Where next for the US yogurt category? Chobani, Danone North America, General Mills, weigh in
Sales of Icelandic skyr were up 15.8% and non-dairy yogurt sales rose 39.6% year on year over the same 12-week period, but dollar sales of Greek yogurt – a key category growth driver in recent years – were down -6.7%.
So have we reached ‘peak yogurt’ in the US or will the overall category return to growth?
General Mills: Market share gains after grim few years
In its presentation at the Consumer Analyst Group of New York (CAGNY) conference this week, General Mills – which saw its market share in yogurt increase very slightly at the start of fiscal 2019 after a grim few years – noted that while Greek dollar sales (which account for around 45% of the category) were down, non-Greek sales (the category in which General Mills operates) were flat in 2018.
“In fact after multiple years of declines, we've posted market share gains this fiscal year to date and while US yogurt category trends have been negative, that's been entirely driven by the Greek segment, which was down 8% in calendar 2018,” said CEO Jeff Harmening.
“Because we aren’t a meaningful player in Greek, our portfolio is focused on the stronger performing portions of the category, including leading positions in traditional style yogurt, kids’ yogurt and a fast growing simply better segment with our Oui by Yoplait [which has had a very successful start] and YQ [which Bernstein says got off to a slower start in its first six month on shelf].”
Some recipe tweaks to original style Yoplait have also “helped return the signature line to growth in fiscal ‘19 and equity flavor extensions like Sour Patch Kids and Jolly Rancher are driving mid-single digit year to date retail sales growth for Go-GURT,” he added.
Danone: Moderate growth in Q4 ‘in a very highly competitive category’
Speaking to analysts on the 2018 earnings call Tuesday, Danone CFO Cécile Cabanis noted that the yogurt business in North America “posted moderate growth in Q4 in a very highly competitive category in the US, especially in the Greek segment.”
Chobani: ‘We continue to be very bullish on dairy in the US’
With US per capita yogurt consumption still lagging that of markets in Europe and elsewhere, however, both Danone North America and Chobani say they are encouraged by long-term trends, despite the recent sluggish performance of the category.
Peter McGuinness, chief marketing and commercial officer at Chobani, told FoodNavigator-USA that, “We continue to be very bullish on dairy in the US and feel it’s underpenetrated, under-innovated and its best days are to come. Our intent is to bring excitement back to the category, and what we’re doing is having a positive category effect.”
He also noted that there had been a rebound in Greek yogurt from a volume perspective in recent weeks, with volumes down -7.1% in 2018 but down a much more modest -3.2% in 2019 YTD (year-to-date). In contrast, volume declines had not abated in traditional yogurt in 2019, dropping -5.4% in 2018, and 5.9% in 2019, YTD.
Asked about the company’s recent performance, he said: “We’re off to a fast encouraging start. In US Food, Chobani grew +7.6% in dollars and 8.8% in volume in the four weeks ending February 9, 2019. Chobani was the only major brand to show growth in January and February to date.
“Chobani’s dollar share is up 1.9 points in latest four weeks and up 2.2 points in the latest week, while our volume share is up 1.8 points in the latest four weeks and up 2.1 points in the latest week."
‘Our early read on Gimmies is also that it is bringing new consumers into the [kids’ yogurt] category’
Asked about new kids' line Gimmies and Chobani's new coconut-based non-dairy range, which have just launched, he said, “We are doing very well from a dollar velocity perspective, but it’s early days. Our early read on Gimmies is also that it is bringing new consumers into the category, so it’s incremental."
He added: “Our Less Sugar Greek yogurt [formerly known as A Hint Of…] is off to a great start and is selling faster than other lower sugar items on the market. We’re talking two times the dollar velocities vs [Danone North America's new low sugar brands] Two Good and YQ, and on parity with [low sugar Icelandic skyr brand] Siggi’s. We also see that it’s bringing more consumers to the table rather than just taking share from other low sugar products.
“We updated the packaging to be more on the nose, so people were very clear what the proposition was, but the formulations are the same.”
The higher fat trend: There is room to push beyond 4% milkfat, but you have to be careful
As for the higher milk fat trend, Chobani launched – and later withdrew - a whole milk range called Chobani indulgent a few years ago, but has since had a lot of success with blended products made with creamy blended products made with whole milk (eg. orange & cream, lemon & cream), but has no plans to launch ‘triple cream’ type products, he said.
“We’re going to expand the creamy blended range in July, and I do believe there is room to push beyond 4% milkfat, but you have to be careful if you’re getting into the double digits [for milk fat]. When you look at the double and triple cream products, they taste delicious but they are not the best-performing SKUs. Consumers know there is a trade off.”
Danone North America: ‘Recent declines in the category were a short-term irregularity’
Jeffrey Rothman, VP marketing and portfolio acceleration, yogurt, at Danone North America, said he was also bullish about the longer-term prospects of the category, arguing that “recent declines in the category were a short-term irregularity and we are encouraged to see signs of growth moving into 2019.”
He added: “We’re optimistic about the long-term growth potential of yogurt because new products, such as Two Good, our latest innovation in the low sugar space, are drawing new shoppers to the category.
“At the same time, plant-based yogurt alternatives [Danone NA has recently launched a new almond-based brand called Good Plants, and a coconut-based line under the Oikos brand] are bringing renewed interest to the category among the growing ranks of vegans and flexitarians.
“To help unlock the growth of this segment, last week, we announced the expansion of our facility in DuBois, PA, which is the largest facility making plant-based yogurt alternatives in the United States. In addition to Good Plants and Oikos Dairy Free, we currently make Silk, So Delicious Dairy Free, and Vega yogurt alternatives there. The expansion will give us the opportunity to dramatically increase the production of plant-based foods to meet growing consumer demand. To that end, we added a new building, where we will produce Vega nutritional powders.
“Lastly, in the past year, we have also seen kids’ yogurt growing led by Danimals and probiotic yogurt back to growth driven by the resurgence of Activia.”
Two Good low sugar, high protein launch ‘already exceeding expectations’
Two Good - a new stevia-sweetened Greek lowfat yogurt under the Light & Fit brand with 2g sugar and 12g protein produced via a “patent pending slow-straining batching process” that removes lactose (milk sugar) - is “already exceeding our expectations,” claimed Prabha Cheemalapati, VP of yogurt marketing.
“This is truly a breakthrough product innovation because it allows us to directly address the sugar concern in an even more meaningful way... Quotes such as ‘I missed yogurt’ and ‘OMG Finally’ are early indicators of how big of an opportunity we’ve tapped into.”
Good Plants products have also been formulated with less sugar, featuring “40% fewer calories and 70% less sugar than most almondmilk yogurt alternatives,” she claimed. “However, the biggest breakthrough is how good the yogurt tastes.”
The introduction of coconutmilk-based Oikos Dairy Free, meanwhile, “is another step towards reaching our ambition to triple our plant-based business globally by 2025,” added Rothman.
Non-GMO Project verified in the dairy aisle… is it worth it?
But what about the high-profile decision to invest in buying milk from cows not fed GM feed in order to secure the Non-GMO Project certification on key product lines – something Fage USA (which has seen its sales decline lately) has also invested in?
Was it worth it, and do consumers understand the difference between Non-GMO Project verified claims in the dairy aisle and regular ‘No GMO ingredients’ type claims made by some rivals (which don’t go all the way back to animal feed)?
Rothman didn’t comment on its impact on the core Dannon lines, but noted that the Danimals line, which features the Non-GMO Project stamp, “continues to grow and is now one of our best performing brands [although it is not clear to what extent - if any - that had to do with the Non GMO Project stamp].”
McGuinness at Chobani, which makes ‘No-GMO ingredients’ claims on pack, but does not go all the way back to animal feed, acknowledged that multiple stakeholders had “made this a pretty confusing topic for consumers,” but claimed that Chobani’s philosophy been using “only natural, non GMO ingredients from day one.”
* Source: Nielsen data, all outlets combined, including c-stores, 52 weeks to January 26 and 12 weeks to January 26, 2019. Source: Nielsen Retail Measurement Services, inclusive of Nielsen's Total Food View, Total U.S. xAOC incl. Convenience.
