For more than two decades, yogurt has been a dynamic powerhouse in the dairy segment. It offers a variety of new products, double-digit annual sales growth from several mainstay brands, and a healthful nutritional proposition. Yogurt has become the star of the otherwise predictable cultured product segment. Of dairy’s four major categories, only cheese has shown the kind of overall sales growth as the yogurt-driven cultured products group.
The category growth was spurred initially by an Americanization of what was essentially a European product. In the 1970s and ’80s marketers gave American consumers a milder, sweeter yogurt. But during the past decade yogurt has broadened its appeal, said Alan Reed, senior vice-president of U.S. manufacturing and ingredient marketing for Dairy Management Inc. (DMI). But the real excitement may still be around the corner.
"Yogurt has grown 7% to 10% annually for about 30 years," Mr. Reed said. "It’s not a small category any more. So we are pushing beyond what we in the U.S. traditionally think of as yogurt."
Most recently the push has been in the area of functional products designed to provide specific benefits in the areas of digestive health and immune system enhancement. Just five years ago these products — which had already found broad acceptance around the world —continued to be a challenging sell in North America. As of 2009, the leading brand companies have had success with functional products, and private label offerings are now elbowing their way onto retail store shelves.
"I think we will see functional yogurts continue to grow," Mr. Reed said. "Yogurt happens to be a fantastic carrier for functional ingredients, some of which can be a bit unstable. The first foray into probiotics — digestive health and immunity will continue to be hot areas. But I think we will see yogurt with more antioxidants and yogurt with trendy inclusions like glucosamine chondroitin or CoQ10."
What will make this shift easier, Mr. Reed said, is the fact consumers already know about the functional ingredients and the benefits they provide. Yogurt marketers will not need to sell the benefits of ingredients such as antioxidants; they may simply label a product "yogurt with antioxidants."
Yogurt that helps reduce cholesterol or control glycemic function also may be around the bend as well.
What else might consumers see in the yogurt case in the near future? More tart flavors, more clean labels, and perhaps even beauty yogurt. Also, look for products enhanced with whey protein.
More niches and more slots
Another success story in the cultured dairy product segment has been Greek-style yogurt (see Dairy Business News of June 23, Page 8). Nearly a half-dozen product lines have been attracting attention thanks to their clean labels, and bold flavor and texture profiles. Similar to Greek yogurt is Skyr, an Icelandic strained cultured dairy product now available in the United States.
With all of the new products entering what is already an innovation-driven category, one would think the competition for shelf space would be fierce. It is, said Michael Neuwirth, senior director of public relations for the Dannon Co., White Plains, N.Y. But Dannon and other yogurt makers have widened the playing field.
"On the retail side, during 2008 — in part thanks to Dannon — we have seen the addition of approximately six linear miles of shelf space for yogurt in the United States," Mr. Neuwirth said. "We are working with retailers to allocate more space for what is really the brightest star of the dairy industry. This is happening through added space, or reallocations within the dairy aisle."
Dollar sales of yogurt were up 4% for the year ended June 14, but that does not mean the category is not immune to the effects of a struggling economy. Mr. Neuwirth said Dannon has offered more specials on leading lines to keep consumers buying.
Dannon and its chief rival Yoplait — a General Mills, Inc. brand — have introduced numerous functional products in recent years designed to aid digestion and boost immunity. Now they are introducing yogurts that contain fiber.
Dannon’s Activia accounted for more than $100 million in its introductory year. Since its U.S. launch in 2006, the company has rolled out DanActive and extended both brands. General Mills’ Yoplait has countered with YoPlus and Fiber One, the latter a brand that extends into General Mills’ nutrition bar line as well.
Back when organic and natural products were little more than a niche, Stonyfield Farm was seen as a leader. Since its inception in 1983, the company has focused on innovation and social responsibility, along with a goal of bringing organic yogurt to the widest audience possible. The company, partly owned by Dannon’s French parent Groupe Danone, was a pioneer in developing products specifically for children and babies, and in adding fiber.
Looking ahead to 2010, Stonyfield’s Mike Johnson, vice-president of sales, said the market segment will continue to generate growth through new styles and a focus on health.
"Greek (yogurt) will grow at a very aggressive rate for the next few years," he said. "This segment will continue to expand and will offer new formats like multipacks and larger sizes.
"The health benefits of yogurt will continue to be included in yogurt innovation. These benefits will be delivered in both a scientific and natural method. There will be products that will have very specific functional benefits.
"As always very unique flavors across all segments will facilitate growth in the category. Indulgent yogurts may experience some growth in ’10."
Yogurt fortified with whey also has made its debut at Whole Foods Market. Tula Foods, Evanston, Ill., is the manufacturer of the products, which are sold under the Better Whey of Life brand.
K.J. Burrington, dairy ingredients applications coordinator at the Wisconsin Center for Dairy Research, said there was a time when only bodybuilders recognized the benefits of whey protein, but that has changed. Tula is using the word whey directly in its product name, and this is a sign consumers will seek products enhanced with whey, she said.
"Whey is very high in the branched-chain amino acids — isoleucine, leucine and valine," Ms. Burrington said. "Unlike the other amino acids, they are metabolized in the muscle to readily provide the benefit of muscle recovery, not only for bodybuilders, but for anyone doing endurance exercises and activities. Recent research has also shown that adding whey proteins to a diet high in protein is great for people who want to lose weight, and keep lean body muscle while lowering body fat."
Forms and packaging
There are now perhaps two generations of U.S. adults who have grown up eating yogurt, and children now see yogurt as a standard breakfast food or snack. Yogurt is not novel to today’s youngest consumers, so marketers may have to become more creative to keep consumers interested. Many are doing just that. In addition to the efforts of Stonyfield, Dannon and Yoplait have both developed unique products for children over the years.
In 2006, Lifeway Foods, Morton Grove, Ill., the makers of Lifeway Kefir, introduced ProBugs, a line of single-serve kefir drinks designed for children. Each flavor has its own unique pouch shaped and designed like a different buggy character.
In April, Dannon, (which holds a 20% stake in Lifeway) began introducing Danimals Crush Cup — a cup yogurt for children that doesn’t require a spoon.
Drinkable yogurt once was considered a sub-category that showed lots of promise, but it experienced a bit of a setback when it was alleged some of the products were heavy in calories and laden with sugar. Undaunted, Dannon recently launched a line of drinkable Activia.
Mr. Reed, of DMI, pointed to a broader array of use occasions as an opportunity for cultured products to expand. At a recent trade event, DMI showcased a ranch salad dressing made with a yogurt base. It has just a fraction of the fat found in a standard ranch dressing, but all the flavor and mouthfeel.
This article can also be found in the digital edition of Food Business News, July 21, 2009, starting on Page 33. Click