Yogurts with special toppings and exotic fruit flavors are generating excitement and new business in the category, but they are also forcing retailers to constantly reset the section.
Supermarket sales of yogurt for the 52 weeks ended April 24, 1994, reached $1.5 billion, an increase of 8.6% from the comparable period a year earlier, according to Information Resources Inc., Chicago. Corresponding unit volume was up 6.8% to 1.2 billion pints. This growth continues a turnaround in the category that began in 1991 following several years of stagnant sales.
Some of the growth can be attributed to new offerings
of yogurts topped with everything from granola or sprinkles to gelatin, and yogurts with an ethnic appeal, such as papaya and guava flavors.
As retailers have evaluated the category more closely to ensure that they are carrying the right mix, pricing strategies in some parts of the country also have been changing.
By all accounts, yogurt is a highly promotable category, but in some marketing areas promotional dollars have been cut back. The cuts have meant fewer deals to draw in traffic, but steadier profits, according to some retailers surveyed by SN.
One Midwestern retailer, who asked not to be named, said in his market some suppliers continue to promote heavily while others are cutting back.
"It is still a very promotable category and almost all companies do something on a regular basis," he said. "Most customers are brand-conscious. When a brand they are not normally used to is on sale, they will switch."
Here is how retailers across the country say they are handling yogurt.
Bashas' Markets Chandler, Ariz.
There has been a reduction of product deals in the yogurt category.
It's interesting because yogurt is a very promotable category and responds very well to feature ad pricing in terms of pulling customers into our stores. And now that they've changed their promotional strategy, we can't use yogurt as a draw.
However, the profit in the category is stronger now. Because when it is on special, we promote it at or below cost and then there is no profit. Otherwise, the yogurts with the toppings are generally doing well and have carved out a growing niche. Of course some items are doing better than others.
Regarding space in the category, we've been building larger stores, so we've allocated a little more space for yogurt.
Basics/Metro Markets Randallstown, Md.
In this market, we haven't been that successful with the topping yogurts. In fact, we just discontinued a line due to poor sales. We have just looked at another line, but we have put that one on hold for now due to our previous experience.
Pricing promotions are not heavy in this marketplace anyway. Everybody is pretty much going to an everyday-low-price program due to reclamation and everybody is trying to cut down on the up-and-down swings of advertising and to smooth out the ordering process at store level and at the warehouse. We've seen a lot of companies go to an EDLP program and get away from hitting items with pricing promotions once a month.
Actually, I like it better that way. I like it EDLP; it has increased our category profitability. I know what we are going to get, so I can adjust my pricing to effect whatever margins I want, instead of using yogurt as a price item.
We haven't analyzed our category for a while, but we will be forced to soon because we've had a lot of new items presented. So we will be taking an in-depth look shortly. The category has more even growth now, instead of the peaks and valleys.
We are seeing some duplication but also some interesting flavors, such as papaya and passion fruit, and lots of items we haven't seen before.
We haven't expanded space, but we know it is a growing category, and that is one of the reasons we have put it on hold. We just had a presentation by one manufacturer a couple of months ago to talk about how the category is growing and category management.
Harvest Foods Little Rock, Ark.
The new yogurts with toppings are increasing sales somewhat. And I do also see some cannibalization. But for the most part, it is increasing the sales.
To make room for them, we have been eliminating some of the slower-moving items, such as the ones with fruit on the bottom and also some of the plain yogurts.
What I'm seeing here is that the category is not being very heavily promoted by manufacturers. They do give us an allowance, but not ads. And in this market it has always been like that.
Jack & Jill Galva, Ill.
We only have one item with a topping and that is with gelatin. It's doing doing well. We've had that in for about a month or so. And no, it is not higher priced than the other yogurts.
To promote them, we sampled them outright when we first got them.
To make room in the case, we just cut down on some quarts of milk. So we allocated a little more space, but it wasn't much. Overall, yogurt sales are pretty strong.
Dahl's Food Markets, Des Moines, Iowa
Our space is limited. And now you've got a million items when you used to have only three or four.
And you always want to have new items on the shelf. The upside is that you have greater sales and the people are really interested in these new items with toppings. The downside is the limited space.
You run out of space on the shelf and end up going from four facings to three facings to make room for something else.
We have a nice-sized dairy department and a nice-sized yogurt section. We carry some local brands and some national brands, too.
We currently devote 8 feet to yogurt and it has been that size for a while now.
Yogurt is great for us and we really do well with one of the local brands, which also has a cottage cheese, sour cream and some other items. But we find you really cut yourself in the throat by not taking on the new products, because it is advertised and there are coupons on it in the paper.
For the most part, our pricing has been somewhat guided by what our competition has been doing.
Occasionally, we will run a good promotion, say three for $1 on some top brands. But there have been quite a few times that we have just followed our competition.
Overall, it is a strong category.
Brookshire Bros. Lufkin, Texas
The new items are definitely having an impact on the category and making it difficult to merchandise. There are so many line extensions in that category. However, I must say, the newer items are doing quite well.
We have taken on several new items recently.
Pricing in the category at the moment is a high-low program. We are not EDLP on any of the yogurts. There are lots of price deals and multiple pricing and things like that.
Greg Von Eschen
manager, dairy/frozen Supervalu Billings, Mont., division
The entire dairy category is becoming increasingly difficult to manage.
There are just a lot of new items with a given amount of space and the yogurts are no exception. Placement at retail and at warehouse level is difficult to accommodate. But it is an area for growth. Some new items targeted to kids have helped improve the category.
We are still seeing some dealing going on in the yogurt category. There is not as much as in the past. The discretionary money that we had seen in the past isn't as available. And the category is really responsive to advertising and especially multiple price points.