Article Archive - July 28, 2006

Breaking the mold: Cold pack strives for year-round market

Editor’s note: Each month, CMN profiles a different cheese, giving our readers a comprehensive look at production, marketing and sales, as well as any other interesting details we can unearth. Please read on to learn about this month’s featured cheese: cold pack.

By Amelia Buragas

MADISON, Wis. — Cold pack cheese is an entertaining favorite — especially during the holidays. But according to cheesemakers, cold pack is gaining in popularity and has grown into a healthy year-round market.

Cold pack appeals to consumers, they say, because it is both versatile and an authentic natural cheese product.

“It’s the closest thing to natural cheese in a spreadable form,” says Mary Lindemann, marketing associate, Pine River Pre-Pack, Newton, Wis.

• Beer and cheese: a Wisconsin original

Cold pack cheese was developed by Wisconsin taverns in the early 1900s as a snack food for their customers. As a throwback to its origins, cold pack also is known as “club,” “crock,” or “pub” cheese.

Cold pack cheese as it is produced and marketed today is considered a Wisconsin original. However, according to information provided by the University of Wisconsin-Madison’s Center for Dairy Research (CDR), some households made dips and spreads from old cheeses that were beginning to dry out well before cold pack became a product category. The Swedes also produced a potted cheese called Pot Käs that is similar to cold pack.

According to CDR, cheese spreads as a commercial product date back to the early 1900s when the Pabst Brewery served them in its hospitality center in Milwaukee. However, CDR credits Hubert Fassbender as the first manufacturer of cold pack cheese. In 1933, Fassbender, who started in the beer depot business, began giving cold pack cheese to his best customers. Eventually, customers began requesting the cheese without the beer and the Kaukauna Klub cheese business grew from there. Today Kaukauna cold pack is produced by Bel/Kaukauna U.S.A. headquartered in Chicago.

In 1934, Armin Herke began using surplus cheese to produce his own variety of cold pack cheese and formed the Calumet Cheese Co., Hilbert, Wis., which later became known as WisPride (now a part of Bel/Kaukauna’s product portfolio). In the 1950s Thiel Cheese, Hilbert, Wis., entered the business, and in 1964, Phil Lindemann formed Pine River Pre-Pack. By 1979 the company was making 17 flavors of cold pack cheese.

Cold pack is produced by blending natural cheese without the aid of heat, which sets it apart from process cheese. According to the federal standards of identity, cold pack must contain the same amount of moisture as the cheese used to make it and no water can be added. Fruits, vegetables, meats or spices can be added to cold pack cheese, and when they are, the standards allow for 1 percent higher moisture and 1 percent lower fat levels.

Although cold pack most frequently is sold as a cheese spread, the Wisconsin Milk Marketing Board (WMMB) reports that it also has been used as an ingredient in recent product introductions. Castleton and Michelina brand Macaroni & Cheese, Betty Crocker Complete Meals Ham & Au Gratin Potatoes and Nacho Cheese Bugles Corn Snacks all use cold pack as an ingredient, according to WMMB officials.

• Bringing consumers into the fold

Cheesemakers say the key to growing the cold pack segment is to change consumer perceptions.

Al Dummer, director of marketing, Bel/Kaukauna, says a frequent comment the company gets during market testing is that cold pack is a cheese “mom kept in the refrigerator.” He says this product often is associated with an older generation and that companies must strive to make cold pack relevant to the current generation of consumers.

“We want to make sure the flavors, the packaging and all aspects of our product appeal to today’s on-the-go consumer,” Dummer says. “We’ve learned that versatility is the key for this product.”

He says Bel/Kaukauna markets cold pack as the perfect quick and healthy after-school snack. Consumers also can keep a cup of Kaukauna in the refrigerator to serve drop-in guests hors d’oeuvres.

Linda Hook, vice president of marketing, DCI Cheese Co., Richfield, Wis., which distributes Pine River Pre-Pack’s cheeses under the Black Diamond label, says her company also is focused on giving consumers additional usage ideas. Hook says in addition to a simple appetizer, cold pack can be paired with wine, beer, fruit or vegetables and it makes a great topping on bagels or baked potatoes. However, Hook adds that many consumers continue to see cold pack as something served only during the holidays.

“I think people have a connotation that it’s been an inexpensive cheese product and it’s something you bring out at the holidays,” Hook says. “We’re trying to change consumers’ perception.”

She says the inclusion of cold pack cheese in prominent competitions helps raise its standing with consumers. DCI’s Black Diamond Extra Sharp Cold Pack took first place in its category at the 2006 World Cheese Awards hosted by the Wisconsin Cheese Makers Association. Pine River’s Horseradish Cold Pack also recently received a first place award at the 2006 American Society of Cheesemakers Cheese Contest.

Mary Geissbuhler, co-owner, Brunkow Cheese Cooperative, Darlington, Wis., says her company hopes to leverage its second place award at the ACS contest into more sales. Brunkow took second with its Horseradish Raw Milk Cheddar Spread.

“When you win an award like that, it’s the perfect PR to use to promote the product,” Geissbuhler says.

Dummer adds that while cold pack has become a year-round market, there is still a great deal of room for improvement. Holiday sales of Bel/Kaukauna cold pack cups, for example, account for 40 to 50 percent of the product’s total sales. When it comes to balls and logs that number increases to 60 to 70 percent.

Steve Lindemann, marketing director, Northern Wisconsin Produce, Manitowoc, Wis., adds that his company sees a 20 percent increase in sales during the holidays. Paul McKinlay, executive vice president, Ivanhoe Cheese Inc., Ontario, Canada, says his company only produces balls and logs for the holidays. Keeping them in production year-round just is not worth it, he says.

Mary Lindemann says another way Pine River Pre-Pack is appealing to consumers is through added flavors.

“It seems like the hotter, the better,” Lindemann says, noting that the company’s Jalapeno and Habanero cold pack spreads are very popular at the moment. However, the company’s most popular flavor is Sharp Cheddar followed by Horseradish, Port Wine and Swiss Almond.

Dummer compares cold pack to ice cream when it comes to flavors.

“You’ve got a base of core flavors like Sharp Cheddar and Port Wine and it’s good to rotate in other new flavors,” Dummer says. “It brings some excitement to the product. It keeps the category invigorated and brings some new consumers to the fold.”

Dummer says Bel/Kaukauna’s most recent flavor addition is a Parmesan Ranch. The company’s most popular flavors are Sharp Cheddar, Port Wine, Smoked and Swiss Almond.

Ivanhoe’s McKinlay says introducing exotic flavors in Canada is more challenging because of the country’s smaller population. He notes that in the United States, where there are nearly 300 million consumers, there is a good chance a company’s product will appeal to someone.

However, McKinlay says cold pack does have a strong following in Canada and that his company’s products can command a premium price comparable to that of a vintage Cheddar.

“I think it’s one of those products that if you can get people to try it, they rave about,” McKinlay says.

Hook says she has noticed a similar level of dedication from U.S. consumers. DCI receives more customer feedback e-mails about its Black Diamond brand than any other product, she says. A common comment from consumers is that they are “addicted to the product.”

• Production and sales data

In 1978, according to CDR, 59 Wisconsin plants produced 48 million pounds of cold pack cheese. Recent data from USDA’s National Agriculture Statistics Service show the segment has grown moderately since then. In 2004, production of cold pack was 63.9 million pounds — up roughly 33 percent from 1978. Production suffered several years of double digit percentage decreases over the past decade and was down 14.4 percent from 1993 to 1994, 23.5 percent from 1994 to 1995 and 39.1 percent from 2000 to 2001.

However, in the past three years, production has grown by a healthy average of 33.2 percent. From 2001 to 2002, U.S. production grew 17.3 percent; from 2002 to 2003 it was up 26.6 percent; and from 2003 to 2004 cold pack production grew by an impressive 55.8 percent.

In 2004, 100 percent of U.S. cold pack cheese was produced in Wisconsin. From 1994 to 2000, Wisconsin made up an average of 70.3 percent of the national production of cold pack cheese. In 2001, this share grew to 99.3 percent and since 2002, Wisconsin has accounted for all cold pack cheese produced in the United States.

While cold pack makes up only a fraction of the total U.S. cheese market, it is the envy of cold pack producers to the north.

“In the United States, the cold pack market is huge,” says McKinlay. “It never ceases to amaze me the prominence of cold pack. In Canada, cold pack cheese is really underdeveloped.”

McKinlay says Ivanhoe is one of only a handful of companies that markets cold pack in Canada.

Grocery retail sales of cold pack cheese also have grown in recent years. From 2003 to 2004 grocery retail sales grew 2.4 percent from 13.6 million pounds to 13.9 million pounds, according to Information Resources Inc. Scanner Data 2005. Exact weight packages make up 97.6 percent of the segment at 13.6 million pounds in 2004. Random weight packages made up 2.4 percent of the market in 2004 at 328,866 pounds. However, sales of random weight packages demonstrated the highest rate of growth from 2002 to 2004 and increased by 14.3 percent. In the same time period, exact weight packages increased by 2.2 percent.

• Looking to the future

Cheesemakers are optimistic about the potential for continued growth in the cold pack market.

“We see an opportunity to expand beyond our consumer base,” Dummer says.

“The Western markets are just picking up,” adds Steve Lindemann. “It takes some work to get into these retail chains, but I think it’s very possible this is going to be a high-growth market.”

CMN

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