Article Archive - June 29, 2007

Companies turn to analog products for function, cost

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 details we can unearth. Please read on to learn about this month’s featured cheese: analog.

By Amelia Buragas

MADISON, Wis. — Foodservice and industrial companies have been turning to analog or imitation cheese products for a number of years due to this product’s attractive price and functionality. Increasingly, companies are discovering that analog products also offer a competitive taste as new technologies bridge the gap between analog and natural cheese products.

Whitehall Specialties Inc., Whitehall, Wis., has been producing analog cheese since the company’s inception in 1994. Currently, Whitehall Specialties employs 280 people with annual sales of more than $100 million.

“We saw a niche field,” says Steve Fawcett, president, Whitehall Specialties. “We made it our business, and we grew from there.”

Fawcett, who has been working with analog for more than two decades, says the product has undergone substantial improvements in quality. What used to be considered a high-end product would be lucky to fall in the mid-range today, he says.

Analog cheese refers to a substitution or imitation cheese product made to mimic the flavor profile of natural cheese. Generally analog cheeses are produced using casein and vegetable oils in place of milk solids.

USDA does not track production of analog cheese. However, grocery retail sales in 2006 were 34.1 million pounds according to scanner data from Information Resources Inc. Nearly 100 percent of sales fall into the exact weight category. The Wisconsin Milk Marketing Board’s Foodservice Cheese Tracker shows the largest usage segment for analog is full-service restaurants at 76 percent. Non-commercial use accounts for 19 percent with leisure/retail accounting for the remaining 5 percent.

Analog cheeses are available in a wide variety of flavors including American, Cheddar and Monterey Jack, and can be purchased in blocks, shreds, slices or sauces. Analog products also are available as blends with natural cheese products.

A different ingredient base means that analog products have different nutritional qualities compared to their natural cheese counterparts. In many cases, an analog cheese can be tailored to meet specified nutritional needs.

Fawcett says because analog products are not restricted by standards of identity, a company has the ability to experiment with its recipe and tailor a product to a consumer’s needs. Whitehall Specialties, for example, can custom formulate low-sodium, zero cholesterol, increased/decreased protein and lactose-free products. Fawcett estimates 60 percent of Whitehall’s business is for custom-formulated products.

“The one thing we strive for is to custom-formulate for our customers and the customer’s applications,” adds Michelle Sonsalla, sales and marketing manager, Whitehall Specialties.

From the supermarket perspective, analog products offer the retail consumer different nutritional values. For example, a slice (17 grams) of Galaxy Nutritional Brands’ Veggie American-Flavor cheese has 40 calories, 2.5 grams of fat and 3 grams of protein. A slice (28 grams) of Land O’Lakes’ Pre-Sliced Pasteurized Process Sharp American Cheese contains 110 calories, 9 grams of fat and 6 grams of protein.

In terms of appeal, functionality and price are the ace up analog’s sleeve.

“We can buy analog cheese that will be manufactured to what customers need,” says Dean Uglem, president, Horizon Sales of Minnesota, Brooklyn Park, Minn.

Uglem says a significant portion of his company’s analog cheese sales are to the industrial side of the market. As a result, Horizon Sales offers a variety of melt characteristics including no-melt, slight melt and easy melt analog cheeses.

“Functionality has never really been an issue,” adds Uglem. “Flavor profiles have always been the challenge.”

Uglem says his suppliers are working on new formulas all the time to improve their products as well as to develop new varieties of analog cheese.

“They’re formulating more products like cream cheese and sour cream,” Uglem says. “They’re getting very good at coming up with analog and cheese substitutes with better formulas and better flavors all the time.”

Still, Fawcett says there is a lingering stigma against analog cheese products, which harkens in part back to the early days of the industry when the flavor profiles were not as sophisticated as they now are.

“It’s not as bad as it used to be,” Fawcett says of negative perceptions toward analog products, “but there still is a little bit of that.”

Fawcett says that while analog cheeses have their place in the market, he appreciates that analogs are not always the answer to a company’s needs. For one, he says despite the advances in research and development, there still is a flavor difference between analog and natural cheeses.

“I would say it’s probably able to get close,” Fawcett says. “To make it be as good would be tough, but we can get awfully close.”

• Trickle down economics

Because analog cheese uses casein as an ingredient, it has not been immune to the recent record-high prices for dairy products and ingredients.

“With all the milk proteins and all the milk components getting so expensive, it is driving up the price of analog cheese,” Uglem says.

“Analog is going through what everyone is going through — high prices of ingredients,” Fawcett adds.

However, analog certainly has been affected to a lesser degree than has the natural cheese market.

“One thing about analog products is that dairy is just a component of the product,” Uglem says. “Other components are not as volatile as the milk market.

“For a manufacturing company, if they have analog cheese in their formula, they can keep their costs more constant.”

In addition, Uglem says the analog cheese market could leverage recent price increases in natural cheese into new sales opportunities.

“The question for analog producers in this scenario is: can they keep their prices down while the natural cheese prices go up and increase their market share?” Uglem says.

However, he says analog producers — just like the other segments of the dairy market — are going to have to carefully weigh price with demand so as not to price themselves out of the market.

• The customer is always right

Horizon Sales carries both analog and natural cheese varieties and Uglem says it is up to the customer to examine the options and decide the best product for their use. However, he notes that often clients come in with misconceptions about analog and the qualities that it can offer.

“We educate people along the way as to what cheese to use for what application,” Uglem says. “Most times analog cheese will work as an ingredient, it’s just a matter of having the correct formulation.”

Analog cheese has been featured in a number of new products released in the United Sates in the past year. According to the Mintel Global New Products Database, the following new products use analog cheese as an ingredient: Celeste Pizza for One Meatball Pizza, Banquet-style Homestyle Bakes Pizza Pasta and On-Cor Pizza Pop’ems pizza snacks.

CMN

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