Cheese: Look Sharp!

April 25, 2008
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Natural cheese products drive growth in the private label segment.

Natural cheese products drive growth in the private label segment.

While the majority of us would like to believe we are superior to a three-year-old, in the case of discerning between cheese types based on aesthetics, we are sadly mistaken. As consumers (of everything, not just cheese), we are often picky and fickle. Our preferences drive our choices, and in turn, our choices drive what products become available to us.

Over the past year, the cheese category, and private label cheese in particular, has experienced a dramatic shift, complemented by often-fickle American attitudes concerning healthy eating.

“A great shift in consumer attitudes and an eating revolution is taking place right now,” says Steve Fay, vice president of sales and marketing for Berner Foods, Roscoe, Ill. “Fresh is in vogue. Processed and heavily preserved foods are not. The success of Whole Foods Markets and the advent of increased fresh, all-natural and organic offerings in mainline retailers is testament to this.”

To insinuate that processed cheese sales are insignificant, though, is cheese blasphemy.

“The processed cheese segment of the category is very large and important, however, there has not been nearly the amount of manufacturer focus on innovation,” asserts John Metzger, director of specialty sales for American Dairy Brands, a division of Dairy Farmers of America, Kansas City, Mo.

The perception is that natural equals good-for-you. American consumers want natural cheese products, and this demand is reflected in what they add to their shopping carts. Across the board, consumers are getting back to the basics. According to Chicago-based Information Resources Inc. (IRI), sales of private label natural cheese slices, for example, increased nearly 11 percent in the past year, while private label natural crumbles increased a whopping 33 percent.

Why the shift? Fay asserts that Americans simply are embracing what they’ve always known to be true. “The great cholesterol scare that has become a part of our national consciousness in recent years is balanced by the new awareness of the ‘good-for-you’ part of cheese,” he says.

While cheese may not offer the same obvious health benefits as fruits and vegetables, it is a rich source of calcium that is highly valued by consumers. Additionally, cheese supplies a great deal of protein and phosphorus.

Assuredly, consumers’ tastes have become accustomed to quality, all-natural products. “You will continue to see the slide in sales of processed and imitation cheese products,” says James McDonough, vice president of sales for MMI Store Brands, Fort Worth, Texas.

Making Cheese a Breeze

Perhaps not surprisingly, consumers enjoy the renaissance of cheese as a healthful food. While the demand for natural cheese products is on the rise, so is the plea for products of convenience.

“Cheese is one of the few options for those looking to snack on something that isn’t packed with sugars and/or carbohydrates,” says John Sadowsky, general manager for Kantner Group, Pemberton, N.J. “Cheese snacks are displacing candy bars and chips in the lunchbox.”

Improvements in packaging and form have made natural cheese the natural choice for snacking consumers. For example, the sale of private label natural cheese cubes rose 5 percent this past year. According to IRI, private label string cheese followed suit with an 11 percent increase.

Sadowsky explains the success of convenience cheese: “To take a traditional 8-ounce chunk [of cheese] from the fridge, grab a knife and cutting board, cut it, re-wrap the chunk, and wrap the cuts may only take three minutes,” Sadowsky points out. “But three minutes is an eternity if you are rushing out the door to work or packing three lunches.”

Michelle Meyer, representative for Winona Foods Inc., Madison, Wis., agrees. “Consumers are continually seeking on-the-go products,” she says. “This trend is particularly important in the dip and sauce category.”

The data from IRI supports Meyer’s claim - private label dairy and cheese sauces have increased dramatically in sales, up almost 10 percent from last year. Portion-control cups and pouches also are on the rise.

Connecting Via the World Wide Wedge

While wholesomeness combined with convenient packaging tops the average consumer’s wish list, another growth trend is found among specialty cheeses.

“In fact, the growth of private label cheeses in traditional grocery stores is being driven by all-natural, specialty cheeses,” says Marilyn Wilkinson, director of national product communications for the Wisconsin Milk Marketing Board, Madison, Wis.

According to Wilkinson, there are double-digit growth rates among cheese varieties such as bleu, feta, provolone, Gouda, asiago, asadero and gorgonzola. “Specialty cheese shows great potential for the private label category,” she says.

The growth of specialty cheese mirrors the larger general trend of globalization.

MMI Store Brands’ McDonough further explains the catalyst for growth in this category. “As consumers grow more educated, better traveled and more willing to try new items, specialty cheeses have become a growth category,” he says.

A shrinking world affects every slice of life - and consequently, every slice (and wedge) of cheese. As consumers become better acquainted with one another’s cultures and eating customs, more experimentation occurs with products such as goat cheese and fresh mozzarella. Research indicates that sweet and savory Hispanic and Italian specialty cheeses are among the fastest growing in the private label segment.

“The increase in the influence of prominent chefs and cooking shows also helps to drive awareness of new and unique cheese products,” McDonough continues. “Private label is now embracing many items that a few years ago were thought of as niche items.”

When consumers cannot traipse around the globe, they often settle for a smattering of sensational delicacies from abroad to satisfy their wannabe-worldly palates. Media outlets like the Food Network help provide such inspiration. Without popular TV cooking personalities, such as the Food Network’s Rachael Ray, to serve as a guide, many of today’s experimental cheese consumers probably would never have discovered the brilliance of a wheel of brie, much less how to bake it!

Should Cheese Stand Alone?

The promotion of private label cheese is closely linked with its pricing. American Dairy Brands’ Metzger asserts that private label products are competing with their national brand counterparts very aggressively.

“Typically, everyday ceiling prices are established by the national brand and the floor prices are maintained by private label,” Metzger explains. “If everyday pricing and promotions are managed appropriately, the two or three national brands will drive growth in high-commodity markets, and private label will drive its largest share of category growth in low-commodity markets.”

Industry leaders vary in their opinions of appropriate promotions management, however.

Many, like Winona Foods’ Meyer believe the best way to promote and merchandise private label cheese products is during key buying periods such as the Super Bowl and Christmas seasons.

Metzger, on the other hand, encourages advanced promotions. “The cheese category can, and should, be promoted 52 weeks a year,” he asserts. “Advertising and displaying cheese with complementary products and/or meal solution receipts and products is most optimal.”

Regardless of retailers’ strategies, experts agree that while price plays a significant factor in promotion, the best way to market private label cheese is to advance cheese knowledge among consumers.

MMI Store Brands’ McDonough says, “Products should be merchandised next to the national brand equivalent so that price comparisons should be made. However, quality must be impressed upon the consumer.”

Wisconsin Milk Marketing Board’s Wilkinson agrees. “Private label is a brand in its own right and stores are getting smart about the marketing of these brands. The packaging is more sophisticated and attractive, but the biggest improvement is quality,” she says. “You can no longer refer to store brand cheeses as ‘generics.’ There are simply too many exceptional private label brands being sold today.”

The best possible sales occur when consumers are educated about the products at hand. Retailers may choose to use mass displays and create destinations that provide educational information about the products, including opportunities for sampling. Often, this approach is coupled with cross-merchandising (cheese with crackers, or even some private label wine).

A Havarti Round of Applause

Whether sliced, cubed or grated, consumers are looking for high-quality products that feature lower prices. Retailers selling private label cheese are witnessing an increase in sales due to this trend, and the category enjoys potential for great expansion and innovation.

“Price is the key differentiator for store brand cheese. Because we have a long history of strict standards of identity mandated by law, it really is hard to get a truly bad piece of cheese,” says Berner Foods’ Fay. “You can buy a piece of cheese with a large degree of confidence that no matter what the label, it will be good.”

“There is no doubt that this category has climbed from the bottom shelf to the top,” Wilkinson agrees. “Private label marketers have worked hard to improve the quality and image of today’s private label cheese brands and it shows with almost one-half of consumers saying they believe private label products are as good or better than branded products.”

This is great news for those of us who simply crave a quality product at a fair price.

The cheese category will continue to grow as consumers build confidence and acceptance of private label products, experienced through an ever-widening cheese selection.

Berner Foods’ Fay understands why this category enjoys virtually unlimited potential: “Cheese is simply a wonderful, flavorful, smooth and creamy delight that almost everyone just loves.”

For information on the dairy industry, go to our Web site and click on our sister publication Dairy Field magazine.

Did you enjoy this article? Click here to subscribe to Private Label Buyer.

Recent Articles by Kate Rzepka

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