New York CNN store —
Philadelphia Cream Cheese is launching a dairy-free version of its signature spread.
The plant-based cream cheese is now available in grocery stores in Atlanta, Houston, Miami and other Southeast locations, with a wider launch planned for summer 2023. The new variety is made with coconut oil and broad bean protein, among other things. and is designed to mimic the experience of eating traditional cream cheese.
Philadelphia’s dairy-free cream cheese has a suggested retail price of $6.49, compared to $4.57 for traditional.
The brand’s owner, Kraft Heinz (KHC), has focused on driving growth by innovating on its high-performing products like Philadelphia, including the launch of plant-based alternatives, where the company sees room for growth.
“Plant-based products have been outperforming the overall categories within all dairy for quite some time,” said John Crawford, VP of Client Insights for Dairy at IRI.
But as consumers shift to more affordable options amid high grocery inflation and concerns of a looming recession, pricey non-dairy cream cheese could be hard to sell.
Robert Scott, president of research and development at Kraft Heinz, said it took the company about two years to develop the plant-based Philly recipe.
The team focused on two main factors: getting the product to melt and spread easily on toast or a warm waffle, and making sure it tasted like dairy — even if it didn’t quite pass for regular cream cheese.
“It’s difficult to get dairy notes into a plant-based base,” Scott said, but he hopes consumers will notice buttery hints in the spread. “Getting to the butter…that’s a huge success metric,” he said, acknowledging that the non-dairy cream cheese “didn’t taste like the existing product.”
Scott said that many customers aren’t getting what they want with the current offering of plant-based cream cheeses, and that Philadelphia offers a better alternative. According to data from IRI, only about 41% of households who buy plant-based cream cheese make a second purchase within the year.
But Kraft isn’t the only company working on a tastier cheese alternative.
“There’s a lot of work being done to improve the performance of plant-based cheeses,” Crawford said, citing Babybel as another dairy brand that has launched plant-based options.
Kraft’s goal is for consumers not only to try the product, but also to keep coming back to it. When this reporter tried it, the product spread easily on toast (but not so easily on a dry bun), and it looked a lot like cream cheese, too. But it didn’t taste quite the same – it was a bit milder than the traditional version. Still, it certainly works as a passable alternative for those looking for a dairy-free option.
Like its cohorts in the alternative meat space, Kraft is trying to appeal to a flexitarian consumer: someone who doesn’t completely avoid animal protein but does want an occasional plant-based alternative. “There’s a big opportunity there” for Kraft, Scott said.
To that end, this isn’t Kraft’s only foray into plant-based cheese. In October, the company launched a pilot program to sell plant-based American cheese slices in a test market as part of its partnership with NotCo, a company that makes plant-based meat and dairy products.
But Kraft hasn’t made the big investments in plant-based alternatives that its competitors have.
Plant-based meat sales soared just a few years ago when companies like Beyond Mea (BYND)t and Impossible Foods partnered with major fast-food brands and reached customers through major retailers. But over the past year, retail sales of fresh meat alternatives fell about 9%, according to data from NielsenIQ.
The waning interest is being driven, among other things, by the relatively high prices for meat alternatives. As grocery inflation remains particularly high, consumers are opting for more affordable grocery staples
Demand for plant-based cheese has increased, with sales up 1.4% for the year to October, according to NielsenIQ. But like meat alternatives, plant-based cheese comes with a hefty price tag. And consumers may ditch these products if they want to save money, according to a Mintel report earlier this year.
Plant-based cheeses “may well be an area where consumers, particularly flexitarians, are turning to lower-cost cheese solutions instead,” the report says.
Additionally, Crawford says, people who eat dairy but are trying to reduce their intake may not even look for an alternative — they may skip the product altogether.
“It’s just easier to give up cream cheese and cheese… than meat,” he said.