	464.0	-4.7	36.5	183.9	-4.0
Private Label	312.4	-5.6	24.5	150.4	-3.1
Kraft Deli Deluxe	123.2	-4.1	9.7	29.4	-5.1
Borden	91.6	-8.6	7.2	43.8	-5.3
Kraft Velveeta	63.3	-4.5	5.0	17.8	-5.5
Kraft 2%	42.8	1.0	3.4	13.8	-1.0
Kraft Free	30.7	-5.6	2.4	7.7	-8.0
Land O’Lakes	28.6	-9.9	2.3	8.7	-13.6
Crystal Farms	22.2	-3.7	1.7	10.1	-2.9
Galaxy Nutritional Foods Veggie Slices	17.0	-11.1	1.3	5.5	-13.4
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending June 17, 2007. SOURCE: Information Resources Inc.