2018 Category Guide: Natural Cheese

This is part of Supermarket News’ 2018 Category Guide to fresh and center store categories.

Sales of natural cheese remained flat year over year, but the category is still robust with $12.7 billion in sales for the 52-week period ending June 2, according to IRI data. And, as market research firm Packaged Facts notes, a growing preference for natural, authentic cheeses and continued demand for convenience are combining to reshape the cheese industry.

While overall cheese numbers haven’t changed much, the way consumers shop for cheese has. Consumers are increasingly exploring new varieties, and they’re eating more cheese than ever — about 35 pounds per year per person, according to IDDBA, the nonprofit organization serving the dairy, deli, bakery, cheese and supermarket industries. Retailers are responding by giving their customers the specialty cheese shop experience in store.

“When I started, our customer's tastes were very basic, and we've now started to grow into more fun, exotic cheeses that a year ago I wouldn't have been able to bring in,” said Andrew Harvell, assistant culinary director and cheese guru at Colorado-based Lucky’s Markets.

In addition to more upscale cheese mongering, the category is also growing its appeal as a natural and protein-packed alternative to processed snacks. Brands continue to capitalize on this opportunity by packaging their cheese in more convenient forms for on-the-go snacking for adults and children.

The evolution of cheese into a packaged snack food option has led to the introduction of different types of cheeses, sometimes with new-fangled flavor profiles. Natural cheeses positioned as wholesome and sustainable (organic, local, grass-fed) yet still indulgent and flavorful have resonated with today’s consumers. While the cheese market remains dominated by large producers, demand for novel and artisanal cheeses has allowed smaller-label cheeses to claim their place at the table. In addition, store brands remain a market force, accounting for over 40% of dollar sales, according to the Packaged Facts report.

“Product assortment balance is important,” said David Sprinkle, research director for Packaged Facts. “While artisanal and more specialized cheeses are becoming more popular, that doesn’t mean that people are dropping standards such as cheddar and mozzarella, which continue to account for the bulk of market growth.”

Retailers may also expect to see cheese producers coming up with more innovative flavors and marketing campaigns this year as manufacturers look to shore up sales here in the U.S. while they deal with potential losses overseas due to trade tariffs being rolled out this year. It will be more important than ever to hold on to — and grow — the cheese market here at home.