GROCERY: Dairy Case: Who stole the cheese?

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GROCERY: Dairy Case: Who stole the cheese?

The recently renovated Big Y World Class Market in Guilford, Conn. features 200 varieties of gourmet and specialty cheese in its expanded deli section. But that doesn't seem to shake the confidence that dairy/frozen food manager Michael "Yogi" Tomasello has in his own corner of the cheese category.

"It holds its own, especially when you have [a] 'buy one, get two free' [offer]," he explains of dairy case cheese. "We sell a large amount of [commodity cheese, especially] string cheese."

Jeff Culhane, director of deli/bakery at Rochester, N.Y.-based Penn Traffic Co., would agree with Tomasello that commodity cheese still has its place in the mix. Culhane says the segment's sales are "holding steady" at the chain, which operates 106 BiLo, P&C, and Quality stores in the Northeast.

"There's still a consumer buying...sliced American, mild cheddar, and provolone every day," he says. "The 'typical' customer still enjoys the classics for their sandwiches. And with the current cost of goods rising, not to mention gas [prices], customers are watching what they spend."

Dairy vs. deli

But grocers can't ignore the fact that excitement in the cheese category has clearly passed to another part of the perimeter, and sales growth has followed. "Commodity cheese sales have been flat, and sales higher in specialty cheeses," confirms Rita Postell, spokeswoman for Charleston, S.C.-based Piggly Wiggly Carolina Co., which operates over 115 stores in the Southeast.

ACNielsen figures illustrate this shift. The overall cheese category dipped 0.4 percent, while bright spots for growth were the natural (up 1.4 percent) and specialty/imported segments (up 8.6 percent), for the 52 weeks ended March 24, 2007. (ACNielsen figures reflect performance in supermarkets with $2 million or more in sales.) For the same time period, unit sales for the category rose 1.8 percent, with shredded/grated cheese seeing a 4.1 percent increase, no doubt helped by such retail promotions as special offers, long-term TPRs, and EDLP programs.

If the current trend for specialty cheeses holds, however, the dairy case could find itself conceding the cheese battle to deli.

How can dairy departments get stalled cheese sales to go up? More effective marketing could do the trick, say category experts.

Retailers can incorporate such items into more store promotions, suggests Dave Leonhardi, director of cheese education and events for the Wisconsin Milk Marketing Board in Madison. "If a retailer is offering a pasta special, suggest a cheese to go with it. If the produce department has baked potatoes to sell, the dairy department can offer a cheese to top it."

Manufacturers haven't been idle, adds Leonhardi, citing Wisconsin brands that offer easy-prep grated and shredded items, as well as all-natural slices. "And they're dialing up the flavor with jalapeno peppers, salsa, horseradish, and onion and chives," he says.

Plymouth, Wis.-based Sargento Foods, Inc. has accordingly rolled out a range of products to spark interest.

One is the Limited Edition line of shreds, slices, and snacks, which v.p. corporate & marketing communications Barbara Gannon calls "a completely new concept for the cheese category." The line rotates premium varieties "to help create a treasure hunt experience in the dairy case and satisfy the adventurous palates of our consumers," she explains.

Cheesemakers elsewhere are also working to address shopper demands. This summer Northfield, Ill.-based Kraft Foods will introduce to the United States Kraft LiveActive Cheese Sticks and Cheese Cubes (they're already sold in Canada), which feature probiotics for digestive health, and Kraft Singles Select, "a firmer, richer individually wrapped American cheese slice with a more flavorful taste [to] appeal to an adult palate."

New products alone might not be enough to get things moving, though. Kraft advises retailers to "take a consumer-centric point of view and find ways to organize the dairy section based on popular cheese usages." For example, "effective merchandising can help create 'visual speed bumps' in the dairy aisle to encourage consumers to stop and explore cheese snack products."

EXCLUSIVE WEB CONTENT: Between dairy and deli

For cheese producers who straddle the dairy and deli sections, the issue of so-called "commodity" vs. "specialty" cheese isn't so black-and-white.

One such company is Tillamook Cheese in Oregon, which considers itself "a natural cheese manufacturer" rather than a commodity cheese brand, according to v.p. of sales & marketing Jay Allison. The company, which maintains a presence on dairy case shelves with such items as sliced and shredded options, nevertheless has its eye on current trends as well, and to that end has introduced a new line of flavored cheddars in eight-ounce cuts, expressly for the specialty cheese table.

"Following the artisan cheese movement, timing seemed right for the expansion of our cheese line," explains Allison, "because consumers are increasingly open to cheeses with unique flavors, textures, and ingredients."

Montpelier, Vt.-based Cabot Creamery occupies a similar position. "Because Cabot's products compete in both the specialty cheese section as well as the dairy aisle, the perspective [on the struggle for cheese share in the supermarket] is interesting," notes director of marketing Jed Davis. "Certainly, the segments that have suffered most [include] processed cheese. This makes sense, given both the relatively more recent introduction by cheesemakers, including Cabot, of natural cheese slices, and a heightening awareness among consumers [of] products that are, or are perceived to be, artificial."

As a result, continues Davis, "Natural, specialty, and organic products have all benefited from this greater interest….We're also seeing a more sophisticated palate evolve for many consumers."

Cabot recently jumped at the chance to help develop tomorrow's cheese mavens, through its participation in the "Kitch'N Kids with 3-A-Day of Dairy Program" with retail partners Stop & Shop and Giant-Carlisle, and several other dairy producers. The Kitch'N Kids program urges children age 7 to 14 to submit recipes that meet 3-A-Day dairy consumption criteria and use partner products.

"The program has generated substantial Web activity to the retailer partner sites, significant PR coverage, and over 1,000 recipe entries," says Davis. "Possible promotion extensions could include a cookbook from the many great recipe submissions."