Cream Cheese Loses Ground as Protein Craze Doubles Cottage Cheese Sales

U.S. cottage cheese sales have more than doubled since 2021, and Kraft Heinz says the shift is eating into its Philadelphia Cream Cheese business. Cottage cheese sales rose 17.7% to roughly $2.32 billion in the 52 weeks ended Oct. 4, according to data from Circana. Cream cheese sales fell 4.4% over the same period, to about $2.88 billion.

Kraft Heinz made the admission on its Wednesday earnings call. CEO Steve Cahillane said Philadelphia, which commands a majority of the U.S. cream cheese market, needs a product overhaul.

"What Philly needs from a category perspective is more innovation, because it's very clear where we're losing as a category," Cahillane said. "We're losing to cottage cheese and other more protein-forward [items]."

He added: "We need to do more innovation around what the consumer is looking for, vis-à-vis protein, vis-à-vis flavors, vis-à-vis overall innovation."

Why is cottage cheese back?

For decades, cottage cheese sat in refrigerators as a tolerated health food, not an enjoyed one. That has changed. Analysts credit two forces.

The first is "protein-maxxing," a social-media-driven push to maximize protein intake. The second is the rise of GLP-1 weight-loss drugs, which push users toward nutrient-dense foods.

"It's perceived as a high-protein way to keep your muscle mass up when you're on GLP-1s," said Brian Walton, an economist at Bozic, a dairy-market data tracker.

Melissa Altobelli, a dairy analyst at Circana, traced the turnaround to TikTok. Cottage cheese went viral a few years ago, she said, as people watched cooking videos for ideas on how to use it. The cheese now appears in recipes for everything from scrambled eggs to ice cream.

Snacking habits reinforce the trend. Cottage cheese and yogurt are portable and nutritionally dense, which suits eaters on the go.

"More than half of consumers report snacking three or more times per day, and snacking occasions are increasingly replacing traditional meals rather than simply occurring between them," Altobelli said.

What is happening to dairy prices?

The protein boom has tightened whey supplies, a high-protein dairy byproduct common in drinks and snacks, and pushed prices up. Government data show Class II milk — the class used for cottage cheese and other soft dairy products — cost $19.15 per hundredweight, or 100 pounds, in October. That figure sits below peaks reached at points earlier this decade, according to a price compilation from Bozic, though costs for products beyond cottage cheese also feed into it.

Production remains below the cottage cheese boom of the 1970s, which eventually gave way to yogurt. But capacity is expanding.

Carl Colizza, CEO of dairy processor Saputo, one of North America's largest cottage cheese makers, said in September the company cannot keep up with demand. He cited "a couple of exciting areas where we're investing in additional capacity, like in cottage cheese and in some cultured products where we are struggling to meet demand."

Who is investing in the category?

Money is following the demand. In January, investment firm L Catterton agreed to take a majority stake in dairy brand Good Culture. L Catterton said Good Culture's sales had grown nearly fourfold over the prior three years.

"In 2014, I realized there was massive whitespace in a stale category that was lacking innovation," Jesse Merrill, Good Culture's co-founder and CEO, said in the announcement.

Kraft Heinz is fighting back on its own shelves. In September, it said it would roll out new Philadelphia Cream Cheese varieties, including hot honey, cranberry orange and salted caramel, to stand out at grocery stores. It also recently launched a lactose-free cream cheese under the Philadelphia name. The brand held roughly 62% of the U.S. spreadable cheese market last year, according to Euromonitor International.

Can Philadelphia fight back?

Kraft Heinz's total sales fell 2% in the third quarter, as cautious consumers and stiffer competition squeezed the consumer-goods industry. On Wednesday's call, Cahillane downplayed the cottage cheese threat to the brand itself.

"There's nothing wrong with the brand," he said of the Philadelphia line. "It's just the category is under some pressure relative to switching out of cream cheese into cottage cheese and others. And that's very addressable, but it's going to take just a little bit of time."

The bet now rests on new flavors and protein-aligned innovation closing a gap that widened over three years.