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Cream Cheese: Marketing, Shortages, and Bagels

“No publicity is bad publicity” seems to be the motto Philadelphia Cream Cheese is living by these days with their recent Spread the Feeling campaign.

Philadelphia Cream Cheese is no stranger to marketing gimmicks. Let’s start with their name. Did you know PHILADELPHIA cream cheese did not originate in Philadelphia? Its roots are based in New York.

Then why did they call themselves PHILADELPHIA cream cheese?

Companies are always trying to distinguish themselves – make themselves stand out. If they don’t, as more companies enter the market, they can lose customers.

Take cream cheese. It has lots of competitors: goat cheese, marscapone cheese (yum!), Neufchatel cheese, ricotta cheese, cottage cheese, maybe sour cream. It really depends on what you are using cream cheese for, but you can probably find a substitute.

Further, when you look into different types of cream cheese, we’ve got a bunch. Philadelphia cream cheese…. Wait, what else is there? I had to stop and think about this. Ok, Trader Joe’s has a cream cheese. I think Whole Foods has a version too. If you dig in a little bit more, there are other versions as well.

Wow, Philadelphia cream cheese has a strong hold on the market.

Cream cheese was first developed in the late 1800s (about 150 years ago). During that same time period, Philadelphia was known as a hotspot for cheese. So… to build up demand for this new, delicious and creamy cheese, they called it PHILADELPHIA cheese. (For more on this story and on Philadelphia Cream Cheese see this Bon Appetit article by Priya Krishna)

By now, we all know about cream cheese. We lather it on bagels. We blend it up and bake into cakes. We add jalapeño jelly to the top and serve it with crackers for appetizer. Basically, we come up with any excuse to eat it.

Given the hold Philadelphia Cream Cheese has on the market, do they still need to advertise? Well, I honestly don’t have the data to know what would happen if they don’t advertise, but if they are still advertising, then it must not hurt!

You probably have also heard about all of the shortages of things going around. The latest tragedy is cream cheese. The news first came out a few weeks ago with a fear that New York delis weren’t going to be able to serve an equal weight of cream cheese and bagel like they normally do. (NY Times article by Ashley Wong) And then CNN reported that Junior’s Cheesecakes in New Jersey had to close a couple of days while they scrambled to find more cream cheese. (CNN article by Danielle Wiener-Bronner)

Why are they having this shortage? Well, at this point it sounds like a broken record: on the supply-side it relates to labor shortages, lack of packing equipment, and trouble shipping. On the demand-side, it started in 2020 with a rise in demand for cream cheese with people having breakfast at home (I assume more bagels at home?). The retail demand increased 18% in 2020. In 2021, not surprisingly, Philadelphia Cream Cheese is sending out 30-35% more cream cheese to restaurants. Given that many restaurants were shut down for a couple months that latter stat is not overly surprising. Still… they might not be ready for it.

One more thing contributed to the issue. One of Philadelphia Cream Cheese’s competitors had a cyberattack, stopping production for a couple of days! (Bloomberg article by Elizabeth Elkin and Deena Shanker)

So, in sum, supply is down, demand is up. This leads to higher prices. If prices don’t rise enough, it will lead to shortages.

So, what did Philadelphia Cream Cheese do this time? Well, they embraced the issue! Rather than shying away from the news and promising customers they would have a greater supply soon, they actually encouraged people to buy OTHER desserts with the slogan “If you can’t spread Philly, spread the feeling.”

Basically, you could go online over a two-day period and reserve a spot. If you got a “spot” then you could order a dessert (or ingredients) online using a special link. Then in January, you have a chance to get $20 back.

They advertised it as giving away desserts. That’s not exactly how I read the directions, but that was the idea.

Why would they do this? Advertising! They want to keep their demand high. As mentioned above, there are substitutes for cream cheese. And, there are even substitutes within the cream cheese market. So, if people get used to those substitutes, they might forget about Philadelphia Cream Cheese.

In this case, they aren’t directly building up the demand for Philadelphia Cream Cheese in the immediate future (days / weeks), but they are capturing the long-run demand for their products through their continual advertising and reminder that they are THE cream cheese.

Bagels (with Cream Cheese)

Every year, King Arthur Baking Company releases a “Recipe of the Year.” In 2020, it was this amazing pizza crust made in a caste iron pan. In 2021, they topped that with cinnamon rolls that actually lasted longer than a day. Most cinnamon rolls lose their luster after a few hours… but not these!

Now, as we enter 2022, they have released a recipe for bagels. Yes, you can make bagels at home! I tried, and they turned out delicious!! The recipe includes directions for an egg filling, but I chose to have mine with cream cheese (obviously).

I recommend all of the above options! Enjoy!


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