Over the last 40 years a battle has been waged in the dairy sections of supermarkets all around the country, as yogurt and cottage cheese have battled for supremacy. In the early 1970s cottage cheese was the undisputed king. According to the USDA, the average American ate five pounds of it a year. Yogurt was just an upstart hippie-tinged competitor and less than half as popular.
Over the next decade yogurt’s popularity skyrocketed, and by 1985 it had overtaken cottage cheese as the cultured milk product of choice. Today Americans eat 15 pounds of yogurt a year and just 2.1 of cottage cheese.
But one local company is trying to turn the tide of battle with a new, creamier version of cottage cheese developed in Israel.
Muuna, headquartered at 213 Nassau Street in Princeton, is a subsidiary of the Israeli food giant Tnuva. Muuna (a made-up, American-sounding name) launched a creamy cottage cheese to the U.S. market in August, 2016. Its initial focus is the Northeast, but the plan is to go national; Muuna is now in almost 3,000 stores from Washington, D.C., to Maine, including Shoprite, Kings, Fairway, Foodtown, and Acme.
CEO Gerard Meyer, who left another Israeli company, SodaStream, in 2014 after building its U.S. market to $200 million in 2013, explains why Tnuva selected cottage cheese to expand its U.S. sales beyond the kosher market it has been in for a decade. Even though the per capita consumption of cottage cheese has fallen by half over the past 40 years while yogurt’s share has multiplied by more than seven, Meyer believes cottage cheese can take a bite out of its larger competitor.
The rival products are fighting for slices of a big market. “We believe it’s a big opportunity here — a $1.2 billion cottage cheese category, and an $8 billion yogurt category, and cottage cheese used to be twice the size of yogurt,” Meyer says. “We think we know why it declined and think it can increase and improve and do well.”
So why has cottage cheese soured, while Americans can’t seem to eat enough yogurt, despite the similarity of the two products?
One issue, Meyer says, is that most cottage cheese is plain, not very flavorful, and comes in large tubs, whereas in the yogurt market 90 percent of purchases are single servings with fruit. “Everything has become convenience,” Meyer says, adding that even when cottage cheese has sold versions with fruit, the fruit itself was not of sufficiently high quality.
Meyer believes cottage cheese can be just as appealing as its main competitor and has been hard at work improving the product.
His working premise has been to “reimagine and rebuild the category,” from creaminess and taste to package size and design. Looking ahead, Meyer says Muuna’s goal is to be in the hundreds of millions in the cottage cheese market. “How big can this business get?” he asks. It depends, he says, on whether “we [are] able to not just take a share of the category but grow the category by doing all this innovation — single-serve packages, fruit flavors, great packaging, a creamy consistency.”
Another issue is branding. In comparison to yogurt, which has developed distinctive brands like Dannon, Chobani, and Fage, Breakstone cottage cheese is a small part of a large company, Kraft Foods. Its marketing on store shelves also has a blandness problem. “It looks like the package of 40 years ago,” he says.
At the same time, there is a glimmer of hope. Market research statistics indicate a plus side to the potential for growth in the cottage cheese market. “Almost half of American households buy cottage cheese at least once a year, and over 90 percent of people who buy cottage cheese buy yogurt,” Meyer says.
“So they like dairy,” Meyer says, “but cottage cheese is not exciting enough.”
Tnuva’s decision, made with Meyer, to enter the cottage cheese market was inspired in part by the fact that “cottage cheese in Israel is humongous. Israelis eat more cottage cheese per person than anywhere in the world.”
Israeli cottage cheese, Meyer says, is much creamier than its American counterpart at the same fat level, and “happens to be really, really good. We have a technology, process, or recipe that is unique.”
But Muuna was well aware that the cottage cheese offered in the United States had to be specific for this market. Israelis, for example, don’t mix fruit with cottage cheese, treating it as more of a savory rather than a sweet food. But given the evidence from the yogurt market, fruit is critical here.
Cottage cheese not only meshes well with “the whole craze with protein,” Meyer says, but “you don’t need as much sugar to make it taste sweet.” The bottom line: Muuna’s flavored cottage cheeses have more protein and less sugar for the same calorie level as comparable yogurts.
Before marketing its new product line — which includes six single-serves of 2 percent cottage cheese, five of them with fruit, and two larger plain tubs, one 2 percent and one 4 percent — Muuna also developed a new package, created by the designer responsible for Chobani’s packaging. “We made a unique shape and a nice look,” Meyer says. “People buy things with their eyes first.”
Meyer himself often goes to the first meetings with buyers at the bigger retailers to give his spiel and PowerPoint. He says that retailers, who usually get three-page presentations and may be dubious at first often end up impressed by his extensive analysis of the market and his product and tell him, “Wow, you guys may be onto something.”
To take in a new product is a big deal for retailers because it means they have to get rid of something else. And even after they decide to add Muuna to their shelves, it can take a while to fill out forms, set up the product’s weight and measures in their systems, and work out a sales plan for the first several months.
In evaluating the success of a grocery product, the first step, Meyer says, is whether retailers say “Yes, I think you’re onto something; that’s a good idea” or “you’re crazy.”
The next level is what consumers think — do they buy the product? Do they rebuy it? To figure this out, consumer product companies like Muuna use UPC scanned data consolidated by either Nielsen or IRI. Both companies update once a month with weekly results and can tell him, for example, how many units of Muuna blueberry cottage cheese he sold last week in America, in a particular region, in some metro areas, and by larger retailers.
What this data doesn’t tell him, though, is how many times someone bought one of his products or in what Shoprite location, nor does he know how many separate people bought the product. To learn this, he needs to use data from paid panels whose participants use a special wand to scan each grocery item they buy. The resulting data can tell Meyer how often the average family buys each of his products, but it takes at least six months to a year to have a large enough sample size for the data to be meaningful.
So far many of the retailers are putting six to eight items on their shelves, and, from Muuna’s scan data, Meyer says that thus far the products are selling “above expectations.” Sales also do not seem to be varying by region. He adds that retailer reception has been excellent.
The product is priced at “a bit of a premium” because, Meyer explains, “it is a better product than what is out there, and it costs us more to make it.”
They had to look widely for a factory to manufacture their recipe, which Meyer said is more challenging than run-of-the-mill cottage cheese. Muuna had several requirements: the factory couldn’t be so big that it wouldn’t take sufficient care of a small-time operation , but it couldn’t be so small that it wouldn’t be able to grow with Muuna. It also had to be flexible enough to adapt its facility and process to making Muuna cottage cheese and its specially shaped cup.
“There are not too many modern cottage cheese facilities — they were mostly built 40 or 50 years ago,” Meyer says. Muuna finally decided on Kemps, a wholly owned subsidiary of the cooperative Dairy Farmers of America, near Minneapolis. The cottage cheese is shipped to the East Coast in two days by refrigerated truck.
Muuna uses Acosta, a national sales and marketing group, whose sales brokers represent many different brands, to get initial appointments with store buyers and then to handle the day-to-day back-office activities.
Marketing is via digital venues like Facebook and Pinterest, as well as more traditional approaches like radio and TV spots, coupons, store demos, and even a billboard on the Jersey Turnpike near exit 10. And on November 8 Muuna got an article in the Wall Street Journal titled “Could Cottage Cheese Ever Be Cool?”
Currently Muuna has 10 employees, all from the United States, either at the Princeton headquarters or in Pittsburgh, Boston, and New Jersey to supervise stores. The product is stored in Hall’s Warehouse in South Plainfield.
In seeking employees for Muuna, Meyer looked for people with deep consumer product experience who could get a running start. He hired a salesperson from the other side: a man who had spent the last 20 years selling yogurt to grocery stores.
At the same time he wanted employees who had worked in a small business, rather than people accustomed layers of bureaucracy and a long lead time. “I need people who are fast and flexible,” Meyer says. “The job changes daily, and I don’t have a huge staff to do stuff. I need entrepreneurial people who already know how to deal with the big boys.”
“I tend to also look for people who are pretty passionate about what they do and act like it’s their business, their company, as opposed to ‘It’s just a job,’” he says.
Meyer was born in Argentina. His father’s family had fled there from Breslow, Germany, right after Kristallnacht in 1938. Meyer’s paternal grandfather was in the garment industry. He was also a fine pianist, and though the family could not bring money with them, they were able to transport their grand piano with them on the boat, settling first in Bolivia, and then Argentina.
His mother, born in Metz, France, in 1934, was orphaned during World War II. Her father was taken to a concentration camp, and her mother died of an illness. Meyer’s mother lived through the war with a Catholic family. She was “not technically hidden,” Meyer says, and in fact as one of the top students in her French school, presented flowers to Charles DeGaulle.
His mother was brought to Argentina by an uncle who had survived in the French underground and whose older brother was in Argentina.
Meyer came to Plainfield, New Jersey with his parents and older brother in 1964. The family moved to Westfield, where Meyer grew up. His father, a chemist by training, ended up in computer science and worked with Merck’s computer systems for many years. His mother worked part-time for Statistical Research Inc. (SRI), polling for research ratings for radio.
Explaining why he applied to the University of Pennsylvania’s Wharton School for his undergraduate education, Meyer says “it was the process of elimination — I didn’t want to be a lawyer, a doctor, or an engineer.”
Meyer’s first entrepreneurial venture was during college, where he majored in economics.
In his work-study job during his first year distributing soda to campus snack shops, Meyer noticed how much soda students were drinking at the campus commissaries in their dorms. “They were by the can, so they were expensive,” he says, adding that the commissaries closed early in the evening. For Meyer, this was a business opportunity.
So he talked to the Coca-Cola driver about the possibility of selling cases and six packs of Coca-Cola in front of the main dormitories for less than students had to pay when buying Cokes individually.
“I set up in front of the freshman quad (the main dormitory on campus) and sold soda by the case to students one or two times per week in the afternoon when they were going back to their dorm at the end of the day of classes,” he says. Because he was technically on city property in front of the dorm, he had to get a street vendor’s license from the city of Philadelphia to peddle his cases of cola. To be a street vendor, he needed a cart. It was a jury-rigged operation. “I bought a door and put four wheels on it with locks and stacked the cases of soda on this ‘cart,’” he says.
“I made a lot of money,” he says, noting that he then hired other people to man the sales tables.
Realizing that sales at outdoor tables were weather related, he figured out a related indoor business opportunity. “I saw lecture halls with 300 people and no soda machine,” he says. He approached the Coca-Cola driver, who told him that he would install a soda machine at no charge, as long as Meyer could meet his requirements: he had to stock only Coca-Cola products, generate a targeted volume, and fill the machines himself.
This new venture required some additional expenses — hiring a van, getting storage space in fraternities, and paying people to refill the machines, one bottle at a time. Hence, in the machines he sold the cans at the going price.
Reflecting on his first business experience, Meyer says, “I saw a need, and I had the right contacts to make it happen.”
It was also a learning experience. He first tried dorm delivery, but found that the difficulty of finding dorm rooms made it impossible to deliver efficiently. “It was better standing every Friday at 3 p.m. with 50 cases of soda, and people would get them on their way back to the dorm,” he says.
When he graduated in 1984, he sold his business to other students.
Bracketing his two years at Harvard Business School, Meyer did strategy consulting for Booz Allen Hamilton and Boston Consulting Group.
His work consulting with small consumer products companies eventually sent him to companies like Kraft General Foods in White Plains, where he spent eight years working on accounts like KoolAid and Jello, where he learned about channels of distribution, specifically for grocery stores.
He then worked for two years at Campbell’s Soup and then for a year at B&G Foods, which at the time he started was a much smaller operation that bought up orphan brands and was private equity owned. “It was my first experience of a smaller company,” he says. “The others were billion dollar companies.” He started at B&G as director of marketing and left as vice president of marketing.
For the next few years, he moved out of consumer products, spending a year at a dot-com business, then a year at Merck Medco, where he did pharma benefits management. “I decided I didn’t like it; there was too much regulation. And it was business-to-business,” he says, noting that the experience clarified for him how much he preferred consumer businesses. “I like stuff I can touch, taste, feel, and use — I’m a consumer products person,” he says.
In 2003 he saw an online posting that would cement his career path for the next 11 years. The advertisement was for a job in a soda-maker business. He sent his resume online on a Thursday, got a phone call an hour later, interviewed on Friday in Cherry Hill at “a little office with an Israeli HR guy, representing an Israeli company,” and met on Monday in Israel with the president of SodaStream.
He got the job, heading up SodaStream’s U.S. business for 11 years. He left in early 2014, after building the U.S. business to $200 million in 2013.
When Meyer came on board, a couple years after SodaStream’s U.S. launch, it had only a few hundred thousand dollars in sales and wanted to build its business. “They needed someone to help figure out how to sell a soda maker,” he says. They needed to decide what the brand should look like, whether it should be a soda maker or a seltzer maker; what the channels of distribution would be; and how much people would pay for it.
“It was struggling because it hadn’t been positioned for the U.S. market,” Meyer says.
One issue that needed to be remedied was that SodaStream’s machine was white at a time when most small countertop appliances were black or stainless.
Although SodaStream did offer syrups, their names were European — cola light, for example, instead of diet cola. Also, the formulas had not been developed for American palates, so Meyer had to adapt them. They substituted sugar for high fructose corn syrup, which made the syrups sweeter, and also came out with new flavors that would be popular in the American market, like root beer and caffeine-free diet sodas. They also changed the artificial sweetener from aspartame to the more popular Splenda.
Another issue was that SodaStream had put only a single machine on the market. To be successful, Meyer recognized that it needed to offer several versions, with different features, to give people choices.
His biggest challenge, though, was building distribution for a totally new category. “When talking to a retailer, it was not convincing him that my coffee maker is better than yours, but I have a new thing — it’s a soda maker,” he says.
Most important for a retailer considering whether to make room for a new appliance is whether “this new thing is going to sell,” he says.
“It is a risk, and most of these retailers are not risk takers,” Meyer says. “They would rather play it safe.”
So he realized that at first he had to find retailers more interested in innovation and new things, who figure, he says, “if it fails, it fails.” For small appliances, that retailer is Williams-Sonoma, he says. People who go there are looking for something interesting and are willing to pay for it.
You also want a store, he adds, where “in the small appliance section, a person will know their stuff.”
So he got his foot in the door at Williams-Sonoma. They only wanted the $200 version, which made carbonated water in a glass carafe, not the $99 version. “They wanted the Perrier and Pellegrino drinker — no syrups,” he says.
Williams-Sonoma, he says, also understood the concept of the cylinders of carbon dioxide that fuel the seltzer maker. They keep the cylinders behind the customer service desk, he explains, creating a “nice product center” that is behind the counter. “They could make money without shelf space, and it was bringing people into the store,” he says. “They were seeing the threats of Amazon to the world.”
Some retailers just started with machines, and others, like Kitchen Kapers and Ace in Princeton, also sold the cylinders.
From his success with Williams-Sonoma, he eventually made his way into Macy’s, Bed Bath and Beyond, and Bloomingdales. By the end of 2013 SodaStream was in 15,000 stores from Wal-Mart to Ace Hardware.
“As you get more retail distributors, it takes off, exposure starts to escalate, and you get bigger,” he says, noting that in 2011 SodaStream was big enough here to do a Super Bowl commercial.
“It was gratifying to build this brand that didn’t exist,” he says. Although competition in the United States appeared — from Cuisinart, Coke, and Keurig — but “they all fell by the wayside.”
In 2014 Meyer left SodaStream, whose public offering in 2010 had “changed things quite a bit.” He adds, “I was already looking for what’s next, and there were some disagreements in how to take the company from there.”
Meyer lives in Princeton with his wife, Sherry. They have three sons; the oldest graduated from the University of Pennsylvania with a degree in engineering and works in San Francisco; the middle son is a senior in political science at Swarthmore College; and the youngest is a junior at Princeton High School.
During his tenure with Muuna, Meyer says his own dairy-eating habits have already changed. Instead of buying a 130-calorie blueberry Greek yogurt with 12 grams of protein and 15 grams of sugar, he now eats a snack-size blueberry Muuna, with the same 130 calories, but 15 grams of protein and only 10 grams of sugar.
Looking to the future, he envisions possible growth by introducing dairy products that exist in other parts of the world but are not very developed here. Or even growth through acquisition. For the moment, he is carefully introducing his new brand in the Northeast and eventually nationwide.
Muuna, 213 Nassau Street, Princeton 08542. Gerard Meyer, CEO. www.muuna.com.