Spotlight on cheese

According to “Category Insight: Cheese,” a November 2015 report from global market researcher Mintel, the United States is a “standout growth market in the North American cheese category.” The report forecasts an an annual average growth rate of 4.5 percent during the next five years. And it predicts that Canada will also realize a promising annual growth rate of 3.4 percent during the same time period.

When it comes to helping retailers and their own brands grab a share of that growth, effective merchandising could play a critical role. To see what retailers are doing well and not so well in the refrigerated cheese category, we visited three food markets in the Chicagoland area: a Fresh Thyme Farmers Market store, operated by Phoenix-based Fresh Thyme Farmers Market; a Whole Foods Market store, operated by Whole Foods Market, Austin; and a Heinen’s Fine Foods store operated by Cleveland-based Heinen’s Inc. Our visits took place on a Monday afternoon in late February.

Fresh Thyme Farmers Market

General observations:

In the Fresh Thyme Farmers Market store, refrigerated cheeses are available in two areas, within close proximity to each other. The first area is a refrigerated open-air multi-tiered display that can be found within the prepared foods section in the front of the store and slightly to the right (when looking into the store from the front entrance). On it we found about a dozen cheeses merchandised and sold under the Fresh Thyme Farmers Market brand. Half of the SKUs were cellophane-wrapped bulk cheese blocks that were priced by weight, and the other half were clear plastic tubs. We also saw three SKUs of packaged cheese party trays containing small squares of pre-sliced cheese and meat.

The second area is in an open refrigerated case toward the back of the store and against the wall on the right-hand side of the store, right next to the deli counter. In it we found 10 SKUs of sliced cheese, six SKUs of shredded cheese, one SKU of string cheese, three SKUs of block cheese, three SKUs of cheese balls and two SKUs of fresh mozzarella, including a cheese log and a cheese ball, all under the store brand. At the bottom of the display were cheese slices that appeared to be from the deli packaged in Styrofoam trays and wrapped in cellophane.

Foot traffic was very light during our visit, and the store was clean and well-stocked.

The upside:

• Both display areas employ brand blocking.
• Next to the multi-tiered open-air display in the prepared foods area was a small display table featuring the retailer’s Parmigiano Reggiano cheese. It was sold in blocks, in a grated format and as soup rinds for an advertised price of $11.99 per pound.
• While most of the cheeses available under the store brand are fairly typical for any grocery store, we did find some unusual flavors: a garlic and dill cheddar cheese block and a chipotle cheddar cheese block.

The downside:

• There were no promotions or shelf tags promoting the value of store brand cheese.
• They do not sell any cheese in the dairy section of their store. All cheese options are restricted to the two above-mentioned areas.

Whole Foods Market

General observations:

The Whole Foods Market store has a very large selection of refrigerated cheeses. The selection begins along the left-hand side of the store (looking into the store from the front entrance), in coffin cases, and crosses over to the back wall, into refrigerated cases, forming an “L” shape.

We found dozens of SKUs of cheese sold under multiple store brands, including 365 Everyday Value, 365 Everyday Value Organic and Whole Foods Market.

Foot traffic was moderate during our visit, with a fair number of people browsing the cheese area. The store was neat and clean.

The upside:

• We found some dark red shelf-tags under some of the store brand cheeses that said VALUE in big letters to draw attention to the products.
• The retailer uses brand blocking effectively.

The downside:

• The coffin cases housed dozens of specialty cheeses, but only under national brands. ■ Next to the coffin cases are two freestanding cheese sample stations. Both were featuring only national brand cheeses.
• We saw a few SKUs that were running low or almost out of stock.

Heinen’s Fine Foods

General observations:

In the Heinen’s Fine Foods store, refrigerated cheeses are available in multiple areas. The first area is an open-air multitier refrigerated display case on the left-hand side and within the middle of the store, (looking into the store from the front entrance), by the prepared foods section. The second area is at the back of the store, next to the deli case, in two refrigerated coffin cases. The third area is along the wall on the right-hand side of the store in doored refrigerated cases.

Traffic was moderate to heavy during our visit. This store was the last store we visited, so it was later in the afternoon and more individuals were shopping on their way home from work.

The upside:

• Unlike the Whole Foods Market store, Heinen’s offers a few store brand cheeses in its coffin cases, which showcase all of the specialty cheeses.
• Next to one of the Heinen’s branded cheeses in the coffin case was a sign that personalized the cheese. The retailer referred to the cheesemaker by name and called him “friend.” The retailer also pointed out the value of the cheese by stating: “No other blue cheese compares to the quality or the price of this blue.”
• The retailer uses brand blocking effectively in the doored refrigerated cases.
• We found the cheese areas to be well-stocked and orderly.

The downside:

• In the open-air multi-tiered refrigerated display case, we found only one SKU of Heinen’s branded Parmigiana Reggiano cheese among dozens of national brands.
• We saw the Sargento brand had shelf tags to promote that it was on sale (2/$6). The sale price of the Sargento brand was the regular price of the store brand.

Stay on top of trends

When it comes to selling refrigerated cheese, retailers would do well to keep in mind two important trends: snacking and convenience.

According to Mintel, snacking is a major consumer trend that has led to strong demand for healthful and nutritious snacks that can still deliver on flavor and taste. In fact, 25 percent of U.S. consumers rate single-serving packaging as the most important attribute when eating a snack.

However, cheese products positioned for on-the-go consumption represented just 2.6 percent of total new product launches in North America for the 12 months ending in October 2015. Therefore, retailers could capitalize on an underserved market by offering refrigerated cheese products suitable for snacking.

Convenience is also important to consumers. To offer them more convenience, Paul Brumback, deli specialist for Balls Foods, a division of Price Chopper, presented a cheese express case at IDDBA. In a video interview on the IDDBA website, he said the case was meant to offer customers prepared cheese items that could be easily eaten on their own or added to a recipe. For instance, the cheese case offered marinated cheeses that could be added to hot or cold pasta, incorporated into wraps or pitas, or used as an appetizer in an antipasto platter.

Additionally, Brumback mentioned that the cheese express case offered customers grated and shredded upscale hard cheeses available for purchase by weight. Offering upscale cheeses in this way allows the customer to purchase only as much as he or she needs instead of buying an entire block of cheese, which could possibly go to waste.

Retailers could also leverage product and packaging innovations to offer more convenience to customers, says Arturo Nava, marketing director, Nuestro Queso, Rosemont, Ill. For example, his company recently introduced shredded Oaxaca cheese strips. Customers will no longer have to “struggle” with untying the traditional Oaxaca ball of cheese.

Retailers could also leverage packaging to encourage sales of store brand cheese, especially Hispanic cheese, he says. Consumers are often confused as to how to use specific Hispanic cheeses, and this confusion could limit category growth. Packaging that explains how best to use the cheese could go a long way in delivering category growth.