Tasty and versatile, cheese has long been a favorite food and ingredient of U.S. consumers. But recent sales data suggest the cheese segment has been struggling a bit, at least at retail. Dollar sales within the retail processed cheese category fell 3.7% to $2.8 billion during the 52 weeks ending Jan. 27, 2019, according to data from Chicago-based market research firm IRI. Unit sales declined by 4.1%.
In the retail natural cheese space, meanwhile, sales rose only modestly during the same timeframe. Dollar sales increased 1.1%, and unit sales climbed 2.5%.
But things look a bit brighter for cheese in the foodservice and ingredient space. A February 2019 report from Market Research Future, Maharashtra, India, says increased consumption of Italian and Mexican food preparations has raised the demand for cheese in the United States, as cheese is one of the major constituents in these cuisines.
Needed: a genuine story
A number of challenges threaten the cheese category’s growth at retail. One current stumbling block is consumer confusion tied to cheese marketing, said Debbie Crave, vice president of Waterloo, Wis.-headquartered Crave Brothers Farmstead Cheese LLC. She noted that some of the bigger national brands are creating consumer confusion or mistrust by bringing up issues that are not actually valid concerns.
For example, a major cheese brand recently created a TV marketing campaign touting the fact that there are no hormones in the milk going into its cheese, she said, bringing the hormones-in-milk topic out in the fore once again.
“First of all, hormones aren’t added to milk,” added George Crave, manager of Crave Brothers’ cheese factory, “and secondly, what in the world are they trying to convince consumers?”
There are a lot of truthful, good stories to tell out there, Debbie Crave noted, but they can get lost in this confusion.
“We know we have a good story, and when we have the opportunity to tell it, it resonates well with the consumer, the buyer and everyone in the whole chain,” she said. “But sometimes you really don’t have the chance. We work really hard on our label to help fill in those gaps — our story is farm fresh, family owned, green energy, being a sustainable cheese company and a farmstead cheese producer.”
Rueben Nilsson, head cheesemaker and general manager of the Caves of Faribault, a Faribault, Minn.-based subsidiary of Prairie Farms Dairy, Edwardsville, Ill., said good storytelling is key to selling retail cheese. After all, with the increased diversification in the space, particularly on the specialty and artisan cheese side, staying relevant and connecting with consumers and cheesemongers can be a challenge.
“Consumers are interested in knowing where their food comes from and having a more direct connection to food producers and the farm,” added Doug Glade, executive vice president and president, commercial with Kansas City, Kan.-based Dairy Farmers of America (DFA). “They’re also looking for ‘real foods’ offering more naturally occurring nutritional and wellness benefits versus products with added nutrients or processed ingredients.”
DFA’s new Craigs Creamery cheese brand, founded by a small group of family-run DFA-member dairy farms in upstate New York, certainly is in line with consumers’ desire for a genuine story and “real” food.
“The farm families built an on-farm creamery that is located close to where the cows are milked and powered by renewable energy,” Glade noted. “The award-winning cheese is crafted at the creamery with high-quality milk, all-natural ingredients and no added hormones. So with Craigs Creamery cheese, consumers know where their food comes from and that it was sourced responsibly.”
A sea of choices
As more flavors and varieties of cheese come to market, retail shelf space also is becoming an issue, noted Marshall Reece, senior vice president of sales and marketing for Associated Milk Producers Inc. (AMPI), New Ulm, Minn.
“Is cheese receiving its fair share of shelf space to accurately and appropriately recognize the varieties of cheese available?” he questioned. “Is the amount of retail space allocated to cheese representative of the percent of sales generated?”
Yet another obstacle to growth, at least on the branded side, is retailers’ continuing focus on their own brands and their promotion, said Matt Mason, director of product strategy for Cabot Creamery, Cabot, Vt.
“From a retail perspective, store brands are elevating their game by providing more choices and quality of offerings,” he said. “For brands, that means it’s critical that we’re developing innovation that is differentiated and provide benefits that consumers want.”
To help here, Mason advises cheesemakers to develop new partnerships with retailers on cheese products.
Differentiation in this sea of choices also requires an understanding of what consumers really value in their cheese-buying decisions — a challenge because it requires some research on the cheesemaker’s part.
“In the past few years, we saw a strong change in [consumers’] desire for new flavors across the cheese category,” noted Joel Boomsma, vice president of sales for Chicago-headquartered Dutch Farms Inc. “We have developed many new blends and varieties of cheese over the past few years because of this.”
Continually improving on cheese quality is difficult, too, added Jeff Jirik, cheesemaker and vice president of product development for the Caves of Faribault. He noted that Nilsson is an expert affineur, so his goal is to coax the best out of the cheese during the aging process in the company’s famous caves. (The caves, considered to be ideal for the curing and aging of blue cheese, were actually home to the first American-made blue cheese back in 1936.)
Continuous quality improvement for the Caves of Faribault, Nilsson said, requires reinvestment not only in its plant and the cave space, but also in its employees.
“We bring employees into the bigger picture a little and let them know that this is where our cheese is going; these are the people who taste our cheese; these are the awards we’re winning; this is how we’re known in the industry,” he said. “Their care and commitment is really the hallmark for us.”
As more nondairy cheese alternatives come to market, cheesemakers are facing more competition at retail, said Abby Kempf, category manager – innovation for Tillamook County Creamery Association, Tillamook, Ore.
“Our opportunity is to sustain — and hopefully grow — consumer engagement in natural cheese by ensuring we present our dairy products in authentic, relevant and engaging ways,” she said. “Enhancing or amplifying the unique value of dairy — and cheese, in particular — will help differentiate from nondairy.”
Joe Baird, CEO of Crescent City, Calif.-based Rumiano Cheese Co., believes the retail cheese space is already crowded and competition will remain fierce. Sales are flattening at the same time more plant-based offerings are coming to market.
“The winners will need to create more interesting options for consumers and not only rely upon promotions and price per pound,” he stressed.
Challenges go beyond retail
Although cheese sales have seen more positive recent news on the foodservice (and industrial ingredient) front, threats to growth certainly exist.
“With foodservice, innovation also is a big challenge and continuing to evolve varieties, flavors and packaging to meet the needs of restaurants and ultimately the consumer,” Glade said.
There’s also a need for more collaboration, Reece said.
“In foodservice, we must continue to collaborate with restaurants and chefs to identify the kinds of cheeses they are looking for to incorporate in meal offerings,” he pointed out. “They are on the front lines serving customers and have insight into potentially successful cheese pairings or cheese varieties that would complement emerging ethnic food trends, for example.”
More communication and engagement with customers are needed, too, Reece added.
“Cheese is a nutrient-rich food source with high-quality protein, and, [as] a bonus, it also tastes great,” he said. “We can’t share this message enough.”
Another issue is the reality that foodservice is splitting into two major segments when it comes to cheese, Baird said. One segment is wrestling with labor prices, driving cheese and other food costs down. The other is differentiating based on quality or local status.
“Rumiano is increasingly focusing on unique offerings for our more local foodservice customers here in the West,” he noted.
Ralph Hoffman, executive vice president, food service for Fairfield, N.J.-based Schuman Cheese and managing partner of strategic dairy sourcing consultancy Optimally, sees a similar situation. He pointed to an ever-increasing dichotomy between providing customers with back-of-house efficiency via individual standardized serving sizes that reduce prep work and complexity and giving consumers an experience that’s more “natural and authentic.”
“The two seem to be at odds with each other,” he said. “More useable formats tend to be more processed or over-packaged, which in turn, decrease the end-user experience.”
Cheesemakers could help address this issue with packaging or processing innovations that offer operator efficiencies while elevating the consumer experience at the same time, Hoffman said. For example, they could provide easy-to-use, portioned forms that look as though they were hand-carved from a wedge or block.
Aaron Aslin, assistant category manager with Tillamook, added that a premium yet accessible branded cheese that’s offered in efficient formats could help restaurants — particularly those in the middle tier — drive growth.
“At Tillamook, our foodservice department has grown organically, making us one of the most-mentioned brands in the U.S.,” he said. “Our national expansion only further allows us to partner with our foodservice vendors in new ways that leverage our unique position in the market as a quality cheese producer, delivering efficient scale and creating value for foodservice operators.”
Cater to the convenience trend
Beyond acknowledging — and addressing — challenges, cheese producers should pay close attention to current and emerging trends when engaging in new product development. And convenience is one current trend that’s here to stay.
“On-the-go snacking is a big trend with consumers right now, and we’re seeing a lot more flavors in this segment,” Glade said. “Our recent Borden Snack Bar introduction includes family favorites like cheddar, Colby jack and pepper jack, along with unique flavors like Gouda and our new Habanero cheddar and extra sharp white cheddar.”
Crave Brothers also is targeting the convenience trend with its new 1-pound sliced fresh mozzarella logs. With a 60-day shelf life, the logs can be refrigerator-ready for appetizers, pizzas and more. The slices of the award-winning artisan cheese are said to boast a fresh, milky flavor.
For its part, Fitchburg, Wis.-headquartered Emmi Roth also recognizes that convenience is key for consumers. The company is meeting the trend with new products and convenience-oriented formats, noted Heather Engwall, vice president of marketing.
“We recently launched a new line of premium Roth Snack Cheese which is designed to be taken on the go and comes in three varieties — creamy cheddar, creamy Gouda and creamy whole milk mozzarella,” she said.
Consumers are not willing to compromise on quality or taste when it comes to convenience, Kempf said. They want “meaningful yet quick mealtime and snack-time solutions with real food.”
Tillamook’s newest offering, the Tillamook Cheeseboard, fits the bill. Available in four varieties, each featuring a different Tillamook sliced cheese, a fruit spread and artisan-baked crackers, the lineup is designed to “encourage natural cheese lovers to enjoy a mindful snacking experience” that allows them to savor the flavor combinations, she noted.
Cabot Creamery also is catering to the convenience trend. The company debuted seven varieties of Cabot Cracker Cut natural cheese slices a couple years back. Varieties include Seriously Sharp white cheddar, Seriously Sharp yellow cheddar, extra sharp white cheddar, Vermont sharp cheddar, pepper jack and Colby jack.
And Dutch Farms had convenience in mind, too, with the recent debut of its On-the-Go Snackers and On-the-Go Snack Packs lines. The On-the-Go Snackers come in three variety packs: sharp yellow cheddar cheese with cherry-infused cranberries and sea-salted and roasted cashew pieces; pepper jack cheese with honey-roasted peanuts and raisins; and sharp white cheddar cheese with dried cranberries and roasted sea-salted almonds. The On-the-Go Snack Packs contain individually wrapped natural mild cheddar or marble jack cheeses.
Schuman Cheese, meanwhile, took convenience in an unexpected direction with the recent introduction of Cello Copper Kettle Chisels. The premium product features bite-size pieces of Copper Kettle Parmesan, which is crafted in copper vats to create distinctive notes of cooked caramel.
As snacking continues to grow in popularity among consumers, more cheesemakers will need to capitalize on the trend, AMPI’s Reece pointed out.
“This includes snack-size packaging, flavors and combinations — identifying foods to pair with cheese,” he said. “Our challenge will be making cheese available in this rapidly expanding category.”
The cooperative, which “makes the dairy products that make several of the nation’s leading brands,” is certainly on its way to doing that: Over the course of the last 10 years, AMPI has expanded its cheese offerings to include more than 40 different varieties, Reece noted. And it is continuing to experiment with new unconventional varieties.
Experiment with flavor
When it comes to trends, Emmi Roth is seeing continued growth in both retail and foodservice for flavored cheese varieties, too, Engwall said. This trend is fueled by consumers’ desire to expand on traditional offerings without straying too far from their favorites.
Jirik said the Caves of Faribault has noted a trend toward flavors, too — pointing to increased consumer interest in what he calls “wild flavors.” Those flavors include zesty, bold flavors, as well as pepper and cheese combos.
“Spicy flavors have led much of the growth, including our jalapeño and Chipotle Havarti cheeses, as well as our Sriracha and 3 Chile Pepper Gouda varieties,” Engwall agreed. “We’ll be adding to our line of flavored Goudas in 2019 with the addition of Green Goddess Gouda — our traditional, creamy Gouda infused with classic fresh herbs like tarragon, chives, parsley and garlic for a flavor that is timeless and satisfying.”
In 2018, Cabot Creamery also added a little flavor excitement to its offerings when it relaunched its shredded cheese line to include new Bacon Cheddar, Fiery Jack, Mac & Cheese, Rustic Pizza, 5 Cheese Italian and Two State Farmers’ New York & Vermont cheddar blend varieties — all in new packaging.
Emerging ethnic flavors representing growing cuisines such as Korean, Indian and Middle Eastern are another trend gaining traction in cheese and other food categories, Baird added.
Tap into other trends
Convenience and flavors might be the biggest trends in cheese, but they certainly aren’t the only ones. For example, Glade noted a trend toward full-fat dairy.
“Full-fat dairy is growing faster than reduced and fat-free versions,” he said. “Taste is certainly a driver, but we’re also seeing a shift in thinking when it comes to the science behind dairy fat. We saw a big opportunity for cheese to partake in that shift and recently launched a whole-milk mozzarella cheese offering.”
Smaller formats that make life easier for retail cheesemongers are yet another trend, Jirik said. To help meet demand here, Caves of Faribault added two smaller-format artisanal varieties to its line of specialty cheeses: St. Helga’s European Style Swiss cheese, which is crafted in a European style to achieve a complex, full-bodied flavor with pronounced nutty tones, and Cherubic Heavenly Young Gouda, the pioneer product in a new line called the Commission collection that exhibits a pungent, buttery flavor.
And for his part, Baird pointed to an ongoing trend toward “occasion cheeses” and the artisanal movement.
“Like craft beer, chocolate or coffee, more local handcrafted product is desired, especially if the quality is on par with the European imports,” he said.
That push goes hand-in-hand with consumers’ increasingly adventurous palates, Hoffman suggested.
“We continually challenge ourselves to satiate this curiosity by providing flavors and blends with Old World influence,” he said. “Selections like our Yellow Door Creamery hand-rubbed Fontina and Alpine cheeses can enhance even simple menu items like grilled cheese, with unique flavors and spices such as harissa or bergamot hibiscus.”
Kempf also noted a growing trend toward a “customized and optimized” nutrition approach in the food and beverage segment overall. In relation to cheese, consumers desire functional benefits — for example, probiotics or the use of A2 milk.
“The desire for functional benefits layers up to a more emotional space, as it allows for more confidence in the food they feed themselves and their families,” she added.