Cultural growth: annual data shows an increase in retail dollar and volume sales for all key cultured dairy foods categories - even cottage cheese!

Dairy Foods, April, 1998 by Donna Gorski

The three largest segments in this category are cottage cheese, sour cream and yogurt, with low-fat products being the greatest contributor to volume growth. For the first time in years, cottage cheese has shown positive growth in both dollar and volume sales. Much of this is attributed to innovation in product and package, similar to, but not as extensive as the reinventing of fluid milk in single-serve, reclosable bottles.

"The annual [retail sales] data shows an upswing for cultured dairy products across all products tracked in the [IDFA Cultured Dairy Products] report in 1997," says Susan Kjellqvist, market research mgr., International Dairy Foods Assn. "Sour cream showed the highest annual dollar sales increase. And excitingly, cottage cheese increased in both dollar and volume sales. Refrigerated dips also followed this growth trend."

Here's an overview by category:

* Cottage Cheese

Volume sales for the cottage cheese category, which has been declining for at least the past 25 years, increased by 1.2% in 1997, as compared to 1996, with dollar sales increasing by 3.8%. What's interesting is that dollar growth was experienced at all fat levels: Regular/whole milk 1.4%, low-fat 7.0% and nonfat 2.6%. Low-fat cottage cheese sales are driving this category's growth and currently comprise 38.3% of total volume sales. Regular fat is 46.3% and nonfat 15.4%.

This first-time-in-a-long-time growth is attributed to companies like Kraft Foods Inc., Northfield, Ill., which has remained dedicated to the category even during cottage cheese's not-so-popular times. Kraft's brands - Breakstone's, Knudsen and Light 'n Lively - continue to be leaders in their respective markets. The company attributes this to product quality, marketing support and giving consumers what they want.

For example, in 1991, the company introduced to California markets, focusing on the trendy Los Angeles area, a multi-pack of individual servings of cottage cheese under the Knudsen brand. Originally called Four-Pack, the company recently renamed this line "On the Go!" in order to fit with today's consumer trends. At the same time, package graphics and verbiage were dramatically updated and contemporized, "to better communicate the portability and convenience of the product," says Anne Marie Johnson, brand mgr. for cottage cheese at Kraft.

"We've recently added a five-second tag to our highly successful Knudsen base brand cottage cheese TV commercial to promote On the Go!," she says. This corresponded with the kick-off of a multi-faceted marketing campaign, which includes event sampling, in-store sampling and couponing.

"We're going after heavy cottage cheese consumers who are looking for more ways to eat the product and who want to take it on the run," Johnson says. "Cottage cheese is doing phenomenally well for Kraft."

This summer, Kraft will test market a dual-compartment cottage cheese-4 oz cottage cheese with 1.5 oz fruit topping on the side. The product called Cottage Doubles, will debut under both the Breakstone and Knudsen brands.

"We will position Cottage Doubles as a wholesome snack for the whole family," says Michael Pellegrino, category business mgr.

Another cottage cheese die-hard, Crowley Foods Inc., Binghamton, N.Y., believes market conditions and trends are right for the company to expand its line of flavored cottage cheese. The company is rolling out 16-oz containers of Nonfat Cottage Cheese with Chives and Nonfat Cottage Cheese with Vegetables.

* Sour Cream

Sour cream is the epitome of a commodity food, yet still manages to hold its own. Very few sour cream manufacturers stray from the plain white stuff, yet consumer trends indicate that adding chives or other seasonings would fit with today's convenience trend.

Currently, 68.8% ( 4.0%) of volume retail sales are in regular fat, 16.5% ( 5.5%) in low-fat and 14.7% (-7.1%) in nonfat. Overall, 1997 volume sales of sour cream were up 2.4%. Dollar sales showed an increase of 7.3%. Like natural cheese consumers, sour cream users are saying: "Give me the fat, or at least some of it." Nonfat sour cream appears to be a stagnant category.

Refrigerated dips, which are frequently sour cream based, showed even better growth trends in 1997. Volume sales were up 4.6%, and dollar sales grew 10.1%. Full-fat seems to be where the activity is, as exemplified by Heluva Good Cheese Inc., Sodus, N.Y.

"Over the years Heluva Good has been able to identify and develop some very unique flavors in the refrigerated dip category," says Katie Coyne, dir. of marketing. "This variety, along with our high standards of quality and bold packaging, has allowed us to become a leader in the category." Heluva Good ranks fourth in the refrigerated dip category nationally.

"Our goal for the upcoming millennium is to drive sales to new levels, and one way we will accomplish this is through new product introductions," Coyne says.

The company's three new varieties of full-fat dips are Dill Dip with Hummus, Seafood and Vegetable. The dips, which rolled out in select markets throughout the East Coast this March, are sold in 12-oz plastic containers.