Exploring the opportunities for cheese applications in prepared foods

Topics1. World Cheese Insights

2. Five Consumer Trends Driving Cheese Preferences

3. Implications for Developers

1. World Cheese Insights

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U.S.Common:Cheddar, ParmesanEmerging /Cheeses to Watch:Italian Types, Halloumi / Grillable Cheeses, Alpine Styles, Smoked, Herbs & Spices

Emerging Cheeses / Cheeses to Watch Add Variety to a Market Saturated by Cheddar

EuropeCommon:Gouda, CheddarStrengthening: EmmentalCheeses to Watch:Parmigiano Reggiano, Grana Padano, Halloumi/Grillable Cheeses

Latin AmericaCommon:Mozzarella, Parmesan, Gouda, CheddarEmerging / Cheeses to Watch:Grana, Parmigiano Reggiano, Swiss: Emmental and Gruyere Padano

Middle East, AfricaCommon: Feta, Cheddar, Halloumi/GrillableCheeses Emerging / Cheeses to Watch: Cascaval is new in top 5, Parmesan, Asiago, Romano

AustraliaCommon: CheddarStrong: Parmesan Emerging: Pecorino

CanadaCommon: CheddarStrengthening: Swiss (Emmental), GoudaEmerging / Cheeses to Watch:Havarti, Parmesan, Halloumi/Grillable Cheeses and Asiago

2. Five Consumer Trends Driving Cheese Preferences

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COMFORT FOOD

PREMIUMIZATION

OVERSEAS INSPIRATION FOR VEGETARIAN

FUSION

STREET FOOD

A new generation of street food creates opportunities for cheese

Fun formats and healthy twists in

indulgence snacks

Specified cheeses upgrade traditional convenience foods

‘Flower pots’ made of bread and filled with cheese fondue, to dip with vegetables (Trek Festival, The Netherlands)

The famous Caulils tosti is made with a blend of Etivaz d’Alpage and cheese from a local farm (Foodhallen, Amsterdam)

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STREET FOOD

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• More categories apply specified cheese or cheeses with origin claims

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50

10 0

15 0

20 0

25 0

30 0

20 13 20 14 20 15 20 16

# of p

rodu

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s

Global ready meals launches with specified cheese flavor

Ital ia n Swiss

Cheese Origin claims and Alcohol are frequently used for premium positioning

• Alcohol is inspiring products and creating new moments , global beer launches with cheese in claim or description rose 300% from 2013 to 2016

PREMIUMIZATION

Ethnic trends inspire flavor inclusions and

Cuisine blends create novelty in prepared foods

Flavors from the MENA cuisines are

trending up in other markets

5 918

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0

5

10

15

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25

30

35

20 13 20 14 20 15 20 16

# of

pro

duct

laun

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Food launches with “ras el hanout” (Global, excl. Middle East and Africa)

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FUSION

Cheese Flavors in a blending of

cuisines for retail products

Examples:

Jumbo Fresh Empanadas Filled

W ith Bacon And Gruyere

Cheese

(Argentina, Jun 2016)

Food For You Salmon Quinoa Roll

(Mexico, Oct 2016), Sushi-based quinoa

stuffed with salmon, vegetables and panela cheese.

Europe is leading region for meat substitutes

Consumer demand drives new product activity in meat substitutes

Almost 50% of German

consumers pick Dairy as the preferred meat substitute

Source: Innova M arket Insights

69%

53%

38%

Germ any

UK

US

Share (%) of consumers that answered to eat meatless once a

week or more:

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OVERSEAS INSPIRATION FOR

VEGETARIAN

120 million Americans eat

meatless at least once a week showing opportunity for NPD in a growing market.

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10

20

30

40

50

20 10 20 11 20 12 20 13 20 14 20 15 20 16

# of

pro

duct

laun

ches

Global food launches tracked with specified keywords in product

name:

Hal lo u mi Gril l (ed ) ch ee se

Substitutable for meat, Halloumi/Grilled Cheese is strengthening in Europe and emerging in the U.S.

G rilled C heese topper for Salad

A comeback for hearty dishes with traditional claims signaling high quality

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COMFORT FOOD

0

50 0

1,0 00

1,5 00

2,0 00

2,5 00

20 12 20 13 20 14 20 15 20 16

Food & beverages launches tracked with traditional positioning

(Latin America)

Pr od uct co unt

• The UK, France and Latin America experience a revival in traditional main dishes in the last 5 years.

• Products often carry a traditional (recipe) or local sourcing claim, while some other brands add a modern twist on a classic.

Made with the traditional Italian recipe

Lasagna Al Pesto with mozzarella and parmesan cheese: launched in Peru

(April 2017)

3. Implications for Developers

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Various opportunities for cheese are emergingApplications of cheese in prepared foods• Cheese melts as topping and filling for indulgence in trendy street food (any cheese)• The use of specified cheeses in unusual categories, e.g. sushi or empanadas (any cheese)• Cheese shavings to season meat and fish (Italian hard cheeses)• Origin specified cheese toppings to premiumize prepared foods (Italian and Swiss hard cheeses)

Cheese flavoring• Cheese snack cubes with trendy spice and herbs inclusions (Dutch cheese, cheddar)• Sweet fruit flavors, added as filling or inclusion (mozzarella, yellow cheeses)

New moments for cheese • Snack packs mix cheese with fruit, nuts, seeds and chocolate (any hard cheese)• Fine tasting: flavor pairing cheese with other food & beverages (any cheese)

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Parmesan, Halloumi/Grillable Cheeses and Grana are growing Worldwide

Trend status per geography based on new cheese launches tracked (2013-2016)

Hallo

umi

Ched

dar

Italian hard cheeses Swiss hard cheeses

Gran

a (P

adan

o)

Parm

igian

o Re

ggian

o

Parm

esan

Emm

enta

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Gruy

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Latin America EMERGING EMERGING EMERGING EMERGING EMERGING

Europe EMERGING EMERGING SUSTAINEDGROWTH

Middle East GROWINGCanada EMERGING EMERGING GROWINGAustralia GROWINGUnited States EMERGING SUSTAINED

GROWTHEMERGING GROWING

Source: Innova M arket Insights

TREND STATUS DEFINITIONSSUSTAINED GROWTH = growth in market penetration (% of launches) in three consecutive yearsGROWING = growth in market penetration in the last two yearsEMERGING = growth in market penetration in the last year, after two years of no growth

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In the U.S. White Space opportunity existsfor new applications of cheese, e.g. Italian Cheeses in Ready Meals

Market penetration per cheese flavor in sub-category launches in U.S. (2016)

Tota

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f la

unch

es (2

016)

Hallo

umi

Ched

dar

Italian hard cheeses Alpine / Swiss cheeses

Gran

a (P

adan

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Parm

igian

o Re

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Parm

esan

Emm

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Gruy

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Ready meals 214 - 3.3% - - 0.9% - -

Pizza 223 - 3.6% 0.4% 0.9% 7.2% 0.4% -

Prepared pasta 473 - 17.3% - - 7.0% - -

Sandwiches 187 - 14.4% - - 1.6% - -

Meat 543 - 2.0% - - 0.4% - -

Poultry 410 - 1.0% - - 0.7% - -

Fish 318 - 0.3% - - 1.3% - -

Snacks/Finger foods 173 - 11.0% - - 3.5% - -Source: Innova M arket Insights

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Example:Less than 1% of Ready Meals had Parmesan Cheese as an ingredient

What cheeses have the most opportunity?

Italian & Swiss hard cheeses• Specified cheese flavors and origin labeling

are an important differentiator for premium prepared foods.

• Most Italian and Swiss hard cheeses are not a common application in prepared foods in the U.S. market.

• Hard cheeses are versatile and can add a subtle flavor in various formats (e.g. as topping, inclusion or coating).

Grillable Cheese / Halloumi• Global new product activity signals a

growing interest in vegetarian foods. • The vegetarian platform has become

mainstream in multiple regions: in 2016, more than 10% of ready meals launches tracked in Europe, Australasia and the Middle East carried a vegetarian claim.

• The European market is witnessing the first applications of the Cypriote cheese in other categories, the U.S. not yet.

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What flavors have potential?HERBS & SPICES • Herbs further add aromatic experience, in

particular applicable in fresh foods• Spicy flavors have most growth potential:

chili flavors and specified peppers

• Smoked flavors add to the indulgence factor as they resonate the BBQ trend

• Spice blends based on authentic ethnic recipes (e.g. ras el hanout)

+8% SPICY

+13% AROMATIC

Growth in the number of global product launches with selected flavor descriptors

(2016 vs. 2015)

+54% EXTRA HOT

+21% FIRE/FLAME

+14% AUTHENTIC

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Trends drive demand for sophisticated cheeses

C O M FO R T FO O D

PR EM IU M IZA TIO N

O V ER SEA S IN SPIR A TIO N FO R

V EG ETA R IA NFU SIO N

STR EET FO O D

Cheese slices, fillings and melts for burgers and finger foods

Use of specified flavors and origin claims: Italian and Swiss hard cheeses

A revival of pizza, fresh pasta and pies: best accompanied with Italian cheeses

Grill cheese (halloumi) emerging; cheese applications in meat substitutes and finger foodsTrendy spice and herb blends

pop up in cheese; fusion foods add cheese for indulgence

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Key Takeaways • Cheese on the World stage can be a source of inspiration for new products

• Globally 5 key trend areas with cheese as an ingredient were identified: 1) Comfort Food, 2)

Premiumization, 3) Street Food, 4) Fusion, and 5) For Vegetarian Uses

• From the World Cheese insights and 5 key consumer trend areas, U.S. brands should consider these cheeses in their development:

– Parmesan, Italian Blends

– Alpine Styles (e.g. Swiss, Havarti, Gouda)

– Smoked Flavored Cheeses

– Aromatic Cheeses with Herbs and Spices

– Halloumi / Grillable Type Cheese

• These Cheese varieties are emerging, growing and sustaining – making them white space opportunities for categories like Ready Meals, Snacks, Sandwiches, Poultry and Pizza

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Let our Sargento Representative contact you for more discussion

For More Information..

Contact your Sargento Sales Manageror

Sargento Foods, Inc.www.sargentofsi.com

800-795-7090

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