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Philadelphia is launching a plant-based cream cheese | CNN Business


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CNN Business
 — 

Philadelphia Cream Cheese is launching a non-dairy version of its signature spread.

The plant-based cream cheese is now available at grocery stories in Atlanta, Houston, Miami and other locations in the Southeast, with a wider rollout planned for summer 2023. The new variety is made with coconut oil and faba bean protein among other ingredients, and is designed to mimic the experience of eating traditional cream cheese.

Philadelphia’s non-dairy cream cheese has a suggested retail price of $6.49, compared to $4.57 for traditional.

The brand’s owner Kraft Heinz

(KHC)
, has been focusing on driving growth by innovating within its powerhouse products like Philadelphia, including by launching plant-based alternatives, where the company sees room for growth.

“Plant-based has been outpacing the overall categories within all of dairy for quite some time,” said John Crawford, VP of client insights for dairy at IRI.

But with consumers trading down to more affordable options in the face of high food inflation and concerns of a looming recession, pricey cream cheese made without dairy could be a hard sell.

Robert Scott, president of R&D at Kraft Heinz, said it took the company about two years to come up with the recipe for the plant-based Philly.

The team focused on two major factors: Getting the product to melt and spread easily on toasted bread or a warm waffle, and making sure that it tastes like a dairy product — even if it doesn’t totally pass for regular cream cheese.

“Getting dairy notes in a plant base is hard,” Scott said, but he hopes consumers will notice buttery hints in the spread. “To get to butter … that’s a huge success metric,” he said, acknowledging that the dairy-free cream cheese “is not a taste match of the existing product.”

Scott said that many customers aren’t getting what they want out of the current lineup of plant-based cream cheeses, and that Philadelphia is offering 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 is not the only company working to make a tastier cheese alternative.

“There’s a lot of work that’s being done to try and improve the performance of plant based cheese,” said Crawford, pointing to Babybel as another dairy brand that has launched plant-based options.

Kraft’s goal is to not only have consumers try the product, but return to it consistently. When this reporter tried it, the product spread easily on toast (but not so easily on a dry roll) and it also looked a lot like cream cheese. But it didn’t taste quite the same — it was a little more bland than the traditional version. Still, it certainly works as a passable alternative for those seeking a non-dairy option.

Like its cohorts in the alternative meat space, Kraft is trying to reach a flexitarian consumer: someone who doesn’t avoid animal protein entirely, but occasionally wants a plant-based alternative. “There’s a big opportunity” there for Kraft, said Scott.

To that end, this isn’t Kraft’s only foray into plant-based cheese. In October the company launched a pilot program selling 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 major investments in plant-based alternatives that its competitors have.

Sales of plant-based meats were soaring just a few years ago with companies such as Beyond Mea

(BYND)
t and Impossible Foods partnering with major fast food brands and reaching customers through large retailers. But over the past year, retail sales of fresh meat alternatives fell about 9%, according to data from NielsenIQ.

The waning interest is driven in part by the relatively high prices of meat alternatives. With food inflation remaining particularly high, consumers are opting for more affordable basics in the grocery store

Demand has been growing for plant-based cheese, with sales ticking up 1.4% in the year through October, according to NielsenIQ. But like meat alternatives, plant-based cheese is also priced at a premium. And consumers may pull back from these products as they look to save money, a Mintel report from this year noted.

Plant-based cheese “may well prove an area where consumers, particularly those flexitarians, are opting instead for more cost-effective cheese solutions,” the report said.

Plus, Crawford noted, people who eat dairy but are trying to reduce their intake may not even seek an alternative — they might just skip the item altogether.

“It’s just easier to forgo cream cheese and cheese … than it is to forgo meat,” he said.

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