Chaos reigns in the yogurt aisle
September 25, 2012
by Donna Berry
Lactobacillus bulgaricus and Streptococcus thermophiles are currently the only consistent ingredients among U.S. refrigerated yogurt products. There is even variation with the lactic acid-producing bacteria, as the standard of identity for yogurt does not mandate they be alive or present in any specific quantity.
“The standard of identity for yogurt also specifies that yogurt must be made with one or more optional dairy ingredients, which are identified as being cream, milk, partly skimmed milk or skim milk,” said Cary Frye, vice-president of regulatory and scientific affairs for the International Dairy Foods Association, Washington. “These can be obtained from any hooved mammal. Cultured non-milk products should not be
labeled yogurt, but many are, as there is little enforcement in this area.”
The latter includes products based on almonds, coconuts and soybeans.
No regulations exist governing marketing terms such as Greek, Bavarian or Australian-style, and there are no limitations on the use of most approved sweeteners, nutrients or flavor enhancers. All of these variables have created a chaotic yogurt category.
Retailers are not complaining. The yogurt case has become a destination in many supermarkets. It also happens to be one of the most frequently replenished departments.
There are also no complaints from manufacturers either. Most see yogurt as a growth opportunity, especially since Americans consume less than half the amount of yogurt as Europeans. It is no wonder innovations roll out frequently with the belief being new products will attract new users and create additional consumption occasions.
Yogurt’s melting pot
Greek yogurt showed marketers that Americans are open to new concepts. According to a report from Bernstein Research, New York, Greek yogurt now accounts for 35% of U.S. yogurt dollar sales, a significant increase from 4% in 2008.
In terms of volume sales, premium-priced Greek yogurt has a smaller share of the market. When all retail and food service channels are considered, Greek yogurt accounts for about a quarter of all yogurt volume sales.
In context, these are remarkable figures for a product concept that did not exist at the turn-of-the-century. It is no wonder that other ethnic yogurt manufacturers have aspirations to make a name for their country’s specialty.
Ehrmann All Natural Bavarian Lowfat Yogurt is one of Europe’s leading yogurt brands and since September 2011 is now produced in Brattleboro, Vt. The company is moving its Midwest headquarters to the East coast in order to be closer to day-to-day operations and its key customer base.
“Our yogurts are made using old-world techniques and recipes passed down through three generations of the Ehrmann family, but in a new state-of-the-art manufacturing facility,” said Chris Solly, chief executive officer of Ehrmann USA. “We believe that we can further propel U.S. yogurt category growth with a new level of product quality and creaminess. We have found that U.S. consumers are highly interested in innovative yogurt concepts of old-world European origin.
“In addition, research shows that health- and body-conscious consumers want to purchase low-fat and all-natural products, which is what our yogurts are all about. We use only all-natural ingredients, including fresh Vermont and upstate New York milk, and delicious, chunky fruit preparations. The yogurts are free of artificial preservatives, additives, colors and sweeteners. They are packaged in dual-chamber cups, allowing consumers to customize their yogurt experience, adding as little or as much fruit as they like.”
PepsiCo, Inc., Purchase, N.Y., has recognized the same opportunity in U.S. yogurt and has entered into a joint venture with the Theo Müller Group, the largest private dairy business in Germany, to form a partnership called Müller Quaker Dairy. Indra Nooyi, PepsiCo chairman and c.e.o., believes the growth of dairy is virtually unlimited in the United States, explaining that the company has long been in the snacking business.
“Yogurt substitutes for a beverage at other times, so it’s perfectly logical that PepsiCo would participate in this business,” she said.
“The joint venture between Müller Dairy and PepsiCo is an exciting one,” said Sam Lteif, c.e.o. of Müller Quaker Dairy, Chicago. “We are introducing yogurt with a totally new taste and eating experience to America for the first time.”
The joint venture currently offers several varieties, including Müller Corner and Müller Greek Corner. Both feature mix-ins like caramelized almonds, fruit and chocolate-coated cereal. Another variety, Müller FrütUp is topped with a layer of fruit mousse.
All of the products that are part of the initial rollout are being produced in Germany and imported into the United States. Production will be transferred in 2013 to a new yogurt manufacturing plant in Batavia, N.Y., that the joint venture is building.
“We are so excited about introducing our products to American consumers that we don’t want to wait,” Mr. Lteif said. “Also, we recognize that this is a competitive market landscape, so we want to bring our products to market at the right time.”
The desire to introduce Americans to European-style yogurts dates back to 2006, when Switzerland’s No. 1 dairy processor — Emmi Group — began outsourcing production of its Swiss yogurt to a dairy in upstate New York, not far from where the new Müller Quaker Dairy plant is being built. Prior to Emmi’s entry into the United States, a handful of importers brought Emmi yogurt into the states for distribution in specialty markets.
“In 2010, we purchased the facility, bringing Emmi yogurt production back in-house,” said Guido Kaelin, vice-president of marketing for Emmi. “… In 2011 we re-launched the new product formulation (which had increased protein and decreased sugar), combined with a fresh, contemporary look, crafting the new yogurt in small batch quantities in our own carefully monitored environment to ensure the utmost quality.
“Emmi Swiss yogurt recently celebrated its one-year birthday in the upstate New York location, and we’re happy to report double-digit growth in all three measures — sales, volume and distribution — and more than 30% growth in our target markets.”
Mr. Kaelin added that in a category that actively seeks variety, Emmi Swiss yogurt is different from other yogurts on the market.
“Its unique flavor assortment and rich, smooth texture sets it far apart from the competition,” he said. “The Greek yogurt trend paved the road for other yogurt products with cultural heritage and European provenance, and we believe Swiss-style yogurt fills the product void between the popular, premium niche yogurts that debuted in the past few years and the mass marketed traditional American-style yogurts.”
A number of companies are banking on Americans falling for yogurt recipes from Down Under. Dreaming Cow Creamery, Pavo, Ga., has developed a namesake line of New Zealand-style cream-on-top whole milk yogurts.
Bellvue, Colo.-based Noosa Yoghurt developed a line of Australian-style, honey-sweetened whole milk yogurts in clear plastic multi-serving containers. The clear packaging enables consumers to see the fruit included in each container.
Room for more Greek
Interestingly, Wallaby Yogurt Co., Napa Valley, Calif., a producer of Australian-style organic yogurts, recently entered the Greek category, suggesting that even within the Greek yogurt segment, there is room for innovation. This is further supported by the numerous product rollouts this summer.
Stonyfield, Londonderry, N.H., added 1.5% milk-fat varieties to its organic Oikos Greek yogurt portfolio. The original line was fat free.
“As with anything in life, it’s about finding balance, so it’s ideal to have options when deciding which Greek yogurt is right for you,” said Mary Kennedy, a nutritionist and fitness specialist at Stonyfield.
Straus Family Creamery, Petaluma, Calif., introduced whole milk and nonfat varieties of Organic Greek Yogurt, while Springfield Creamery, Eugene, Ore., offers Nancy’s Organic Probiotic Greek Yogurt. The Yoplait and Dannon brands are going after the calorie-conscious Greek yogurt consumer with small-portion cups that contain 100 or fewer calories.
How to get noticed
With so many options, it’s often challenging to stand out in the crowded yogurt case. The YoCrunch Co., Rosemont, Ill., manages by focusing on its point of distinction.
“We are all about the toppings,” said Jeff Hunt, senior director of marketing.
Each product, whether it be an individual cup or multi-pack, has a dome-top containing inclusions for mixing in. Many of the products also contain co-branded ingredients such as M&Ms candies, Chips Ahoy! cookies, Honey Bunches of Oats cereal and Mott’s applesauce.
“Of course, we have a Greek offering,” Mr. Hunt said. “In fact, we were the first to introduce a Greek Parfait and the first to introduce almonds as a topping for Greek yogurt. We are also offering another first this Halloween season. The new Spooky Party Pack contains a dozen 6-ounce cups, half with M&Ms and half with Oreos.”
Keeping with the autumn theme, Stonyfield’s youngest consumers may now enjoy whole milk-based YoToddler Banana and Pumpkin yogurt. Like all YoToddler products, the new flavor is enhanced with omega-3 DHA, a fatty acid important for development.
Mr. Hunt sums up the yogurt business these days.
“It is pleasantly chaotic with all the innovation,” he said. “There’s so much room for growth. If new products bring new consumers to the category, then go for it.”