Philadelphia Cream Cheese launches plant-based spread

Dive Brief:

• Philadelphia Cream Cheese is launching a plant-based version of its original-flavored spread. This is the first time a big brand of cream cheese in the U.S. has made a plant-based variety.
• Philadelphia Plant-Based spread is launching at select retailers in the Southeastern U.S., including the Atlanta, Charlotte, Houston, Miami and Nashville markets. It will roll out nationwide — in both the original flavor and two others — next summer.
• Following increased consumer interest in plant-based dairy, Philadelphia’s parent company Kraft Heinz has quickly jumped into the space. This is the CPG’s second launch of a plant-based cheese product in just over a month, following Kraft NotCheese slices through the company’s joint venture with NotCo.

Dive Insight:

After a slow start, the plant-based cheese sector is quickly accelerating.

The fact that there will be a plant-based version of Philadelphia means two things: Plant-based is recognized as a sizable market force, and Kraft Heinz is endorsing the quality of its plant-based variety by launching it under the Philadelphia brand.

Robert Scott, Kraft Heinz president of R&D, said in a statement there are 20 times more flexitarian consumers — people who choose to sometimes eat plant-based — than vegans. And while many consumers have tried plant-based spreads, fewer than half are repeat customers, according to the IRI and Mintel stats shared by Kraft Heinz.

“We realized the current options weren’t meeting consumer expectations and there was no trusted leader,” Scott said in the statement. “Philadelphia Plant-Based spread not only provides a solution that mirrors the taste and texture of our iconic Philadelphia brand, but it also reinforces Kraft Heinz’s bet to bring plant-based offerings to the masses.”

Kraft Heinz’s Philadelphia entrance into plant-based could be made easier by the dominant position the brand already has with its core dairy product. Philadelphia Cream Cheese is by far the market leader in the segment, holding a 69% share of the category, according to IRI and Mintel data.

For years, as many other CPG companies dove into the plant-based sector by launching or buying plant-based meat and dairy brands, Kraft Heinz appeared to be sitting idle. But the past several weeks have shown that Kraft Heinz was taking its time to prepare for a big and purposeful entrance.

The company said it spent more than two years on R&D for Philadelphia Plant-Based spread, and the formulation was nearly complete when the company announced its joint venture with NotCo to develop plant-based products earlier this year.

The main ingredients in Philadelphia Plant-Based spread are coconut oil, modified potato starch and fava bean protein. Kraft Heinz’s suggested retail price is $6.49 — almost $2 more than its traditional variety with a current suggested retail price of $4.57, but competitive when compared with other plant-based cream cheeses, the company said.

Unlike most other big CPG brands, which have created new branding specifically for their plant-based products, Kraft Heinz has put its new cheese products under its already well-known brand names.

By selling plant-based products under those banners, Kraft Heinz is holding up its new plant-based products to the same standards. This could be a huge vote of confidence for the consumer, considering many plant-based cheeses have been known to have flavors, textures and behavior that are a bit off.

NotCheese, the first product from Kraft Heinz’s joint venture with artificial-intelligence-driven NotCo, has so far only been released in a handful of stores in Northeast Ohio. A national rollout is planned for 2023.

In a Q&A session with analysts after the latest earnings report, Kraft Heinz CEO Miguel Patricio said the product “is very different from everything that is in the market.” The slices look, taste and melt similar to Kraft Heinz’s traditional options.