SHARPER IMAGE

ROSEANNE HARPER

Even as prices climb and consumers rein in spending, retailers are having no trouble selling cheese.

Granted, they're putting a tighter focus on the versatile category, educating consumers, taking advantage of manufacturers' promotions and, in some cases, just trimming margins on selected cheeses each week.

ACNielsen's figures for the 52 weeks ending May 17 show sales up for UPC packaged cheese in supermarkets.

Supermarket delis have gone ahead with plans to expand specialty cheese departments and have made room in the dairy case for an ever-growing collection of convenience items, natural slices and flavored cheeses. Small, medium and large shreds and cubed cheddar ready for the party plate are there, plus lots of string cheese. Sales are brisk, retailers said.

“We've nearly doubled the cheese section in dairy to a run of 24 feet,” said Timothy Hassler, one of the co-owners of Ferguson & Hassler Supermarket, Quarryville, Pa.

The section was expanded just over a year ago, when the 50,000-square-foot store underwent a major remodel, and the owners don't regret it.

“It gives us space for new items,” Hassler said, adding that sales have kept up with his expectations.

At the same time, Hassler and his co-owner brothers reset a specialty cheese island that's situated right across the aisle from the service deli.

“The space is the same, but the reset makes it more attractive, and we've added varieties.”

In fact, he said he'd bulked up the SKUs on that island by at least 5% and sales have increased.

“We save quite a bit by buying bulk cheeses, cutting them and vacuum-packing them in-store,” said Hassler's brother and co-owner, Jim Hassler.

With a nod to consumers' budget adjusting, Hassler said it's not a time to try out new, high-end, high-ticket cheeses.

“If we get a deal, we pass it on to our customers. We've been putting two and three cheeses on ad every week, at 20% less [than their everyday prices]. On in-store, advertised cheese, we may take deeper cuts.”

Hassler, like other retailers SN talked to, sees a good future for specialty cheese.

“If I had my way, I'd increase the size of that island by at least half.”

Meanwhile, in the Pacific Northwest, Central Market, Shoreline, Wash., is selling 2-pound blocks of Tillamook cheddar as if they're going out of style.

“We just can hardly pile them out there fast enough,” said Sam Carlquist, dairy manager.

“We're selling 2-pound blocks for $4.99, and they're costing us $4.75, so we're not making much on them, but we're selling huge amounts.

The two-week, blowout sale is bringing a lot of customers to the dairy's cheese section, though, and they're buying other things, too, Carlquist said.

The regular everyday price of the 2-pound blocks is $8.99, and for pepper sharp, which is also included in the sale, it's $10.99.

Other retailers have told SN that Tillamook is so popular on the West Coast that it's on everyday shopping lists even when it's at its regular, everyday price. It often outsells private label even in these tough times, sources said.

STEADY SALES

For a variety of reasons, cheese sales overall are holding steady, sources told SN.

“Even though retail prices [of cheese] are up 15% over a year ago, and wholesale prices are even higher, sales are about the same as they were a year ago,” said Jerry Dryer, a dairy market analyst and consultant in Delray Beach, Fla.

Dryer said there's undoubtedly been some cost-eating on the part of both manufacturers and retailers, but through thick and thin, the health card is propelling natural cheese sales forward.

“Natural slices in the dairy case — not so much processed anymore — are doing well, and string cheese sales just keep growing. It's a great snack. People love to give it to their kids.”

When it comes to the higher-ticket specialty cheeses in deli, there may be some hand-holding required. In fact, Jim Hassler said the location of his store's cheese island is crucial.

“It's right by the service deli. Customers can ask questions, and our associates do help them decide, tell them about the cheeses. If [the island] wasn't right there, it wouldn't work.”

The same is true at Kowalski's Markets, St. Paul, Minn., and the company is reaping pretty remarkable benefits.

“People are willing to pay for that additional service,” said Terri Bennis, vice president of perishables operations at the eight-unit independent.

“I'm amazed at the growth we've had in specialty cheese. Some of our stores are seeing 30% to 40% dollar volume increases year-to-date,” Bennis said.

Even as some retailers have cut back on labor in their cheese departments, Bennis, Hassler and others say the interaction with associates is key to keeping sales up.

“Our customers tell us the service as well as the quality is worth it.”

Kowalski's has just rolled out specialty cheese departments to all units, and the stores that already had the departments recently expanded them, Bennis said.

Just as it is at Kowalski's, education of the customer is paramount at Publix Super Markets, Lakeland, Fla.

“Cheese, like wine, has such an interesting story to tell and such a unique and varied flavor to experience,” said Maria Brous, spokeswoman for the chain that sprawls across the Southeast.

“Customers are becoming intrigued with cheese. To help with education, we merchandise our cheeses by type, as opposed to by country,” Brous said. “By doing this, we assist our customers — and associates — in understanding the various types of cheese, such as the soft, ripened cheeses like Brie vs. the pressed, cooked hard cheeses like Parmigiano Reggiano.”

STAFF EXPERTISE

Publix spares no expense in making sure its cheese associates know what they're talking about.

In its two — soon to be three — GreenWise markets, Publix has its cheese associates specially trained.

“To help customers with the education process, our Publix GreenWise Market associates receive training and accreditation, using a phased training program adapted from [those used in] Europe,” Brous told SN.

There will be more of that type of training in the future, predicted Marilyn Wilkinson, director, national product communications, Wisconsin Milk Marketing Board, Madison.

With such a proliferation of domestic varieties in the last few years, and consumers' recent quest for local and regional products, there is a lot to tell consumers that can spur sales, Wilkinson said.

“Television programming on cooking and travel and a mix of the two has produced ‘armchair diners,’ and they want to know more,” she said.

A longtime veteran of the supermarket and cheese industries also told SN that education in the cheese department cannot be overrated.

“Most of all, consumers are looking for guidance in the store to explain the cheeses and let them know what to do with them, “ said Dan Giacoletto, director of sales and marketing, Chef de Fromage, F. Cappiello Dairy Products, Schenectady, N.Y. “Make a commitment to an educated cheese department with people that actually talk with customers, and every retailer can enjoy their share of the big dollars that are out there in cheese sales.”

Fortunately, the day of the cheese island with a sea of unfamiliar, sometimes unidentifiable — and often untended — cheeses is almost over, one researcher and consultant told SN.

“Nobody wants to be blindly looking through a mountain of cheeses only to pull out a little wedge of something for $7 or more,” said Michelle Barry, president of Tinderbox, a division of Bellevue, Wash.-based The Hartman Group that is dedicated to culture, trends and innovations.

Now, retailers are devoting the attention to the islands that they deserve, Barry said.

“The specialty stores, I think, can take credit for lifting the culture, for doing a remarkable job of creating a canvas of cheese for consumers in a user-friendly way — ways we didn't even know existed — and now that has spread to mainstream retailers.”

The only trouble is that the islands — in many consumers' minds — get relegated to special events or when company is coming, Barry said. The idea should be to get them to buy cheese from the specialty island for everyday occasions.

In that regard, Barry has a suggestion. Retailers, she said, could eventually make cheese aficionados out of novice cheese tasters.

“We're already seeing zones of high quality in the cheese section of the dairy case, and we'll see more.”

Barry suggests the dairy case is the place to get consumers to start trading up when it comes to cheese.

“For those customers who are just starting their cheese journey, it would be good if they could explore a little in areas of the store they're comfortable in,” she said.

“You're not going to get them to go from cheddar or jack to an exotic, high-end cheese there, but what if, with all the familiar cheddars, they suddenly saw an Irish cheddar. People aren't expecting it, but they might try it,” Barry said.

“Then bring in another they haven't seen there before. You'll be moving them along the cheddar continuum.”

As they trade up there in the dairy case, they may eventually look for more variety in the specialty cheese case, Barry pointed out.

But just for the dairy cheese section, such a move would be good for the retailer in many ways.

“It'd help spread a broader quality halo across the whole dairy case, and it shows the retailer is progressive and on-trend. It also indicates that that retailer is paying attention to a category that's important to the consumer, and making it easier for them to shop.”

Barry conceded that pulling higher-end cheddars from the specialty case and positioning them in dairy is operationally difficult.

“The retail environment does not sync up with either consumers' behavior or their expectations, and that's too bad.”

But she said she's confident there will be changes as manufacturers realize what consumers want.

“If manufacturers don't take the lead in the dairy case, then [retailers] could do something.”

A facing or two, not a whole reset, could introduce the dairy case customer to some higher-end cheeses. Especially, when consumers are showing interest in the story behind cheeses and other products, this could spell opportunity.

“The power of the narrative is much greater in cheese than in any other category in dairy,” Barry said.

91%
Percentage of shoppers who like flavored cheeses
Source: California Milk Advisory Board Survey