Kraft Foods is working with Jewel-Osco and other grocers to reshape cheese and dairy cases at more than 4,000 stores to make its most popular products easier to find and its new items easier to stumble upon.
Known internally as "Reimagine Cheese & Dairy," the program underscores the increased importance of these products for Kraft's North American grocery business, which will be spun off later this year as a stand-alone company. After the separation, cheese and dairy products such as Philadelphia Cream Cheese will account for about 20 percent of total sales, up from about 14 percent currently. (The rest of legacy Kraft will be a $35 billion company called Mondelez International, focused on global snacking brands.)
Kraft anticipates 3 percent to 5 percent sales gains at stores implementing the program during the first year, as a result of additional space, better organization and other factors. As part of the program, retailers are reorganizing the cheese sections and in some cases expanding it by as much as eight feet.
It's an ambitious goal for a category that's become increasingly vulnerable in recent years, following quality improvements by store brands and highly volatile commodity costs that have sent prices higher for consumers. The impact of the heat and drought affecting dairy cows this summer is still uncertain. Northfield, Ill.,-based Kraft has been under intense pressure to give consumers a reason to pay more for its products, even as each dollar spent is under heightened scrutiny. The company has responded with increased marketing investment and new products to make dinner preparation easier.
Kraft declined to name other chains participating in the program.
"Everyone knows the economy drove people home and they started cooking more," said Art Sebastian, director of sales strategy and customer development at Kraft, adding that cheese is a very popular ingredient in these meals. "That led us to believe we needed to take a look at the shredded cheese section and give it proper space allocation as a sort of a cooking destination."
Sebastian said Kraft also saw increased sandwich consumption and growth in natural cheese slices as compared to American singles, particularly with "bold flavors" shoppers might find at restaurants.
Snacking is another key food industry trend, and snack cheeses, such as string cheese, are growing at twice the rate of the overall cheese category, at 6 percent to 8 percent, said Ken Gipple, Kraft's customer vice president of cheese and dairy.
He added that customers have cut shopping times 10 to 15 percent in the past few years, to fewer than 30 minutes on average, citing a Sorenson Path study. Of that time, customers allocate 24 to 30 seconds to cheese and dairy, even though cheese purchases are planned 82 percent of the time, according to Kraft data.
"So for us it's a couple of things: simplify the shopping experience for customers so they can find what they're looking for in the departments, and drive store efficiency" for retailers, he said.
To develop the new design, Kraft conducted research with about 1,000 customers who wore eye-tracking glasses and a bio-sensory headset so the company could follow shoppers' gazes and brain activity to understand positive or negative feelings about what they saw. Kraft also sent researchers on shopping trips with consumers, and stopped others at the grocery to discuss what was in their basket and why.
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