Making the Most of New Consumption Patterns in the Deli
By Kathleen Furore
Americans have always loved cheese. And new industry data reveals the love just keeps on growing.
Per capita cheese consumption is at an all-time high, with per capita spending on cheese up 37 percent since 2008, according to the International Dairy-Deli-Bakery Association’s (IDDBA’s), "What’s In Store 2016" report.
The specialty cheese segment represents a small but increasingly significant slice of that cheesy pie.
“Specialty cheeses have been and continue to be a strong growth driver for the total cheese category,” says Heather Porter Engwall, director of national product communications for the Wisconsin Milk Marketing Board (WMMB).
Understanding the trends impacting the overall market for cheese, and the role specialty cheeses play, can help manufacturers make sure they are providing the kinds of products today’s deli customers crave.
"Specialty cheeses have been and continue to be a strong growth driver for the total cheese category."
—Heather Porter Engwall, Wisconsin Milk Marketing Board
Specialty Cheeses: Substantial and Growing
Sales data show that 2015 was a good year for the specialty cheese segment.
According to IRI, retail volume sales of specialty cheese in the U.S. reached an all-time high of 702 million pounds in 2015 – a 5.3 percent jump from 2014, the WMMB’s Engwall notes. Non-specialty cheese volume sales, on the other hand, were up just 1.6 percent for the same time period, she adds.
The numbers are also up over time. Specialty cheese volume sales have risen, on average each year, by 3.8 percent between 2011 and 2015. By contrast, non-specialty cheese volume sales were up just 0.4 percent, on average, each year from 2011 to 2015, the WMMB reports.
“In terms of volume share, specialty cheese accounts for 18 percent of the total retail cheese category,” Engwall says. Dollar sales paint a similar picture for specialty cheese growth in the retail channel. According to IRI, the U.S. specialty cheese market was $4.9 billion in 2015, accounting for 24 percent of the total retail cheese category.
"Specialty cheeses are very important to the overall marketplace, with many major and independent retailers increasing their offerings and creating excitement around this category. Consumers' tastes have evolved and they are searching for new flavors and packaging choices and the specialty cheese category is evolving with their tastes."
“That’s up 4.6 percent over the past year, compared to non-specialty cheese dollar sales growth of 1.2 percent from 2014 to 2015,” Engwall says. “Looking back over the past four years, U.S. retail sales of specialty cheese increased an average of 4.8 percent per year vs. 2.6 percent average, annual growth for non-specialty cheese from 2011 to 2015."
Trending with Millennials
The fact that specialty cheeses hold strong appeal to millennials is another plus.
As IDDBA’s, "What’s In Store 2016" report notes, “Millennials are an important cheese consumer, given their desire to try new flavors and textures, as well as their belief that specialty/craft and imported
cheeses are worth paying more for.”
That’s all good news for retailers and cheese manufacturers, since shopping baskets that contain specialty cheese are worth nearly double the baskets that do not – $92 on average with specialty cheeses vs. $48 for those without, according IDDBA.
However, where customers are shopping for cheese indicates that mainline supermarkets and delis might not be adequately meeting their demand for specialty products.
“More than 25 percent of shoppers visited a specialty store or natural/health food store instead of their preferred store to make a cheese purchase,” the IDDBA’s, "What’s In Store 2016" report reveals.
That’s a fact cheese manufacturers and mainline retailers are starting to consider (or should be considering!) when planning their inventory of specialty cheeses.
“Specialty cheeses are very important to the overall marketplace, with many major and independent retailers increasing their offerings and creating excitement around this category,” reports Gaetano Auricchio, vice president of sales and marketing for Wisconsin-headquartered BelGioioso. “Consumers’ tastes have evolved and they are searching for new flavors and packaging choices and the specialty cheese category is evolving with their tastes.”
Photo courtesy of BelGioioso.
—Gaetano Auricchio, BelGioioso
An Opening for Organics
California-based Rumiano Cheese Company committed to organic about a decade ago and consequently has weathered the up and downs of the organic food movement. Today, the company is enjoying the upswing in demand for organics, with sales of its organic cheeses on the rise.
“We were in organic a little early in the cycle – maybe nine or 10 years ago. This was a little early and was pretty painful,” recalls Richard Moore, Rumiano’s director of sales and marketing. “The demand for organic milk has grown at a substantial compound annual rate and this is directly correlated to the demand of all things organic by the consumer.”
Sales of organic food and non-food products in the United States broke through another record in 2014, totaling $39.1 billion, up 11.3 percent from the previous year, Organic Trade Association (OTA) statistics show. Subdivided further, sales of organic food are now nearing the milestone 5 percent share of the total food market. The organic dairy segment has played an important role in reaching that milestone.
“The organic dairy sector posted an almost 11 percent jump in sales in 2014 to $5.46 billion, the biggest percentage increase for that category in six years,” the OTA’s, "U.S. Organic Industry Survey 2015" reports.
According to IRI, exact weight sales of organic cheese accounted for just 0.3 percent of retail volume cheese sales in the U.S. in 2015. But that small number doesn’t tell the entire story.
“While small in volume, the organic cheese segment grew by 37 percent over the past year, and an average of 20 percent each year over the past five years,” the WMMB’s Engwall explains.
In addition, organic cheese sales are projected to increase by double digits to reach $750 million in 2018, the Packaged Facts’ report, "Cheese: Natural & Specialty Cheeses in the U.S. & Global Markets" predicts.
Photo courtesy of Rumiano.
Source: Organic Trade Association
Consumers’ Cheese Preferences
Convenience, flavor, authenticity and freshness will be the key factors impacting consumers’ cheese purchases in 2016, the WMMB predicts.
Bold, uniquely flavored cheeses, in fact, are expected to outperform in both volume and dollar sales – think hints of jalapeño, herbs, garlic, berry, ginger, coconut, bacon, and even sweets like caramel and maple syrup, according to the WMMB and IDDBA.
“The Dry Jack is a hand rolled and aged wheel of Jack, and the Mozzarella is smoked using real hickory chips in large smokers we have on site,” Moore says.
Cheese Snacking Grows too
A change in consumers’ snacking habits is also driving innovation in the specialty cheese category.
“More consumers are looking for convenient ways to add high-quality proteins to their diets, with Mintel reporting sales of protein-rich snacks increasing by 89 percent between 2012 and 2014,” the WMMB reports. “New items such as snack sticks with notes of parmesan and zesty teriyaki beef, fresh mozzarella ball snack packs and aged cheddar cracker cuts offer nutritional value and grown-up flavor appeal to the growing snack sector.”
BelGioioso is tapping into that growing demand for better-for-you snacks.
“The specialty cheese category has seen fantastic growth with style varieties and off-the-wall flavors,” says Moore, who says Rumiano's most popular, widely distributed specialty cheese products include the company’s dry jack cheese (which the company has been producing for four generations) and the smoked mozzarella.
“Consumers are focusing on the nutritional value of natural cheeses and they recognize that our specialty cheeses have significant values of protein and calcium along with consistent texture and flavor,” BelGioioso’s Auricchio says, noting that the company is concentrating on the snacking category.
New items include single-serve packs of fresh mozzarella, fontina, mascarpone and ricotta; pre-sliced Italian cheese boards; and cheeses with added flavors including meats, rubs and marinades – “all perfect for snacking or entertaining,” Auricchio adds.
“One of our most popular cheeses is fresh mozzarella, and we have recently introduced a one-ounce portion sized fresh mozzarella snacking cheese,” he says. “We have also introduced an infused flavored Black Truffle Burrata and a 12-ounce Italian Cheese Board, with slices of provolone, fontina, parmesan and asiago.
The Slicing Component
When it comes to producing and packaging specialty cheeses, the slicing process comes into play in a big way.
Tackling the challenges that slicing specialty products present is something cheese manufacturers must deal with almost daily.
“Overall, one of the biggest costs associated with slicing would be how to accurately manage your trim and give-away reduction without conversely causing your labor spend to spike,” says Moore, noting that slicing is a fairly significant portion of Rumiano’s business. “This is where we think that Weber's expertise has and will [continue to] help our operation.”
Consistency is another must in producing high quality specialty cheeses – and it is something the right kind of equipment can help companies achieve. “Our ability to slice cheeses with consistent results stems from carefully chosen equipment partners like Weber,” Auricchio of BelGioioso says.
“Their technology allows us to produce perfect slices that are more consistent and uniform than other equipment can produce. Weber also has a reputation for hygienic design, making their slicers easily accessible for fast and thorough cleaning, which adds to our production efficiency and helps to keep our costs competitive.”
With the market for specialty cheeses growing faster than the non-specialty products, the future appears bright for companies willing to commit to the category. The cheesemakers most likely to succeed in the segment will be those that meet consumers’ demands with new products – products the WMMB describes as those “that go beyond convenience, taking flavor and performance to innovative new heights for both home cooks and on-the-go snackers.”