Drinking yogurt market in transition

by Keith Nunes
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Competition from other dairy-based concepts is forcing manufacturers to innovate.

DUIVEN, THE NETHERLANDS — While health remains a core focus, the manufacturers of drinking yogurts and fermented beverages are seeking new options and formats to better position their products in the marketplace, according to Innova Market Insights.

Drinking yogurts and fermented beverages accounted for 8.5% of total global dairy launches recorded by Innova in the 12 months through Oct. 31, 2015. While tracked product introduction numbers have increased over the past five years, share of overall dairy activity has fallen slightly during the same period.

Lu Ann Williams, director of innovation at Innova

“The drinking yogurt market has enjoyed mixed fortunes in recent years,” said Lu Ann Williams, director of innovation at Innova. “A positioning that falls between traditional, spoonable yogurts, milk drinks and other soft drinks has proven to be a mixed blessing, with high levels of competition in all these areas.”

After a period of growth in the first half of the 2000s, driven by rising interest in healthy and convenient options, the market split into two key areas — single-serve dose-delivery active health drinks and traditional drinking yogurts — with the latter coming under pressure from the former. The position has tended to reverse with the regulatory changes preventing the use of probiotic claims in key markets, perhaps most notably Europe, which accounts for over half of launches in the sub-category.

Manufacturers are attempting to move on with new formats and target markets, although the focus on health remains strong, according to Innova. Over 80% of global launches recorded in the 12 months through the end of October 2015 featured health claims of some kind, rising to 98% in the United States.

Despite the use of the term probiotic being disallowed on product labels in the E.U., the association of yogurt with digestive health has clearly been made. It is the most popular claim globally, used on over half of drinking yogurt launches, according to Innova’s data. Other popular claims relate to low and light, with nearly 45% of launches featuring low fat, low sugar and/or low calorie claims. Interest in clean label is also evident, with over one-fifth of launches using natural or no additive/preservative claims, rising to nearly 27% if organic claims are also included.

The market is now moving forward, with a particular focus on yogurt and fruit blends in a smoothie format, while there also has been the rising interest in yogurt-style fermented drinks that has brought products such as kefir, lassi and ayran into mainstream markets in non-traditional regions. One of the most high-profile recent arrivals has been the Icelandic yogurt-style fermented dairy product Skyr in the United States, the United Kingdom and mainland Europe, in drinkable and smoothie formats. It is offered in a range of fruit flavors, as well as trendy options such as coffee and vanilla. There also has been a focus on offering liquid yogurt products for the breakfast market, both in-home in cartons and for on-the-go replacements in re-sealable plastic bottles.

“After a few difficult years, it may be that the drinking yogurt market is once again on the up,” Ms. Williams said. “The renewed focus on convenience and indulgence, combined with its healthy image has resulted in a drink or snack offering suitable for both in-home and on-the-go consumption.”

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