The past year has been a rollercoaster ride for the cheese category. While the COVID-19 pandemic drastically reduced demand for cheese in foodservice, the category’s growth at retail was extensive, notes Kelly Slentz, associate brand manager, cheese for La Farge, Wis.-based Organic Valley.
“Pre-COVID-19, retail cheese saw slow and steady growth as a mature category,” she explains. “Due to COVID-19, we saw that change drastically, with 2020 sales up double digits compared to 2019.”
Michael Pellegrino, president and chief growth officer of Plymouth, Wis.-based Sargento Foods Inc., notes that foodservice cheese, especially in the casual dining segment, suffered from social-distancing mandates. But on the other hand, “a massive shift to at-home eating” was responsible for a lot of cheese’s growth at retail.
“Not many categories have these historical growth rates of cheese, and we are confident these trends will continue for many years to come,” he remarks.
A switch in formats
In the early days of the COVID-19 pandemic, consumers’ rush to stock up on groceries stressed companies’ ability to meet their retail customers’ supply needs.
“There was extraordinary pressure on the grocery business during the pandemic,” notes Karen Van Prooyen, marketing director for Chicago-based Dutch Farms Inc. “We received an avalanche of inquiries for product outside of our regular customer set.”
She adds that Dutch Farms ultimately chose to fulfill orders for its existing customer base and take on a couple new customers only as availability allowed.
According to Mark Braun, CEO of Nuestro Queso LLC, Chicago, one tricky thing about the shift to demand for more retail and fewer foodservice offerings was the change in sizes companies needed to produce.
“That meant that now, all of a sudden, we're making much smaller sizes,” he explains. “We already made those products, but it was more labor-intensive, and they slowed [our] lines down.”
Nuestro Queso had to adjust its operations, notes Braun, and invested in new product lines and packaging equipment to account for the change in demand.
Different types of packaging became popular over the past year at retail, too, notes Janell Lofton-Minta, vice president of growth and marketing for Minnetonka, Minn.-based Crystal Farms Dairy Co. Many consumers made fewer trips to the grocery store, so they looked for larger-format offerings.
“We have adapted by expanding distribution on larger pack sizes and focusing more on supply chain efficiency to keep up with increased demand,” Lofton-Minta says.
She predicts that this change in shopping behavior on behalf of consumers is likely here to stay.
“The pandemic accelerated a trend toward online shopping and larger basket sizes, which is likely to continue in the foreseeable future,” she notes.
Violet Degnan, assistant marketing manager for Norseland Inc., Darien, Conn., says that pre-packaged items that make cooking simple also are driving growth.
Mihira Rami, marketing director – consumer brands for the Borden cheese brand (a licensed brand of Kansas City, Kan.-based Dairy Farmers of America) agrees, noting that customers are looking for easy ways to make meals. She’s noticed increased purchases among millennials in the pre-sliced cheese category in particular.
“We do typically see [pre-sliced cheese consumption] with households that have young children. That could be a reason why, but we also saw households without young children, and we saw a lot of millennial males come into the category,” she explains. “And so we're thinking that that would be for self-consumption. As you're learning the basics around the kitchen, that's something that can fit in really easily.”
Slentz says that customers are looking to simply meal prep, and this has led to increased sales of shredded and sliced cheese. Organic Valley recently unveiled organic American cheese slices that fit this trend. The varieties include yellow and white cheese. The cheese slices are made with just seven ingredients, including butter produced with milk from pasture-raised cows.
Speaking of at-home cooking, Lofton-Minta says a rise in this behavior has lent itself to more usage occasions for cheese.
“Consumers are looking for new at-home meal solutions for all occasions,” she says. “Cheese is being incorporated into recipe ideas and retailer events for breakfast, lunch, dinner and snacking.”
She adds that companies could drive growth by educating consumers on different ways to use their products across recipes and various eating occasions.
Debbie Seife, marketing director – consumer dairy for FrieslandCampina, Paramus, N.J., says that the increased amount of at-home cooking will likely be here to stay even after the pandemic. She explains that FrieslandCampina has several cheese brands that fit the bill for home entertaining — in particular, its Parrano, A Dutch Masterpiece and Gayo Azul cheese brands.
“Our Gayo Azul brand offers some great cheeses to cook with,” she notes. “Gayo Azul queso blanco and the Gayo Azul Gouda slices offer a perfect option for recipes and sandwiches.”
Degnan says that cheese’s identity as “a much-needed comfort food” was solidified during the pandemic. This past year, she noticed that customers were gravitating to two categories of cheese, in particular: “affordable, convenient, everyday cheese staples” and high-quality specialty cheeses for events such as a date night. And Gouda is one specialty cheese that has experienced a lot of recent growth.
“Specialty Gouda continues to grow significantly — 41% growth on dollar sales over the past three years and 22% over last year,” Degnan explains, citing data from Chicago-based market research firm IRI.
Norseland distributes Old Amsterdam — Huizen, Netherlands-based Westland’s Gouda brand — in the United States. The brand recently introduced Old Amsterdam Mild and Old Amsterdam Reserve Gouda varieties. Old Amsterdam Reserve is an extra-aged Gouda — aged for a minimum of 18 months. Old Amsterdam Mild is a young Gouda that is aged for a minimum of four months and has a creamy and semi-soft texture.
While eating or entertaining at home, consumers are looking to indulge a little, explains Slentz, and are selecting cheese brands that can offer something extra.
Sargento Creamery shreds and slices, which were launched this year, meet this consumer interest in indulgence — as well as in convenience for meal prep and at-home cooking.
“Creamery shreds and slices is a line of natural cheese that delivers a superior melt thanks to the simple addition of real cream, which adds a creamery texture to dishes,” Pellegrino says.
Hispanic cheeses trending
Retail cheese grew exponentially this year, and within the category, Hispanic cheeses were a real standout, says Braun. He likens these cheeses to mozzarella a few decades ago — when it was beginning to move from a specialty offering mainly used in pizza to something much more mainstream.
“I think Hispanic cheeses are on a similar trend. You see the celebrity chefs, more and more of them incorporating authentic cheeses,” he points out. “Before, a Mexican mix was a mix of shredded cheddar cheese and maybe a Monterey Jack … now, you see more acceptance and actually more demand for more authentic-style cheeses, which is good for our particular category.”
Rami says that Hispanic cheeses are an area in which Borden sees an opportunity for growth. The brand already offers a Mexican cheese blend featuring “more authentic” cheeses and Oaxaca-style shreds.
“We know that Hispanic cheese as a segment is growing, but now we're starting to see more variety and more authenticity in some of the mainstream sets around that space,” she notes. “So it used to be that everyone had a four-cheese Mexican blend, but now you're seeing more specific varieties [such as] quesadilla, asadero or even certain offerings that are for certain dishes specifically as well.”
According to Arturo Nava, marketing director for Nuestro Queso, the sales volume of some Hispanic cheeses such as Oaxaca, quesadilla and cotija is growing between 20% and 30% annually. He says that private label customers also are driving growth as more and more of them want to create their own Hispanic cheese brands. Additionally, the cheeses are more frequently being used as an ingredient in products such as pizza, burgers and bakery items.
“People are recognizing Hispanic cheeses as a viable alternative for mainstream dishes, for mainstream cuisines,” Braun adds. “[It’s] a very exciting time in the category where all of a sudden, you know, the cheeses have become more mainstream across the different channels.”
Snacking behavior continues
A lot of innovation in the cheese category in the past few years has been related to the popularity of snacking.
“Americans are eating fewer large meals and instead snacking on small meals throughout the day,” says Van Prooyen. “Current dietary trends support more protein-focused snacks.”
However, consumer behavior around snacking changed a bit with the COVID-19 pandemic, Rami says.
“It's less on the go and less individual snacking [and] more family snacking. And if there are individual-sized items like string cheese that are still consumed, they're consumed in the home,” she explains. “So you might open up a multi-pack of many items and serve them to the kids while they're doing their distance learning, in between meals.”
With this trend of at-home snacking, some core items such as block cheese are experiencing new usage occasions as consumers find the time to create their own cheese boards as a snack, Rami points out.
“We definitely think snacking is gonna continue to be a behavior that sticks around for a long time,” she adds. “We just have to wait and see and glean some insights around what's gonna happen to on-the-go snacking and consumption as life begins to sort of normalize.”
For its part, Dutch Farms unveiled multiple offerings in its Dutch Farms On-the-go line of ready-to-eat cheese-focused snacks in recent years. The line includes On-the-go Snackers (cheese cubes, dried fruit and nuts), On-the-go Protein Packs (one hard-cooked egg, string cheese and salami) and On-the-go Snack Packs (pre-sliced individually wrapped slabs of cheese).
Sargento also continues to expand its cheese snack offerings, explains Pellegrino. It recently added Sargento Balanced Breaks cheese and crackers — a partnership with Chicago-based Mondelez International. The offerings include pepper jack and colby jack natural cheeses and Ritz Mini crackers, Gouda and sharp cheddar natural cheeses and Triscuit Mini Original crackers, Monterey Jack and mild cheddar natural cheeses and Wheat Thins Mini Original snacks, low-moisture mozzarella and fontina natural cheeses and Wheat Thins Mini Sundried Tomato & Basil snacks.
“Eating cheese and crackers is obviously a very popular consumer trend,” Pellegrino says. “We are thrilled to give our consumers great-tasting and convenient snacking options with the category’s best-selling snacking cheese and the most popular brands in the cracker category.”
Cheese is known to be packaged in a few conventional formats — blocks, cubes, shreds, slices, etc. — but a growth opportunity might also be found in reimagining what cheese formats could be. With the rise in popularity in low-carb diets such as keto, some customers are looking for products that can replace carbohydrates in dishes. Cheese could be a food fit here.
For its part, Nuestro Queso introduced “fries” made out of cheese. This keto-diet-friendly offering can be pan-fried or deep-fried or cooked in an air fryer, explains Braun.
And Crystal Farms debuted cheese wraps last year. The company recently added a new variety — cheddar blend — to the line, which already included mozzarella and marble jack.
“Cheese wraps are a great option for those looking for a low-carb alternative to the standard tortilla,” says Lofton-Minta.
Shelf-stable dried or dehydrated cheese could be another growth area, notes Rami.
“Over the last couple of years, we've seen cheese come out and break the mold from your conventional refrigerated set only,” she points out. “We've seen dried or dehydrated natural cheese become an interesting space both in snacking or pure consumption … that's something that has been really interesting and exciting to see because I think it gives the opportunity to have a broader consumption and broader footprint in the retail landscape for cheese as a segment.”
For its part, Borden launched Borden Crisps ‘n Cubes last year. The offerings are a duo of crunchy 100% oven-baked cheese (crisps) and 100% real cheese (cubes). They are made with 100% real cheese and come in three flavor combinations: sharp cheddar crisps and colby jack cubes; jalapeño crisps and mild cheddar cubes; and cheddar crisps and white cheddar cubes.
“For people that are increasingly looking to manage carbs and have like a little bit more of that healthy, low-carb snack, you really have to give up crunchy things like chips and [that] crispy, satisfying texture,” she says. “And [Crisps ‘n Cubes] let you have the best of both worlds. So unfortunately, not ideally timed to launch something in that format with the pandemic, but we really think that this is an interesting space to play in and that the right consumer really finds value in it.”