Cheese: cheese gets squeezed as Cheddar falls

Life doesn’t get any easier for cheese brands. The whole category has experienced a contraction of space in the past year, with cheddar brands in particular being squeezed.

Retailers have chosen to invest in their own-label ranges and rationalised the number of branded SKUs on shelf. As a result, innovation has suffered, with branded launches focusing predominantly on convenience formats such as sliced, grated or snacking products whose growth is a rare green shoot in an otherwise inhospitable landscape.

“The cheese category is changing,” says Lee Wiseman, category development manager at Mondelez International. “Traditional cheddar is in value decline and its penetration is saturated, meaning there is limited headroom for growth.”

Wyke Farms is one of the brands to have suffered in this hostile environment. “It’s been very tough,” admits MD Rich Clothier. “We’ve backed away from the deep promotions and tried to sell off-shelf. It’s about focusing on the people who appreciate the values of the brand and trying to reinforce that position.”

The fact that brand leader Cathedral City has managed to deliver volume growth is “really pleasing to see” says Lee Willett, Dairy Crest marketing director. Yet the brand has also seen value sales dip, demonstrating just how competitive and price-sensitive the cheese fixture currently is.

Nielsen analyst Rupert Austin notes that although pricing has been relatively flat for cheese over the past year, prices are noticeably up over the last 12 weeks. In this context, brands such as Cathedral City may find it tough to keep price rises in check for too much longer.

Other cheddar brands have fared much better. Sales of Pilgrims Choice topped the £75m mark thanks in part to investment in TV advertising. “Over the last three years we’ve continued to invest in above-the-line, which some of our competitors haven’t done as significantly as we have,” says Ornua Foods marketing director Mike Harper. “What we’ve always tried to be is the counterpoint to Cathedral City. We’ve wanted to have a differentiated point of view, tone of voice and flavour.”

The Seriously brand has also delivered steady growth. Earlier this year, Lactalis McLelland relaunched and added to the brand with the rollout of a fresh new look and two clearly defined sub-ranges with their own unique recipes: Seriously Strong, which is targeted at consumers looking for texture and versatility, and Seriously Creamy, which is aimed at consumers looking for a distinctive and full-flavoured taste. The move also saw the launch of a completely new line, Seriously Creamy Medium Cheddar 350g, which was introduced to appeal to younger families in particular.

The most eyecatching innovation, however, is coming in convenience products, which meet the growing demand for on-the-go snacking, particularly among adults. Lactalis McLelland reports that Seriously Spreadable Squares, which were launched to tap into the portions market, have added £1.4m worth of incremental sales to the brand’s value and are attracting new shoppers to the category. Even more impressive is the impact made by Kerry Foods’ GoGo’s brand, which was launched in February and is already worth £3.8m.

Wiseman says that Mondelez’s insights show that 98% of adults snack at home, work or a place of study, and consequently “snacking cheese has been a success as it provides added value for shoppers looking for convenience, as well as being expandable with a large range for different occasions”.

Mondelez added a new Nachos variant to the Dairylea Dunkers range in the spring; however, the brand itself is down 3.7%.Philadelphia has also struggled despite the launch of a Greek Style variant. In fact, Mondelez’s growth is being driven by Lunchables, sales of which have spiked 15%.

Baby Bel is another brand targeting the adult snacking market. Bel UK recently invested in a significant integrated marketing campaign focusing on young adults, and marketing director Steve Gregory reports seeing a 7% uplift when Mini Babybel was sampled at front of store.

Bel UK is also looking to drive sales of more ‘mindful snacks’ with its recently launched Snaccident campaign for The Laughing Cow, based on research that showed millions of Brits are regularly underestimating the calorie content of their favourite food by an average of 700 calories a day.

Part of the rationale for brands focusing on adult snacking is to compensate for the decline of the kids’ lunchbox opportunity now that free school meals are available to all primary schoolchildren. In this context, Cheestrings’ growth of 9.5% is all the more impressive. Brand owner Kerry Foods has continued to support Cheestrings. Earlier this year, it joined forces with Sony Pictures to run an on-pack promotion linked to The Emoji Movie as part of a wider £1m integrated marketing campaign, which also included TV, shopper activation and digital support.

Snacking aside, the other significant growth area is in speciality cheeses, which Nielsen’s Austin notes is being driven by changing consumer tastes and the growing use of speciality cheeses in recipes. Own label is a key driver of this trend. Waitrose cheese buyer Chris Dawson reports sales growth of 109% in the retailer’s quark range, while Waitrose has launched its first organic halloumi as the cheese moves from being an ethnic speciality to a mainstream staple, according to Dawson. The Co-op, meanwhile, has made its Irresistible Buffalo Mozzarella an all-round line after seasonal summer sales outperformed expectations.

Brands have responded with innovation of their own. In May, Galbani launched ready-to-heat mozzarella slices alongside a £2.5m marketing campaign to inspire consumers to “do things the Italian way”. And Arla has launched a Castello Snacking Bag that contains snack-sized cheddar, brie, decorated cream cheese and creamy blue varieties.

In a mature category, a marginal decline in total sales cannot be considered a complete disaster, yet Wyke Farms’ Clothier believes the category should be performing better given that a lot of current trends are favouring cheese.

“The protein trend, low carb, low sugar, they’re all messages that shoppers understand and as an industry, I’m not sure we’ve quite done enough to exploit those.”

So will they step up and seize the new opportunities in 2018?

TOP LAUNCH

GoGo’s by Kerry Foods

With free school lunches having bitten a chunk out of kids’ snacking, suppliers are relying on adults to shed their inhibitions and gorge on cheesy treats. Step forward GoGo’s, a pairing of cheese bites with ingredients including chocolate-covered coffee beans, chorizo bites and flapjacks. Whilst GoGo’s undoubtedly owe a debt to Graze snack boxes, that they’re found in the chiller sets them apart from other combos, and with a protein content of 10g to 18g the health box is ticked too.