Whole Health: Special Delivery

THE YOGURT CATEGORY used to be a choice between simple flavors like vanilla or lemon. True fans might have gone one step further and debated their preference for fruit on the bottom or mixed. Today, some people claim there are too many choices. The supermarket dairy aisle has everything from natural and organic options to functional formulas featuring probiotics and fiber. There are ethnic and niche

THE YOGURT CATEGORY used to be a choice between simple flavors like vanilla or lemon. True fans might have gone one step further and debated their preference for “fruit on the bottom” or mixed.

Today, some people claim there are too many choices. The supermarket dairy aisle has everything from natural and organic options to functional formulas featuring probiotics and fiber. There are ethnic and niche offerings as well, like Greek-style and goat's milk yogurt. It comes in tubs and tubes and tiny snack containers. It's drinkable, squeezable and now it even comes in 100-calorie packs.

“It's just been unbelievable the past few years,” said Mike Cronce, dairy manager at Pennington Quality Market in Pennington, N.J. “I have a pretty large selection of yogurt with 25 feet of shelf space, and we could probably use more.”

Growing the section would be a wise move, judging by the numbers. According to Mintel, sales of yogurt and yogurt drinks grew 34% between 2004 and 2009 to reach $4.1 billion. By 2014, the market research firm predicts, the industry will have grown by 28% and achieved total sales of more than $5 billion.

Much of this popularity can be attributed to yogurt's convenience and flavor versatility. But industry observers point out the infusion of probiotics and other healthy innovations have turned the category into a shining star.

“Yogurt has become a delivery system for many of the healthy benefits that people are looking for today,” said Alan Hiebert, education director with the International Dairy-Deli-Bakery Association in Madison, Wis.

In 2006, Dannon introduced Activia, the first nationally distributed yogurt line to feature stomach-friendly probiotics. What seemed an oddity at the time exploded into the hottest new trend on the market as Activia soared to more than $130 million in sales in its first year. Pretty soon, every major yogurt manufacturer marketed live bacteria content in their formulations. Now, even private-label lines like Target's Archer Farms and Wal-Mart's Great Value brands have gotten in on the act.

Indeed, probiotics are quickly becoming an industry standard. But what exactly are they? That's the question that is starting to catch up with consumers, said David Browne, senior analyst with Mintel.

“They know [probiotics are] good for them and for their digestion because of all this advertising,” he explained. “But they don't really know what they are, and because of that they're only so empowered.”

Despite the confusion, the segment is going strong with global sales at around $14 billion, according to Euromonitor, a figure that's expected to double within the next four years. Dannon has updated its Activia line by adding fiber, and Yoplait recently introduced Yoplus Digestive Light, a non-fat yogurt infused with probiotics.

Collectively, Group Danone and General Mills, makers of Yoplait, account for more than two-thirds of U.S. market share in the yogurt category. They're starting to lose their grasp, however, as healthy innovations evolve into private label and beyond.

Schnuck Markets, for one, recently introduced its own brand of probiotic yogurt. Category manager Steve Zielinski said it's been a hot seller lately, especially with people trading down from national brands during the recession.

“The economy has helped us get trial, but our quality has made it a regular item on our shoppers' lists,” he explained. “Whenever we advertise a branded yogurt, I also advertise our Schnucks brand right alongside of it.”

Premium niche yogurts are also selling well at Schnucks and in stores across the country. These include natural and organic varieties that have ridden the wave of demand for healthful, unprocessed ingredients. It also includes Greek-style and goat's milk yogurts, drinkable kefir and other seemingly out-of-left-field choices with an appeal that's a bit harder to pinpoint.

“Consumers who enjoy yogurt have an interest in experimentation,” said Browne. “They want to try these newer textures that are distinctive and gourmet.”

For this and other reasons, premium-priced niche offerings have quietly started taking over shelves. Sales of these “other” brands grew by 12% last year, according to Mintel data, while mainstream manufacturer growth stayed relatively flat — a feat made even more impressive against the backdrop of the recession.

At Pennington Quality Market, Cronce said he often sells more than 100 cases of Greek yogurt each week.

“They love the taste of it,” he said. “It's the more expensive option, but the people who like it are more than willing to buy it.”

For retailers like Schnucks and Pennington Quality Market, the opportunity for growth lies with innovative new offerings. To that end, manufacturers have expanded not only their formulations, but their delivery systems as well. Breyers recently introduced 100-calorie packs that are sweetened with Truvia — a proprietary version of stevia — and come with a serving of low-fat granola. Dannon's Danimals line of yogurts for kids, meanwhile, just released Crush Cups, which factor out the need for a spoon by allowing tiny fingers to squeeze the yogurt out of the package.

“I think yogurt companies have done a great job of staying contemporary and satisfying that need to be easier,” said Harry Balzar, longtime food analyst and vice president of the NPD Group, Port Washington, N.Y.

Yogurt Crazy

The yogurt category has proliferated in all sorts of healthful new directions. Here are a few of the fastest-growing health claims over the past few years, and the number of products that featured them.

Claim 2005 2006 2007 2008
Low/no/reduced fat 94 111 146 150
Kosher 24 38 111 119
Organic 11 9 37 51
Functional-digestive 0 17 4 56
Gluten-free 4 1 12 42
Added fiber 0 3 17 24
Added calcium 9 16 13 18

Source: Mintel

GOOD ADVICE

  • Grow the section with popular niche options, like Greek-style and goat's milk yogurt.
  • Private-label yogurts should compete with brands on ingredients, taste and health — not price.
  • Use signage and other marketing materials to educate consumers about the benefits of probiotics.