Fueled by rising demand for Greek varieties, yogurt finished 2010 as one of the fastest-growing grocery categories, according to new figures from SymphonyIRI. But the battle for dominance is just beginning, as yogurt upstarts and stalwarts pump new money into big marketing campaigns, seizing on the growing American appetite for rich, creamy, protein-packed blends.
Strong Consumer Demand Pushes Greek Yogurt Into a Dairy-Aisle Battlefield
|GROWTH SPURTS: Top growth unit sales in 2010|
Greek yogurt "will be the battlefield in the dairy case -- both in advertising and in store," said food industry analyst Phil Lempert, who runs the site Supermarket Guru.
Amid surging competition, Fage, the brand credited with jump-starting the Greek yogurt trend in the U.S. in 1998, is launching its first national TV campaign, including a 45-second spot by Interpublic Group of Cos.' Mullen that uses poetry to position yogurt as an "extraordinary sensory experience." The effort follows a campaign that rolled out last month by Chobani, which last year shot past Fage to claim roughly 45% of the Greek market, according to market research group Mintel.
The two private companies have helped grow Greek yogurt from a $33 million category in 2007 to a $469 million juggernaut as of late last year, accounting for 12% of all yogurt sales, according to Mintel. Fage (pronounced "fa-yeh") has about a 25% Greek-yogurt share.
Meantime, global dairy giant Alpina, which is an $800 million dollar company with a presence in more than 20 countries, is plotting a big splash this spring in the U.S. to capitalize on yogurt's new popularity. Though it is not introducing a Greek yogurt, the company's campaign, from San Diego-based agency Vitro, will tout its regular yogurt as "indulgently creamy." While it's not entering the Greek yogurt category, Alpina's going after the same demographic, with a positioning that the yogurt is thick and a natural source of energy. It currently retails in gourmet groceries but later this year is expected to debut at Whole Foods. The textured packaging was designed by consumer psychiatrist Dr. Clotaire Rapaille.
Dannon, Kraft Foods and General Mills have been late to the party with Greek varieties but are expected to make up for lost time with their vast ad budgets and distribution networks. Dannon, for instance, is seeking to mass-market Greek yogurt, just as it has with its regular brands, which it has no intention of betraying.
"We are adding on top. We are continuing to support the other brands at high levels as many of our other brands like Activia and Danimals are still driving big growth for our company," said Richard Williams, a Dannon marketing director who oversees the Dannon Greek brand, which was launched nationally in January and is being promoted with an ad campaign by WPP's Y&R with a "Heaven on Earth" tagline.
General Mills' Yoplait -- the leading seller of regular yogurt with $1.4 billion in sales in the year ending Feb. 20, according to SymphonyIRI -- came out with its Greek variety a year ago, but recently reformulated it with a thicker texture, new flavors and brighter-colored packaging. While no TV ads are planned, Yoplait has tapped Greek-American TV personality Maria Menounos as a spokeswoman.
What's remarkable about Greek yogurt's rise is that it basically came out of nowhere, driven almost entirely by changing consumer tastes and without the corporate hype that normally surrounds growing categories, said one expert. "It wasn't as if there was an obvious sort of marketing push," said Bill Patterson, a Mintel analyst. "Greek yogurt just kind of leapt on the scene. It truly was consumer-driven, which is really quite unusual."
A longtime staple in the European diet, Greek yogurt has only recently caught on in the U.S. as health-conscious consumers gravitate toward products with simple ingredients. Greek varieties are strained through a cloth or filter, removing liquid (known as whey). The result is a thicker, creamier yogurt with twice the protein as ordinary brands, according to Mintel.
The Greek growth helped make the entire yogurt category the 11th-fastest consumer-packaged-good category -- food or otherwise -- for 2010, with unit sales spiking 5.6%, according to SymphonyIRI. And the good news for yogurt makers is that it was one of only four categories in the top 11 in which average prices also increased, up by 1.4%. (The average consumer-packaged-good category grew by 1.2%, with pricing falling 1%.)
The average American now eats yogurt 7.5 times a month, up from seven five years ago. That's still a fraction of the frequency in Europe, suggesting there's plenty of room to grow stateside, according to Mintel.
Fage, still run by the Athanassios family, which founded it in 1926, sells in 30 countries. But the marketer did not enter the U.S. until 1998, when it began flying shipments into New York City. The company opened a plant in upstate New York in 2008 and now sells three yogurt lines, ranging from "classic" (260 calories per 7-ounce serving) to "0%" (90 calories in 6 oz.), plus many flavors, including "Strawberry goji." The "Plain Extraordinary" campaign emphasizes the exotic flavors, with the TV spots showing bursts of color in a creamy white sea. The strategy was "to make the advertising as mouthwatering as the product," said Brett Eaton, senior VP-group account director at Mullen.
If Fage created the category in the U.S., Chobani grew it into a powerhouse. Parent company Argo Farma was founded by Hamdi Ulukaya, who came to the U.S. from Turkey in 1994 to go to college. He got into the yogurt business because he could not find good-tasting varieties like the kind made on his family's dairy farm back in his homeland. So he bought a nearly 100-year-old plant in upstate New York from Kraft, which was shuttering the facility as it exited the yogurt business, Mr. Ulukaya said. "Fifty-five people lost their jobs, and the first day I hired five of them, and that's how we started," he said. Mr. Ulukaya, 39, now oversees a mini-yogurt empire, employing some 600 people and boosting local dairies by taking milk from 70,000 cows every day.
Seven years after exiting yogurt, Kraft is back in via its Athenos brand of Mediterranean foods. The Greek yogurt, launched nationally this month, is made in central California and plugged in an Athenos campaign by Droga5 that primarily targets women in their 20s and 30s by using humor.
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Contributing: Rupal Parekh