2020 State of the Industry: Cheese is flying high
Americans’ love affair with cheese is defying gravity. According to Chicago-based market research firm IRI, over the 52 weeks ending Sept. 6, 2020, natural cheese retail sales were swinging high through the air. Dollar sales jumped 15.8% to $15,291.0 million, while unit sales catapulted 9.0% to 4,356.4 million.
Even the once-struggling processed cheese category was performing handsprings. It saw a 13.5% gain in retail dollar sales (to $3,175.1 million) and a 6.8% increase in unit sales (to 776.4 million).
Despite these successes, 2020 has been a balancing act for the cheese category. While retail sales have exploded, cheese also lost a lot of ground during the coronavirus pandemic due to huge dips in foodservice/commodity sales.
“The pandemic and the ensuing responses have sent cheese markets all over the place,” says Bill Beaton, president and CEO of Agri-Mark Inc./Cabot, Andover, Mass. “From panic-buying to the government stepping in, demand has been all over the place. Record highs and lows.”
According to Michael Pellegrino, president and chief growth officer of Plymouth, Wis.-based Sargento Foods, the challenges of 2020 required the industry to come together to address both the growing demand at retail and the supply chain issues companies faced.
“This … has required an incredible amount of flexibility and agility across the industry,” he adds. “It has not been easy at times, but you can clearly see everyone is working collaboratively to keep our essential food businesses as healthy as possible during this once-in-a-century event.”
Pandemic flips expectations
This year has been a wild ride for cheese in terms of sudden shifts in consumer purchasing behavior, notes Pellegrino. Shutdowns led to an unprecedented demand at retail that still is not back to normal.
“During the peak of pandemic shopping in March and April, consumers rushed to grocery stores to stockpile cheese for their coming quarantines. In several segments, the industry saw retail sales surge 30-70% percent from 2019,” he adds. “While this extreme spike only lasted a few weeks, several segments are still experiencing exceptionally high demand (+15-25%) that will likely stay until the foodservice industry recovers from consumers limiting their away-from-home meals.”
Jeff Jirik, vice president of quality and product development for Prairie Farms Dairy’s Cheese Division, Edwardsville, Ill., agrees that demand is “volatile and evolving.” And because most cheese processors’ main objective was to meet this demand, 2020 saw significantly fewer product launches.
“Overall, innovation this past year was slowed considerably by the response to COVID-19,” Jirik says.
Beaton concurs.
“There is no doubt that COVID slowed product innovation as we — like all cheese companies — stepped up production to meet demand,” he explains. “We’ve added shifts for larger pack sizes as our consumers moved away from convenience items.”
In addition to quickly adapting to surges in demand, cheese processors had to immediately implement coronavirus safety measures to keep supply chains running. For its part, Agri-Mark/Cabot “built health screeners on the fly on iPads and pre-ordered thermometers before [any] state or federal assistance,” notes Beaton.
According to Pellegrino, Sargento’s main priority was to keep its employees safe and healthy.
“We have done everything we can to maintain our vital role in the nation’s food supply during these unprecedented times,” he explains.
Cartwheeling for home cooking
One of the primary drivers for all that cheese purchasing is that more consumers are cooking at home, says Jirik. This has led to an increase in sales of “basic” cheeses and those that are convenient for meal prep/cleanup.
“Innovative variety packs of natural cheese will continue to evolve as a convenient item for consumers to use at home in meal preparation,” he predicts.
According to Pellegrino, the pandemic “put more focus on in-home cooking needs.” And consumers specifically are looking for cheese options that enhance their favorite home-cooked meals. Sargento’s Reserve Series of sliced and shredded natural cheeses fits the bill of gourmet, convenient offerings that can easily be used at home. The line’s shredded cheeses were introduced in 2019, and the slices were added in 2020. The slices come in fresh Asiago, aged Gouda and aged white cheddar varieties; the shreds are available in aged Italian blend, six-month aged Gouda, 14-month aged Parmesan and 18-month aged cheddar.
The offerings “allow home cooks to add specialty cheeses to sandwiches, burgers and weeknight meals, allowing anyone to create their favorite dishes and conveniently enjoy gourmet flavor profiles,” Pellegrino notes.
Neil Cox, chief customer officer for Fairfield, N.J.-based Schuman Cheese, says “unique twists” on classic cheeses have enticed those looking for something extra special in their home-cooked meals.
“With entertaining being drastically reduced, people have also found little luxuries in specialty cheese such as Cello Copper Kettle or one of our curated Cheese Flights,” he adds. “The landscape is drastically different than past years, but we have found that consumers and operators alike are still connecting with each other through good food and quality cheese.”
Many consumers have turned cooking at home into a social occasion. According to Shannon Maher, vice president of marketing at Bel Brands USA, Chicago, 2019 was the year of “on-the-go snacking,” and 2020 has become the year of “social snacking.”
“We have seen an increased demand for homemade ingredients versus ready-to-eat [products], resulting in positive growth for dairy and [for] some of our entertaining and local brands like Boursin, Kaukauna, Merkts, Price*s and Owl’s Nest,” she adds.
This year, Bel Brands added two products under its brands that are ideal for entertaining. Its Kaukauna Rosé White Cheddar cheese ball is a 10-ounce offering made with quality aged white cheddar blended with a refreshing semi-sparkling rosé wine. Each ball is covered in a crunchy almond coating for a delightful combination of unique flavors and texture, Bel Brands says.
The company also debuted Boursin Fig & Balsamic — a limited-edition holiday flavor. The offering combines creamy, crumbly cheese with the rich, complex sweetness of balsamic and notes of fig. According to Bel Brands, the cheese is perfect with crackers, charcuterie and accoutrements or can be added to “show-stopping” appetizers for a refined finish.
Jinny Lam, director, cheese for Tillamook County Creamery Association, Tillamook, Ore., says in-home entertaining/consumption is a potential growth area for the cheese category. She thinks that companies should look into developing products that make “entertaining/snacking at home easier,” ones that “enable more vegetable consumption using cheese as a flavor and texture boost,” and offerings that recreate cheese-forward restaurant dishes at home.
To meet this demand, Tillamook is launching cracker-cut cheese early next year. The line will include Tillamook’s sharp cheddar, extra sharp cheddar and pepper jack cheeses “pre-cut in a peel-and-reseal package for snacking in or out of the home, or as a simple way to entertain,” Lam explains.
And newly created company Board At Home, Willows, Calif., jumped on the home entertainment trend, launching curated kits of artisanal cheese and charcuterie with next-day delivery in the continental United States. Currently available in three sizes, Board at Home kits feature an assortment of small-batch handcrafted cheeses, charcuterie, crackers, jam, nuts and other accompaniments sourced from a rotating selection of California-based makers and artisans that use ethically sourced ingredients and sustainable practices.
Somersaulting for new formats
With consumers moving away from three meals a day to smaller, more frequent bites, new formats of cheese are a growth area for the cheese category, says the Packaged Facts division of Rockville, Md.-based MarketResearch.com in its “U.S. Food Market Outlook 2020: Home Cooking, Grocery Shopping & Food Trends in the Age of Coronavirus” report.
“Increasing format varieties — including versions targeting snacking (fun shapes/forms for kids) and cooking (shredded cheese deigned for specific meal types and sauces) — will generate opportunities,” the report notes.
According to Maher, cheese companies are creating products that respond to consumers’ changing lifestyles and eating habits such as “portable cheese options for on-the-go snacking.”
Easy-to-use formats, in particular, really resonated with consumers this year, says Cox.
“Many of us multitask on a daily basis, but this year — with all of its challenges — brought a new meaning to the phrase,” he adds. “The need to streamline mealtime and make it as delicious and easy as possible led to many changes in the way the dairy and deli aisles look.”
For its part, Lioni Latticini Inc. created a new, convenient format of its fresh mozzarella cheese. The pre-sliced mozzarella logs come in an easy-to-open package with a fresh new look. Sliced into 21 pieces, the creamy mozzarella is quick and easy to add to any classic sandwich or caprese salad, the Union, N.J.-based company says.
Consumers are looking for convenience and portability — especially in cheese snacks, says Pellegrino. Sargento introduced Snack Bites and Balanced Breaks to address these needs.
“Snacks with protein continue to perform very well — like our new Snack Bites, which combine two natural cheeses in a convenient, portable package. And we continue to offer a variety of Balanced Breaks snacks,” he notes. “Designed for on-the-go eating occasions like an afternoon pick-me-up, a go-to travel or post-workout snack, or simply a cheesy snack, the individual-sized Snack Bites were also designed to create an elevated eating experience thanks to the pairing of flavors in each convenient pack.”
According to Cox, Schuman plans to expand its offerings in the cheese snack area in 2021.
“Consumers want snacks that are easy, portable and portion-controlled,” he notes. “With that in mind, we’ve already begun to roll out snack packs among brands like Bella Rosa and Vevan and are looking to continue this expansion with our flagship Cello and beyond.”
While snacking cheese remains popular, it hasn’t had the same growth surge as other types of cheese this year, says Lam. Since the cheese snacks often are “pre-portioned and packaged for lunch boxes,” they are currently less in demand than “block, shredded or sliced cheese, which are more used inside the home.”
Flavor exploration does a hoop act
Beyond new formats, consumers also are interested in experimenting with new varieties and flavors that pack a punch.
“Consumers’ adventurous pallets will enjoy cheeses that place further emphasis on specialty attributes, including artisanal processes, extended aging, handcrafted recipes and special handling, as well as even bolder flavors from heat, spices, peppers and smokiness,” reports Packaged Facts.
According to Maher, one of the most consistent recent trends in the cheese category is “flavor innovations for cheese that adapt to expanding and global-inspired palates.”
Lam notes that consumers are looking for variety and “bolder flavors,” including spicy, smoky and Hispanic options. Tillamook recently launched the boldly flavored Maker’s Reserve 2010 extra sharp white cheddar, which was “produced and set aside in 2010 and released in 2020.”
“It’s crumbly and complex with incredible bold cheddar notes, yet still buttery and velvety smooth,” she explains.
Willows, Calif.-based Rumiano Cheese Co., meanwhile, added three new adventurous flavors to its Redwood Coast line: Wild Arabian Nights (Monterey Jack with za’atar seasoning), Borderline Blaze (smoked jalapeño cheddar) and Tuscan Temptress (mozzarella with basil and sun-dried tomato). Some of the sales of the product were donated to organizations supporting front-line health care workers in California.
“This product release could have been delayed due to the pandemic, but instead we decided to move up the release so that we could make an impact on our community during a time of need,” said Joe Baird, CEO, Rumiano Cheese.
And Schuman jumped on the global flavors trend by launching a new brand: Margot Fromages. The brand consists of Gruyere cheese that is produced by the “third-largest and last family-owned purveyors of Gruyere,” Cox says. The distinctively nutty and fruity cheese is aged from five to 12 months, beginning creamy and mild at five months, and then developing into a more complex, salty and earthy flavor as it ages.
Future planning an uncertain stunt
While 2020 has been a positive year for cheese sales, at least on the retail front, the peaks and valleys have made it pretty impossible to predict the future, notes Paul Bauer, CEO of Ellsworth Cooperative Creamery, Ellsworth, Wis.
“The coronavirus [pandemic] has been such a never-ending cycle of up and down,” he explains. “It's very hard to manage through and anticipate. What's hard is not just anticipating the needs of your customers, but also your suppliers, your supply chains, how fast you can adapt, how fast your workforce can adapt.”
Pellegrino agrees that quick and nimble adaptation will be key to getting through the next year and beyond, as there’s no way to know how long the pandemic will continue.
“We’re all trying to determine when a ‘new normal’ will be here and how to effectively manage our businesses in the interim,” he adds. “Projecting demand between different channels, addressing trends like accelerated online grocery sales, and determining what changes in consumer and shopper behavior are most important are just a few of the areas where we are focused at Sargento. Our teams know agility will be very important for the next 12 to 24 months.”
Lam predicts that the eating-at-home trend will continue for the near future.
“While Americans are anxious to get back to their on-the-go and restaurant-going routine, I expect that eating inside the home will continue in the year to come as we try to get back to a sense of normalcy,” she explains.
The only thing that is clear right now is that this home-eating trend will include cheese.