Category Insights: Cheese

Private Label Taking Sharp Approach To Cheese

Expanded flavor profiles and improved packaging helping drive private label share higher in the category.

May 10, 2013
Trans

Sometimes it might come off as a little cheesy. But there’s no joking around about the strength of private label sales in the cheese category today.

Data from the PLMA 2012 Private Label Yearbook shows cheese as the third-largest private label category by dollar sales, and fourth by unit sales. The latest research by Mintel Group Ltd. showed the overall category reaching $18.9 billion in sales in 2011, with that number expected to hit nearly $20 billion by the end of 2012.

And the latest figures from SymphonyIRI Group show private label approaching a 44 percent share in the largest segment, natural cheese, with about a 22 percent share of processed cheese, about a 31 percent share of cream cheese, and a 39 percent share in cottage cheese.

And Mintel’s report on the category from June of 2012 shows no sign of slowdown in the overall category or private label. It forecasts sales to climb an additional $4 billion to $24.2 billion annually by 2016.

“The market for cheese is positioned to grow over the next five years,” the Mintel report said. “Part of the innovation that will expand sales will come from further development of better-for-you products. … Additionally, marketers will become smarter with the use of such social media tools as Facebook and Twitter to multiply brand impressions via friend-influencing fans.

“Finally, the continued success of private label, especially in the large natural cheese and the small cottage cheese segments – where it outperforms all brands – will continue to grow the market among value-seekers, so that all strata of consumers will find something that speaks to their interests and needs.”

Jeff Giffin is the president and CEO of Wisconsin-based Masters Gallery Foods, a private label manufacturer of natural cheeses. The company has been in business for 39 years and Giffin said that sales are strong.

“We have seen steady increases in private label,” Giffin said. “We feel new package styles and flavorful offerings are drivers for success.”

Mintel’s report showed that after a downturn, cheese sales rebounded in 2011 and 2012, as consumers were willing to spend more, and retailers added to their private label cheese product lines. Although Kraft is the dominant brand in the category, it has about a 17 percent share of the natural cheese market, compared with private label’s 44 percent share in the category, the report said.

“Each segment (of cheese) will continue to grow sales as more cheese makers enter the market, including strong retail private label programs,” the report said.

Giffin said his company saw demand in new flavor profiles.

“It seems the population desires more flavor, and increased demand for aged products and blends fill these needs,” he said.

Mintel also pointed out a couple of areas where private label could continue to find growth.

It pointed to rising childhood obesity rates, and the influence of better-for-you products in the category, as one potential area for private label influence to be felt.

“Brands that innovate with BFY snack/lunch cheeses and kid-appropriate packaging and promotions could have a good chance at success,” the report said. “It’s an area private label could champion, combining kid-friendly cheese with local promotional tie-ins.”

Among the areas where better for you comes into play is in low sodium products, said Wixon Food Scientist AnnMarie Kraszewski.

“There’s a few things we have to deal with like the school lunch program, and we do some work with the national salt initiative out of New York City,” she said. “At this point we’ve been able to reduce the sodium but still know how to keep the flavor there.”

Low-fat products also are making strides, Giffin said.

“We continue to see traction in lower fat items, as the population discovers that these cheeses are now quite pleasing, after many years of being less than desired,” he said.

The other area is in regards to packaging and brand loyalty.

“When making up their minds regarding what cheese to buy, besides the particular type of cheese, consumers consider resealable packaging as most important, even more so than the cheese brand,” the report said. “This weak showing for brand loyalty puts private label cheese in a good place, especially considering its usual value pricing.”

Some of those packaging innovations are old ideas coming back in style, Giffin said.

“We see renewed interest in our stand-up gussets,” he said. “We have offered larger size gussets for years, and now small bag private label has really embraced the new package style.”

As natural cheese sales overall grew 3.8 percent in 2012 from a year earlier, according to SymphonyIRI data, private label showed strength in shredded cheese (up 3.5 percent) and shelf-stable grated cheese (up 3.55 percent). Private label grew ahead of the overall category in natural slices (up 6.5 percent), string cheese (up 6.5 percent), and crumbled cheese (up 18.5 percent).

“Besides higher flavored products, we have seen convenience and smaller serving items filling the snack or impulse voids,” Giffin said. “Hispanic items continue to grow, as do items that serve specific culinary expectations.”

As processed cheese overall dipped 2.2 percent in 2012, private label processed and imitation cheese slices – the largest subgroup in the segment – felt 7 percent.

Kraszewski, whose focus is on the snacks category, said her company had worked on richer flavor profiles as consumers’ tastes continued to expand.

 “We did a port wine and cheese, mac and cheese last year, and that sort of hit a baby boomer generation,” she said. “Goat cheese has popped up a couple times, some of the fancier cheddars. There’s a lot (going on) with comfort food, taking a mac and cheese and making it a little more sophisticated, making it more interesting.”  

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