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Sleepy US $1.1bn cottage cheese category is ripe for disruption, says Muuna

By Elaine Watson+

10-Feb-2017
Last updated on 10-Feb-2017 at 17:15 GMT2017-02-10T17:15:24Z

$1.1bn cottage cheese category ripe for disruption, says Muuna

Forty years ago, the US cottage cheese market was twice the size of the yogurt market. Today, yogurt (at $7.68bn) is seven times bigger in dollar terms than cottage cheese (down 1.7% to $1.1bn in retail sales in 2016 according to Nielsen data). So have Americans fallen out of love with cottage cheese, or is this a category that is ripe for disruption?

Gerard Meyer – CEO of new Israeli-backed brand Muuna , which launched its single serve cottage cheese pots in the US last August and is already in 3,000+ stores on the east coast – is firmly in the second camp.

But why the confidence? Lots of reasons, but above all, he says because cottage cheese (unlike some other things that were hip in 1977) actually ticks all the boxes today’s consumers are looking for.

Nutrient dense, simple and wholesome? Check. Clean-label? Check. High protein? Check. Simple ingredients? Check? Minimally processed? Check. Snackable? Check. It’s also low in calories and saturated fat. (A 5.3oz pot of 2% milkfat Muuna contains 120 calories, 19g protein - which is more than Greek yogurt, 3g fat, and 4g sugar.) 

Meanwhile, 45% of American households buy cottage cheese at least once a year, adds Meyer.

In other words a lot of people buy it, but they’re not eating it every morning or afternoon as a snack, like yogurt, because the way it’s presented now, you just wouldn’t think of doing it. 95% of them buy yogurt, when as we have more protein and less sugar, so why is that? We’re going after exactly the same people.”

Stuck in a timewarp?

The key problem, says Meyer, is that the products, packaging and branding have remained stuck in a time warp (although emerging brands such as goodculture are attempting to shake things up); while the yogurt fixture has been transformed by disruptive players such as Chobani and deluged with new concepts from Icelandic (Siggi’s) to Australian-style (noosa) to grass-fed (Maple Hill, Dreaming Cow, Stonyfield) to kefir (Lifeway) to lassi (Dahlicious) keep consumers interested.

“Just like yogurt, cottage cheese was mainly sold in multi-serve tubs in the 1970s, but unlike yogurt, it’s still like that today. There are some single serve products out there but half of them are just in plain [without fruit on the bottom], so it’s perhaps not surprising it hasn’t really grown. It just didn’t keep up with consumers.

There’s no Chobani in cottage cheese; no Dannon. Breakstone’s is big but there are still lots of regional brands, and it’s just been a very neglected category,” adds Meyer, who heads up Muuna Inc, a wholly owned subsidiary of Israel’s biggest food manufacturer, and cottage cheese expert, Tnuva (which is in turn owned by Chinese company Bright Food).

Cottage cheese or a portable high protein, nutrient-dense snack?

Like John Haugen at General Mills 301 INC (which has invested in goodculture), it’s more helpful to think about need states or usage occasions than narrowly defined categories when assessing the size of the potential prize in this market, he says.

Put another way, the opportunity Haugen saw in good culture was not cottage cheese, per se, but a portable high protein organic snack that taps into demand for less processed, more nutrient-dense foods.  

The same applies to Muuna, which is also packaged as a single serve snack (MSRP $1.69) in packaging that would work equally well in the yogurt category, except that the brand is going for the mass market consumer, “not just the Whole Foods set,” says Meyer, a CPG veteran who has worked at brands from Sodastream to Merck, Campbell Soup, Kraft and B&G Foods.

goodculture [which is organic and features some edgier flavors such as Kalamata olive and blueberry acai chia] is a great product and I think along with us they are the only other pure-play cottage cheese company in America; but we’re more mainstream [Muuna features familiar flavors such as mango, pineapple, and blueberry and is free of artificial colors, preservatives and sweeteners, but isn’t organic or grass fed].

"We also have a different texture. Muuna light and creamy with smaller curds.”

Where should the new wave of cottage cheese products be merchandised?

So does this mean that the natural place to merchandise Muuna - which is manufactured in Minnesota - is in the yogurt set?

Ultimately, perhaps, says Meyer, although right now it could backfire. “First they’d measure our velocity based on yogurt velocity and that’s not fair yet and secondly there’s a possibility that people might buy it thinking that it is yogurt.

“But if we’re successful, what I think will happen is that they’ll start to increase the space allocated to cottage cheese, which is what happened with yogurt, and we may see a blending between the cottage cheese and the yogurt set further down the line.”

Retailers are coming to us now

It’s early days, but just six months after launch Muuna is now in 3,000+ stores along the east coast and will likely be in 4,000 by the end of March after it rolls out at Ahold, says Meyer, who says Muuna’s longer term plan is to buy or build its own manufacturing facility [currently the product is co-packed in Minnesota].

Retailers are coming to us now and asking us when we are going to come here [beyond the east coast], and for cottage cheese, that’s just astonishing. Most retailers are also taking all eight of our SKUs, which is amazing. They want us to succeed.” 

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