Who's Winning the Greek-Yogurt 'Revolution'?
The surging Greek yogurt category is now a "two-horse race" between Danone and Chobani as General Mills falters with its Yoplait Greek brand, according to a leading financial-research firm.
"We believe that General Mills has likely missed out on Greek. … From having started late to poor positioning of the product, we consider that General Mills is unlikely to become a major player in Greek yogurt," BernsteinResearch stated in a report today to investors.
To be sure, Yoplait still leads the U.S. in total yogurt sales, including non-Greek brands, with 26.7% share, edging out Dannon, which has 25.6% as of April 15, according to SymphonyIRI, which excludes Walmart. But Yoplait is paying a price for faltering in Greek. The fast-growing segment now accounts for 35% of total yogurt sales, up from 30% last year and just 4% in 2008, according to Bernstein, which referred to Greek's surge as a yogurt "revolution." Yoplait's dollar sales in all types of yogurt fell 8.7% in the year ending April 15, compared with the 8% gain categorywide, according to SymphonyIRI.
A General Mills spokeswoman declined to comment on the Bernstein report but said in an email that "Yoplait is the leading brand in the U.S. yogurt category and is committed to driving innovation and growth across all of the segments in which we compete." On an earnings call in March, CEO Ken Powell said, "There are many more ways, we believe, to innovate in the Greek-yogurt segment," hinting at innovations coming this summer. Yoplait also seems ripe for new advertising.
Dannon and General Mills both came late to the Greek-yogurt trend, following upstarts Chobani and Fage, which introduced U.S. consumers to the concept way back in 1998 when it started flying shipments into New York City from Greece. Greek -- which is richer and creamier than traditional U.S. yogurt -- did not gain steam here until 2007, when Chobani launched. Chobani today leads all brands with 47.3% share of Greek in the U.S. But Dannon has come on strong of late, growing share from 15.2% a year ago to 19.7% share as of May, taking the No. 2 spot ahead of Fage, whose share fell from 19.1% to 13.9%, according to Bernstein estimates citing Nielsen data. General Mills holds the No. 4 spot, but its share fell to 5.7% from 6%.
Globally, Yoplait is No. 2 in total yogurt sales, including non-Greek brands, with 6.2% share. Danone, the global parent of Dannon, is No. 1 internationally at 23.4% share, according to Bernstein, citing 2010 figures from Euromonitor.
Greek's rise in the U.S. has been remarkable, essentially coming out of nowhere to the surprise of big-spending marketers. Kraft Foods tried to get in on the growth last year launching a Greek yogurt under its Athenos banner, but the competition proved too tough and the marketer exited the category earlier this year. Greek Chobani and Fage paved the way, taking advantage of America's emerging appetite for authentic products with simple ingredients.
Greek yogurt is strained though a filter removing liquid known as whey to create thicker, creamier yogurt with plenty of protein.
"Early thoughts (including from Danone) that Greek could turn out to be a fad (like the low-carb phenomenon of the early 2000s) have turned out to be erroneous, and there is now a rush to build capacity to produce more of this product," Bernstein stated.
Dannon has been more successful in its come-from-behind bid than General Mills.
Yoplait did not enter Greek until early 2010. While Yoplait Greek initially gained share, peaking at 8.1% in May 2010, "the product has failed to excite the consumer," the Bernstein Report said. Stumbles included initially formulating it with the fruit mixed in, which "eliminated the pure-white look that consumers expected in Greek," Bernstein noted. Yoplait reformulated the product in 2011, giving it a thicker texture, new flavors and brighter-colored packaging, while tapping Greek-American TV personality Maria Menounos as a spokesperson. Those moves were followed by TV spots by brand agency Saatchi & Saatchi featuring a man dressed in white breaking out of a Los Angeles vending machine to offer the product to women as a "more satisfying snack."
Dannon dipped its toe in Greek in 2007, but only recently got aggressive beginning about two years ago with marketing and logistical moves that have helped fuel its surge.The company retooled an Ohio plant to produce mass quantities and rebranded its "Dannon Greek" brand as "Dannon Oikos Greek," taking the name previously reserved for its Stonyfield Farm organic yogurts. And in a sign of just how far the Greek category has come, the marketer earlier this year shelled out big bucks to plug Oikos Greek in a Super Bowl spot featuring Greek-American actor John Stamos by brand agency Y&R.
Still, Bernstein notes that Dannon continues to lose overall yogurt share, as Greek gains have not entirely offset losses in non-Greek varieties. Dannon spokesman Michael Neuwirth said the company remains committed to non-Greek varieties, noting that in volume terms (not factoring in pricing) non-Greek yogurt still commands some 80% of total yogurt volume. (Greek varieties are more expensive.) For instance, Dannon continues to pour resources behind its Activia brand, with plans to launch a new variety soon, he said, without providing specifics.
Chobani is the brainchild of Turkish immigrant Hamdi Ulukaya, who founded parent company Argo Farma and created Chobani in an attempt to mimic the yogurt he was used to from his family's dairy farm in Turkey. The one-time scrappy upstart is now marketing like a major player, including signing on as an official sponsor of the U.S Olympic Team. The brand is expected to tout the sponsorship in a TV campaign in development by Publicis Groupe 's Leo Burnett, according a person familiar with the matter. A Chobani spokeswoman declined to comment on its marketing plans.
The brand has a fight on its hands for sure. After its meteoric rise, Chobani has lost some share to Dannon recently, noted Bernstein, which projected that Dannon could "potentially see its share in Greek rise to 30% to 40% of the Greek market over the next few years … catching up to Chobani."
Doron Stern, Chobani's VP-Marketing, said in an email that "our only limitation is making enough yogurt for our ever-growing fan base. But we have plans to increase capacity through our current New Berlin, N.Y. plant and our future production site in Twin Falls, Idaho, over the next several months so we can put more and more Chobani into the hands of consumers throughout the country."
Fage, meantime, continues to fall behind, with its Greek share declining from 93.5% in 2007 to 13.9% in May, according to Bernstein. "They are just essentially getting muscled out of the market," said Rick Shea, a food-marketing consultant and former Kraft marketer. "Even Kraft couldn't make a go of it," he added, noting that "shakeouts tend to happen in these types of markets. Growth isn't unlimited."
Fage did not return a call for comment.