More innovation is needed in the US cream cheese category as consumers increasingly switch to cottage cheese and other protein-forward products, according to Kraft Heinz CEO Steve Cahillane, DairyReporter reports.

Key points:

  • US cream cheese consumption is declining, even though the Philadelphia brand continues to gain market share;
  • US cottage cheese sales topped USD 2 billion in 2025, up 19.2% in value and 13.9% in volume;
  • the global cottage cheese market is set to grow at a 6% CAGR;
  • Kraft Heinz is betting on innovation, including lactose-free cream cheese and new Philadelphia flavours.

Consumers switch to protein

Speaking during the company’s third-quarter earnings call, Steve Cahillane, CEO of The Kraft Heinz Co, said the category is under growing pressure even though Philadelphia continues to gain US market share. Overall consumption is declining as consumers migrate to cottage cheese and other protein-focused options.

The shift highlights a broader dairy trend: cottage cheese has been reinventing itself through new formats, younger consumers and rising global demand. A wave of challenger brands has helped drive growth, while social media has fuelled demand.

According to Circana, US cottage cheese sales topped USD 2 billion in 2025, up 19.2% in dollar terms and 13.9% in volume.

Globally, the category is set for a 6% compound annual growth rate (CAGR), with North America the market share leader, followed by Europe and Asia-Pacific, according to Cognitive Market Research.

Philadelphia needs innovation

Cahillane acknowledged that the company’s pricing moves for Philadelphia had proved deflationary to the category and that it was adjusting them.

«I’d say what Philly needs from a category perspective is more innovation, because it’s very clear where we’re losing as a category. We’re losing to cottage cheese and other more protein-forward products. So 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», Cahillane said.

«The brand itself is an incredibly strong brand. There’s nothing wrong with the brand. It’s just that the category is under some pressure from consumers 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».

Philadelphia has already been broadening its offer to meet changing demand. The brand recently launched a lactose-free cream cheese in the US and continues to expand its distribution.

The company has also released new flavours in the US, including Mike’s Hot Honey whipped cream cheese, salted caramel and a seasonal cranberry orange.

About the company

Kraft Heinz is one of the world’s largest food and beverage companies, with net sales of about USD 25 billion in 2025 and brands enjoyed in more than 40 countries. It distributes Philadelphia in North America, while Mondelez owns and manages the brand in Europe and internationally.

Separately, Kraft Heinz announced it is selling its North American coffee business for USD 650 million while retaining a 30% non-controlling equity stake.

Source: DairyReporter