CHEESE
TO PLEASE AS LIFESTYLE DICTATES
Cheesemakers of both local and overseas products share with Retail World the drivers of the cheese category
and how they are innovating to meet consumer demands.
By Nerine Zoio.
T
he cheese category has
grown consistently in value
over the past 12 months,
with all quarters contributing
to a 3.8 per cent MAT growth rate
(IRI MarketEdge Total Australian
Grocery Unweighted to MAT to 21/7/19,
supplied by Saputo).
The category is split into dairy and deli
cheese, according to Saputo Cheese
Head of Marketing Mike Murray.
Dairy cheese is the larger subcategory
and represents 70 per cent of the
dollar share of total cheese, with 3.4
per cent dollar growth in the past 12
months. Deli cheese constitutes 30 per
cent of the dollar share of total cheese,
with 4.8 per cent dollar growth MAT to
21/7/19 versus the previous year.
The category growth has been driven
by a small increase of 1.8 per cent
in average price per unit versus the
42 RETAIL WORLD OCT, 2019
previous year across dairy cheese,
and a more pronounced 7.1 per
cent increase in the volume of deli
cheese sold.
Saputo Dairy Australia, the largest
dairy processor in Australia following
its acquisition of the activities of Murray
Goulburn Co-operative in 2018 and
Warrnambool Cheese and Butter in
2014, produces, markets and distributes
products for domestic and international
markets, including Caboolture, Coon,
Cracker Barrel, Devondale, Great
Ocean Road, Liddells, MG Ingredients,
Mil Lel and Sungold.
Mr Murray points out that natural
cheese slices (not processed),
especially “lifestyle cheese” such
as lactose free and vegetarian, is a
growing category as consumers seek
offers of more natural products.
Saputo recently launched Liddells
Lactose Free Shredded Pizza Blend
cheese in line with lactose free dairy
cheese growing ahead of the total
cheese category at 11 per cent sales
growth (three-year CAGR MAT 6/8/17 to
4/8/19), with mozzarella slices 250g to
soon follow suit.
“Australia is a nation that’s largely
focused on cheddar cheese,” Mr Murray
said. “Slices is a growing segment and
Coon aims to offer consumers a variety
of cheese types in the sliced format
for convenience.”
The two main contributors to cheese
category growth are the cooking and
entertaining cheese segments, which
make up 60.6 per cent dollar share of
total cheese and are delivering 3.7 per
cent and 4.6 per cent dollar growth
respectively compared with last year,
says Mr Murray.
To meet demand, Cracker Barrel,

Saputo’s casual entertaining brand,
continues to innovate with new
products and flavours, including the
launch of Infused Cheddar Cheese
with Jalapeno & Honeycomb 130g,
exclusive to Woolworths, in May this
year, and Vintage Club Sharp & Rich
Creamy Cheddar 130g for Coles and
independent retail stores in September.
As much of the cheese category
bought outside of specialty cheese
represents habitual purchasing,
experiential marketing is becoming
increasingly important as a way of
getting people to try new things,
according to Mr Murray.
“Cheese lends itself towards cross
category activations as it is often
consumed in conjunction with other
items,” he said. “A shopper-centric
mindset among retailers will facilitate
cross category planning and execution.
“Occasion based marketing
activations in collaboration with FMCG
suppliers from other categories have
worked particularly well at boosting
in-store sales of cheese.”
Mr Murray says supporting retailers
starts with input into shelf layouts with
a logical flow, clearly defined segments
and brand blocks that act as signposts
to assist shoppers, in a shopper-first
approach, with navigation.
Saputo packs, he adds, include
visually appealing usage ideas to
encourage buying.
Premiumisation and cross
segment buying
According to Fonterra Australia’s
Category Manager for Cheese, Kate
Marshall, fixed weight cheese is worth
more than $2 billion annually, with value
growth continuing to outstrip volume
growth in the past year (IRI Market Edge
AU Grocery Scan MAT to 4/8/19).
The Bega brand remains the branded
market leader in the category, holding
11.8 per cent value share, growing in
line with the category and above total
branded value growth.
With 98.4 per cent of Australian
households already buying the
category (IRI Shopper Panel National
Panel MAT to 21/7/19), growth is being
achieved through premiumisation and
increased cross segment buying as
shoppers continue to trade up and
across into higher priced value-add
products, says Ms Marshall.
Products that deliver functional
benefits through convenient formats,
such as natural cheese slices and meal
solutions (culinary grated blends), as
well as emotional and social benefits
(entertaining cheese) are achieving
highest growth, she adds.
This is demonstrated through the
slowing of growth within everyday
block, slice, grated and soft formats
despite these comprising the majority
of category volume, while culinary,
snacking and entertaining cheese
continue to contribute significantly
to growth.
“The ability of retailers to maximise
everyday cheese sales – the most
highly penetrated segment – while
opening up opportunities in-store
and at fixture to take advantage of
increased consumer demand for
culinary, entertaining and snacking
cheese [lower penetration segments]
is key to extracting incremental
category sales and driving loyalty to
store,” Ms Marshall said.
She adds that private label, smaller
packs, health concerns, lactose free,
vegan, value-added convenience,
snacking, culinary and entertaining
are making their impact on category
performance in supermarkets.
Private label continues to perform
strongly, achieving 31.1 per cent value
share and growing ahead of the category
average at 4.1 per cent (IRI Market Edge
AU Grocery Scan MAT to 4/8/19). This is
due to continued product expansion into
higher everyday value.
CHEESE
Growth in the number of smaller
households, coupled with an increase
in demand for convenient solutions and
desire for less waste, is driving demand
within smaller pack formats.
Ms Marshall says four out of every
five units sold come from small packs
(500g or less), which continue to grow
at three times the rate of larger packs.
Fonterra’s research into consumer
usage and attitudes towards cheese
showed a trend towards shoppers
citing “health” as a key concern for
consuming less cheese.
“While there’s high-level awareness
that cheese is a pure and natural
product that delivers positive attributes
that impact wellbeing through calcium,
protein, and vitamins, high fat content
and potential cholesterol concerns are
contributing to consumption declines as
consumers opt for portion control rather
than low fat products,” Ms Marshall said.
Of interest is that in the past four
years, value sales of reduced fat
products have almost halved in value,
representing less than 10 per cent of
total value sales currently (IRI Market
Edge AU Grocery Scan MAT to 4/8/19).
Also, products delivering lactose free
claims enable category consumption for
those with known intolerances.
Despite being small, innovation in this
space has enabled rapid growth over
the past four years, says Ms Marshall.
“New products that broaden usage
occasions and deliver to existing
unmet consumer needs will continue
to contribute positively to category
growth,” she said.
Currently, vegan cheese substitutes
have a less than one per cent share
of the category. However, Ms Marshall
points out that high levels of innovation in
this space, in line with other categories,
have fuelled positive growth in the past
two years.
“Reinforcing the health benefits of
dairy and industry-wide effort towards
more sustainable practices are key to
prevent category leakage long-term,”
she said.
Shoppers are increasingly moving
away from the large block as a one
stop solution to meet all of their
cheese needs, turning towards more
fit-for-purpose offers, she adds.
This, she says, is evidenced
in the growth in natural cheese
slices, culinary, snacking and
entertaining cheese.
TO PAGE 44
OCT, 2019 RETAIL WORLD 43
 CHEESE
FROM PAGE 43
Ms Marshall says research suggests
that snacking is a growth area, with
more consumers choosing snacks to
sustain energy and provide short-term
satiety benefits outside of main meals.
“Snacking is currently the highest
performing value growth segment,
with the kids snacking segment slightly
outperforming adult,” she said, adding
that culinary cheese is the second
highest growth segment.
Consumers’ love of cheese coupled
with their understanding of cheese’s
ability to solve meal tensions via flavour,
texture and broad appeal is driving
usage in this segment, she says.
“Within culinary cheese, grated
formats achieved the highest value
growth and thereby attracting
significant new buyer spend due to
the ease of use and convenience this
format delivers.”
Dollar/unit declines over the
latest year combined with a net
SKU reduction of two per cent has
encouraged more shoppers to engage
with the segment, increasing house
penetration by 3.4 per cent and having
a net impact on total category spend,
which has increased by 4.6 per cent
(IRI Market Edge AU Grocery Scan MAT
to 4/8/19, IRI Shopper Panel National
Panel MAT to 21/7/19), according to
Ms Marshall.
“With a significant number of
entertaining-cheese shoppers stating
that price is a key reason for leaving
the segment, breaking down price to
enable more accessible entertaining
opportunities, as well as simplifying the
shelf layout to aid ease of shop, are key
to delivering ongoing category growth,”
she said.
Organic, clean-labelled
and convenient
Ashgrove is one of Australia’s
largest family owned and operated
vertically integrated dairy processors.
It specialises in the manufacture and
production of fresh milk, cheese, cream,
butter and ambient natural cheese
snacks under the Ashgrove Tasmanian
Farm, Ashgrove Signature, Ashgrove
Tasmanian Organic, Elizabeth Town
Creamery and AmazeBall brands.
In 2017 its factory was certified
by NASAA Organic: Australian and
International Organic Certifier to
process organic milk into premium
44 RETAIL WORLD OCT, 2019
value organic dairy products.
Ashgrove Cheese Marketing and
Communications Manager Anne
Bennett says the first thing a shopper
sees is a product’s outer packaging,
so care has to be taken.
Then, she adds, come texture, touch
and feel, which Ashgrove uses to
its advantage.
“If we’re going to make our brand
stand out from a sea of choices in the
cheese category, the second sensory
element of a tactile brown paper web
can be a great marketing tool for the
product,” she said.
She adds that the company’s
approach to retail cheese design under
its master brand, Ashgrove Tasmanian
Farm, is to incorporate indicators or
marks such as a geographical quality
indicator with a Tasmanian map,
suitable for vegetarians, beverage
matching and a cheese flavour profile.
These indicators or cues are
integrated on the front and back for
an all-over feel to assist and influence
consumers in their purchase, says
Ms Bennett.
She also says consumers want clean
labelling that points to whole natural
foods made from natural ingredients with
minimal processing and no additives.
Ms Bennett emphasises that
convenience is growing strongly as
a driver of sales, with the company’s
NPD segmented to occasions such as
entertaining, cooking and snacking
products that offer “easy solutions and
inspire customers”.
To meet the trend towards smaller
cheese portions, Ashgrove developed
what it claims is the first ambient, all-
natural cheese snack, AmazeBalls.
“They’re natural, crunchy cheese balls
made from pure Ashgrove farm cheese,
which is dried and popped into a nut-
size snack with a honeycomb texture
– ideal to replace croutons in a salad,
top soups or scatter onto a platter,”
Ms Bennet said.
She says the idea came from
conducting research on global
consumption trends, particularly in the
US and UK.
“As an SME, product innovation is
essential to our longevity,” she said.
“We’re always tabling and knocking
out ideas.
“The explosion of natural ambient
snacks combined with technology to
pop our core product cheese was a
two-fold value proposition: it uses our
core product and produces an ambient
product that opens new channels to
market in terms of convenience and
impulsive but healthy purchases.”
The cheese category in the grocery
channel is heavily influenced by
imports, and for this reason Ashgrove
encourages retailers to support
Australian owned and operated
businesses to meet the trend of
consumers buying locally owned and
produced food.
Especial growth in specialty
Lion Specialty cheese offers brands
and products that play across the
entire category.
According to Marketing Director Zoey
Saunders, the company’s specialty
cheddar brand, Mersey Valley, has
“number one status”, with Tasmanian
Heritage, King Island Dairy and
South Cape collectively leading the
camembert and brie segments, with
the latter being the category’s largest
brand at more than 12 per cent market
value share.
The specialty cheese market grew at
2.7 per cent in the latest MAT (IRI Scan
Australia Unweighted MAT to 28/7/19),
with volume growing in line with value
at 2.6 per cent.
The key segments that showed strong
growth were cheddar (up 5.2 per cent
in value) driven by Mersey Valley, and
cream cheese (up 9.7 per cent in value)
driven by South Cape.
TO PAGE 46
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 CHEESE
FROM PAGE 44
Ms Saunders says the manner in
which the company positions and
markets its brands is “imperative to
success” because of its broad portfolio.
“We’re focused on getting more
Australians to try specialty cheese,
as much opportunity lies there, and our
occasion-based strategy is supported
by marketing activities,” she said.
“Ms Saunders says consumers have
an appetite for different flavours in
specialty cheese, where an increasing
number of new and interesting flavours
are being launched into the category,
such as Mersey Valley Smoky Bacon
and Mexican in specialty cheddar.
Products in white mould, ash and
washed rind are also attracting
attention with consumers, especially
appealing to their enthusiasm to try
new flavours, she adds.
Ms Saunders points out that “consistent
execution at the fixture and event
activation” is important to unlock growth
and make it easier for shoppers to shop,
choose and enjoy specialty cheese.
According to 2017 research, 25 per
cent of surveyed cheese shoppers
found it hard to find what they wanted
[Shopper Tracker] and 33 per cent
thought there was too much choice
[Lion research], “which means that
retailers could maximise category sales
by making it easier for consumers to
shop the cheese section,” she said.
“Other initiatives could include the
section being clearly laid out according
to the decision tree, leading with
occasion and then by type of cheese,
and with the types of cheese easily
blocked to make them easier to find.”
Education of consumers on the different
occasions that cheese can be used for
would also be helpful, adds Ms Saunders.
This is because even though the top
occasions for specialty cheese include
entertainment and cooking purposes,
there are still plenty of occasions
where cheese could be eaten, and this
“constitutes a huge opportunity”.
Retailers would also be well advised
46 RETAIL WORLD OCT, 2019
to work toward a snack offering in
specialty cheese through different
formats and sizes to satisfy a snacking
need for consumers outside the current
option of cutting smaller pieces off a
larger wedge/block or wheel, she adds.
Moondarra steps up innovation
Victoria-based Moondarra Cheese,
which was established in 2004, is
now one of the largest manufacturers
of flavoured cream cheese in
Australia, with its brands available in
supermarkets across Australia and
New Zealand.
Moondarra director Nick Katis says
the flavoured cream cheese category,
like most segments and categories,
has a combination of traditional and
innovative drivers.
The trend, he says, is “finding new
and natural summer cream cheese
flavours that extend cheese platters
as the peak season is entered and
entertaining becomes the order of
the day”.
Mr Katis adds, however, that
smaller pack sizes in addition to new
flavours are innovation focus areas
as consumers have made it clear
that the smaller pack size of 120g,
as opposed to 200g, is the “right fit”
for entertainment in 2019.
“In fact, Moondarra’s linchpin in the
120g pack has been Honey Pistachio
– the most successful new flavour
that launched years ago and which
continues to be incremental to the
category as a top-ranked SKU in Coles,
Woolworths and IGA.”
Moondarra is now going further, says
Mr Katis, by innovating with its new
Lemon Coconut 120g, Peach Almond
120g, Blueberry Cashews 120g, and
Cherry Coconut 120g SKUs.
Lemon Coconut and Peach Almond
were due to be on offer in Coles from
late September, with Blueberry Cashew
available in early October and Cherry
Coconut to be a Christmas special
for Coles.
As to challenges, the main one, says
Mr Katis, is striking a balance in the
smaller sizes that are part experimental
and part extending the category.
“The traditional staple flavours
we execute for ourselves, private
label and contract brands are very
important, so the challenge is finding
the right balance between continuing
to innovate in our own brand but still
having the volume and value-add of the
private label and contract brands that
we make because we are very focused
in that one segment,” he said.
“Traditional and staple cream cheese
is represented by the Apricot Almond
200g, Spring Onion and Chives 200g
and Sweet Chilli 200g, which have
been a branded and private label staple
in every supermarket for more than
50 years.”
To keep up to date with the
manufacturing requirement for more
capacity, capability and automation,
Moondarra’s new factory is undergoing
a second major upgrade.
“We are tripling capacity. Growth will
continue to accelerate because of
demand from the domestic and export
market, which gives us the engine to
innovate for retailers,” Mr Katis said.
Maximising supermarket sales
Consumers are more health conscious
and want additional information about
the origin, composition and health
aspects of products, says Gruyère
AOP Head of International Marketing
Denis Kaser.
Retailers can meet this demand, says
Mr Kaser, by telling the story of where
products come from and how they
are made.
“Give consumers the additional
information they seek via shelf talkers,
information boards or staff training,”
he advised retailers.
Gruyère AOP assists retailers
through the provision of additional
point of purchase material to highlight
the cheese’s unique features, as
well as supporting retail staff with
training material.
“Our brand, having been produced
since the mid-20th century and
influencing certain locally produced
dairy products, has a very strong
tradition,” Mr Kaser said. “Consumers
understand the value of having the
original product. Its terroir and tradition
are unique and copy proof.”
Gruyère AOP is generally sold as
either pre-cut portions or in bulk
through the deli section of a retailer.

Mr Kaser says “strong emotional
connection” to a product is forged by
tasting it first-hand.
In line with this, Gruyère AOP provided
retailers with funding to enable their
shoppers to sample its products in a
two-week national campaign.
To further strengthen the emotional
connection, the cheesemaker also
provided Gruyère AOP recipes and
resources through its website and
social media marketing.
It also participated in all Good Food &
Wine Shows on the east coast this year.
Imported specialties endure
Conga Foods Category Manager for
Cheese and Deli Luke McDermott says
Australian consumers are increasingly
looking for true food experiences that
link back to long-standing traditions,
expertise and cherished provenance.
“This consumer trend allows brands
with rich history an opportunity
for growth in an otherwise mature
category,” he said.
“Zanetti is not short of a rich history
and authentic proposition.”
Over 100 years of expertise in crafting
cheese has been passed down to four
generations of Zanettis and in Australia
Zanetti’s history stretches back to the
1970s when its range of hard Italian
cheese was first imported to Australia
exclusively by Conga Foods.
Zanetti is claimed to be the number
one selling brand of Parmigiano
Reggiano and Grana Padano in major
retailers such as Woolworths and
Coles, as well as independent retailers,
thanks to its consistency in producing
authentic cheese, says Mr McDermott
(Nielsen Scantrack, Australia Grocery,
MAT to 30/6/19).
The core range of 200g wedges of
Grana Padano, Parmigiano Reggiano
and Pecorino Romano are all Protected
Designation of Origin (PDO) cheeses
fire-branded by their respective
“Australian consumers
are becoming more
adventurous in their tastes
and increasingly desiring
innovative and truly
authentic cheese and
dairy products.”
consortiums, with their names legally
protected against imitation.
A PDO cheese can only be produced
by the same centuries-old methods
using ingredients geographically bound
to its birthplace town or regions, says
Mr McDermott.
“At Conga Foods, we believe that
Australian consumers’ taste in imported
specialty cheese will stand the test
of time as there’s an appreciation for
genuine brands with an authentic story,”
he said.
Best of Britain and Europe
Consistently high sales reflect the
continued and increasing demand for
authentic, great tasting British cheese
among Australian consumers, according
to Somerdale International.
The company’s range of branded
cheeses include mature British cheddars
such as the Barber’s 1833 farmhouse
cheddar and Quicke’s clothbound mature
cheddar, its own brands specifically
developed for export markets, including
the Somerdale and Heraldic ranges, and
innovative blended cheeses such as Il
Truffelino, which combines the texture of
CHEESE
English cheddar with the flavour of black
summer truffle, and the ever popular
Wensleydale with Cranberries.
Somerdale distributes its own and
private label cheese (mature and vintage
cheddars and Red Leicesters) in Australia
through a distribution partnership with
F Mayer Imports.
Somerdale International Managing
Director Stephen Jones says
quintessential British cheeses such as
mature and vintage cheddar and Red
Leicester are still very popular, alongside
the “king of British cheese”, Blue Stilton.
“What we’re noticing too is that
Australian consumers are becoming
more adventurous in their tastes and
increasingly desiring innovative and truly
authentic cheese and dairy products – for
themselves and entertainment purposes.”
Mr Jones points out that the overall
retail cheese sector continues to witness
strong growth in specialty/entertaining
cheese versus mainstream everyday
usage, with imported British and
European specialty cheeses well placed
to meet demand.
“Indeed, we’re seeing an increasing
level of interest in more modern and
innovative blended cheeses, which can
really transform and bring excitement to
both a retailer’s cheese fixture and deli
counter and a consumer’s cheese board
or menu idea,” he said.
OCT, 2019 RETAIL WORLD 47