HispanicBusiness

Kraft learned, among other things, that its best-selling products were hanging too high, and anything they wanted consumers to notice should be slightly below eye level. At the Skokie Boulevard Jewel-Osco near Chicago's Old Orchard mall, the cheese section has gained 4 feet in the refrigerator case, a significant increase, particularly for a high-traffic area.

"Everyone used to want to put their best-selling (product) at eye level," or the top shelf, Sebastian said. "They'll focus here and then shop around."

Arranging key products in a diamond pattern created another opportunity for Kraft: The top is prime real estate for best-selling products, and there are slots nearby for high-potential new items.

"Consumers said there are always good new items in cheese, but they just couldn't find them," Sebastian said.

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At the Skokie Boulevard Jewel-Osco, Kraft's Fresh Take, a kit of shredded cheese and bread crumbs to coat meat or fish, now hangs next to the shredded mozzarella on the second shelf from the top. Kraft with a Touch of Philly, shredded cheese designed to melt more easily in pastas and casseroles, also enjoys prominent placement. Philadelphia Cooking Creme, designed to help make flavorful, creamy sauces, is merchandised near the best-selling Philadelphia Cream Cheese tubs.

The section is now broken down into types of cheese, such as shredded, string or blocks, rather than mixed together by flavor. Brands are also separated vertically within each section.

Bob Brown, sales and merchandising manager for Jewel-Osco, which operates 180 stores primarily in the state, said the Supervalu-owned chain is "constantly evaluating sales per square foot" to make sure the most productive categories are properly organized and that the store is catering "to what consumers are looking for."

Where the chain was able to both build out and reorganize cheese sections, he said, "it has to be easier for customers to shop."

As for what brands or products lost space in the reshuffling, Brown said it varies by store and was not heavily loaded on any product or manufacturer. Brown declined to provide Jewel-specific sales data pertaining to the reorganization, which was completed this month, adding that the change coincided with price reductions in the department.

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Janney analyst Jonathan Feeney praised the program and Kraft's increased investment in advertising and product development in recent years, from 6.6 percent of total sales in 2009 to 7.2 percent in 2011, on a higher base.

"The market is kind of starved for that kind of activity and Kraft has stepped into that breach well," Feeney said. He added that Kraft has been outperforming the North American grocery category, with modest sales and volume gains compared with declining volume sales at branded competitors that haven't made the same investments.

Feeney sees the shelf redesigns as an extension of the same commitment. He said that while manufacturers are expected to invest in price promotions to help get their products moving off store shelves, "You never want to offer just price."

Aside from products designed to aid meal preparation, Kraft recently launched Philadelphia Indulgence, cream cheese spread with dark-, milk- and white-chocolate flavors, and MilkBite, breakfast granola bars with the calcium equivalent of an 8-ounce glass of milk, which it hailed as a big innovation for its dairy business.

"Ideally from a retail perspective, you're bringing news, spending (promotional) dollars, and volume is responding as a result," he said.

What's more, Feeney said, Kraft is finding ways to leverage its well-known brand names.

"Brands are an affordable way for a lot of households that may have other things going on financially or in their working life that make them feel no longer part of the mainstream," he said. "It's an affordable luxury for a lot of households where many things have become a little less affordable for them."

One opportunity for Kraft, said supermarket industry analyst Phil Lempert, is the large crop of relatively unseasoned cooks wandering store aisles. Men are now preparing about 40 percent of meals made at home, he said.

"There's a whole new group of people who have never really cooked before looking for very basic advice," Lempert said, adding that he sees content on the Food Network and Cooking Channel moving from "more esoteric to more basic."

Maggie Hennessy, an editor for a baking trade magazine who writes the food blog "Marge's Next Meal" in her free time, said she buys "workhorse cheeses," for shredding or sandwiches from the grocery case. She likes Tillamook cheddar for sandwiches and sliced pepper jack for burgers, but she buys Kraft Singles for her husband's classic grilled cheese sandwiches.

Although an accomplished cook, Hennessy said she was "excited to see" Philly Cooking Creme on the shelves as an option for beginners.

"I have a positive association with Philadelphia as a brand, from growing up with it," she said, adding that she buys it as well. "I thought it was a great little idea, and I probably will try it."