SAY CHEESE 1995

LAURA KLEPACKI

Cheese eaters are looking for cheese with more bite. And for the merchandisers willing to cater to them, the impact on cheese volume can be pretty strong.

Indeed, growing interest in sharper, more flavorful specialty cheeses may be enticing some consumers to start enjoying high-quality chunk cheese again, despite the category's bad rap over fat content, said deli executives.

More operators are making room for a variety of higher-priced, more sophisticated products in a section that primarily has been the domain of chunks of imported Swiss, sharp cheddar and fruit-flavored spreads.

Retailers told SN that over the past year they have been adding more aged cheeses, as well as some traditional cheeses in new flavor variations. Examples are feta spiked with herbs, Monterey Jack with pesto, and a creme cheese with sundried tomato.

Without exception, the deli executives interviewed who said they've made such additions are seeing sales over the past year increase.

"Category-wise, specialty cheeses have grown tremendously," said Cathy McDade, deli director at Harvest Foods, a 55-store chain based in Little Rock, Ark. "The customer demand has grown. They are looking for something new."

McDade said her company now offers some 300 items from various suppliers, although every item is not carried by every store. Some new

additions for her stores include aged cheeses and creme cheeses flavored with tomato, basil, garlic and cucumber.

The flavors "are getting a little more innovative," she said. And as the category grows, "we are trying to devote more space to these type cheeses.

"We still sell basic brie, but now there are so many different kinds with so many different flavors, nobody buys the plain anymore," said McDade.

Retailers and other industry members say hectic schedules and more sophisticated palates are probably at least partly responsible for the growth of specialty cheeses.

A spokesman for a leading cheese manufacturer said cheeses spiked with ingredients such as sundried tomato and peppers are scoring because the spiking adds more flavor.

"Our population is getting older and wiser. But their taste buds are getting duller. For that reason, stronger flavored cheeses, such as Gorgonzola, also are getting more popular," he said.

And the more flavorful cheeses can also be used to quickly spice up bland foods.

"Busy people are using spiked cheeses for recipes. For instance, a pesto-infused Monterey Jack gives them two ingredients in one. It is quicker."

One retailer said that despite the nation's continuing concern with the fat content of foods, "cheese right now is making a comeback," said Mark Polsky, vice president in charge of buying at Magruder Inc., a 12-store chain based in Rockville, Md.

"Because cheeses are high-fat, the category had declined," said Polsky. "But people are still interested.

"We have a rather extensive imported cheese section in each store now. It was something we had let die down a little bit. But now people have started to come back in and request cheese, and we geared back up again," said Polsky.

Polsky said consumers are eating cheeses responsibly. "They are not going to eat a half-pound wedge in one sitting, but they are eating what they like and watching the quantities."

On average, the stores carry about 100 stockkeeping units of cheese in two 12-foot shop-around cases, said Polsky. Meanwhile, a newly opened specialty store featuring only deli, cheese, wine and liquor will offer an even higher number than that, in two cases totaling about 32 feet, he said.

A&P, Montvale, N.J., is devoting more space to specialty cheeses, said Bill Vitulli, vice president of community and government relations.

And the 10-unit Byerly's chain in Edina, Minn., is also carrying a wide array of specialty cheeses, said Mary Lou Long, director of deli operations.

"We already devoted anywhere from 16 feet to 20 feet of space for specialty cheeses. So that is a big area," and includes a lot of imported products, Long said.

"I think it is growing as the U.S. consumer gets more and more educated and as they travel more. They come back and eat more of those types of cheeses," she said.

"We are always expanding the variety in that area," she added. "We are always trying new things. Some things kind of move in and out. Some catch on and some don't. But specialty cheese is a big area for us."

Dahl's Food Markets, Des Moines, Iowa, also has experienced significant growth in specialty cheeses, said Sheila Logan, deli buyer for the 13-store chain.

"We are now carrying maybe 30% to 40% more items than we did last year," she said.

Logan said people are cooking less these days, but when they do, it is usually with gourmet recipes, which special cheeses often fit into.

"They are cooking more specialty things, rather than the average meals," Logan said. "They just don't cook roast beef and gravy and potatoes anymore. It has to be something special with a fancy cheese or they don't cook at all."

Dahl's self-service cheese section measures about 4 feet by 6 feet, Logan said. "We buy the cheeses already cut and wrapped, so people don't have to cut here [in-store]."

An official for a leading packager of specialty cheese also noted that there is less and less cutting being done in stores, and the prewrapped cheeses tend to be in smaller chunks.

"People don't want to buy a [big] wedge of something they've not tried before," the official said.

The other retailers polled also said specialty cheeses were for the most part prewrapped and merchandised in self-service cases.

Rod Cox, director of deli's at Morgan's Holiday Markets, Cottonwood, Calif., said that while sales of specialty cheeses have definitely increased, movement is affected by the particular market area.

"Our experience has been that down toward the farming communities, it doesn't do well," said Cox. It sells better in more cosmopolitan communities, he explained. And in areas where the cheese is popular, "they buy the cheese regardless if it is $10 a pound," he added.

Cox said that while the cheeses are more expensive and bring more dollars into the department, the margins are still sometimes lower than what is traditionally expected from perishables departments.

"In some respects, we make money on it, and in some respects we don't. We get about a 32% to 35% margin on it, and in most food areas like delis and bakeries, we like to see at least something about 45%," said Cox.

Still, the specialty cheeses, at least so far, seem to be protected from the retail price wars that plague other categories. Retailers said prices vary on all the cheeses, but $5.99 per pound is a typical point.

An executive at a Midwestern chain, who asked not to be named, said the specialty cheeses are not price-sensitive in his stores, like American and Swiss cheeses.

Logan of Dahl's said retail prices on the specialty cheeses are about twice as much as the traditional cheeses. "The margins are the same, but they bring in more money because of the higher retail cost."

And for now, said Logan, "people are looking for that cheese, and they are paying, no matter what it costs."