Yogurt demand going strong
Consumers keep yearning for yogurt. While sector growth has slowed slightly in recent years following the boom in Greek selections, the category remains vibrant.
Sales of spoonable yogurt rose an estimated 27 percent from 2011 to 2016 and is forecast to increase 23 percent through 2021, reports Mintel, a global market research firm. In addition, yogurt drink sales were up an estimated 62 percent from 2011 to 2016 and are forecast to rise 51 percent through 2021.
Dollar sales of yogurt and yogurt drinks were estimated to reach $9.1 billion in 2016, up 3 percent from the year-earlier period.
The launch of new flavors and formats is sustaining consumer interest as the novelty of Greek offerings fades, Mintel states in its August 2016 "Yogurt and Yogurt Drink — US" report.
"Greek isn’t going away anytime soon, but consumers are hungry for innovation," Mintel notes. “The introduction of Greek products to the category [exposed] consumers to the possibility of variety in terms of flavor, texture and function. Interest in these aspects appears to have moved from being a nice-to-have to a must-have, which can be an indicator to all category players when deciding how to develop and promote their products."
Rollouts of newer yogurt varieties, meanwhile, is occurring, with complex flavor combinations featuring savory or spicy tastes particularly prominent, reports Euromonitor International Inc., a Chicago-based market research firm.
While volume sales of traditionally dominant fruited yogurt fell by an estimated 3 percent in 2016, complex flavor combinations saw an estimated 3 percent increase, Euromonitor notes in its September 2016 "Yogurt and Sour Milk Products in the US" report.
"The yogurt category continues to rapidly evolve and further fragment itself due to innovation and changing consumer trends," says Doug Ricketts, director of sales-retail, for Upstate Niagara Cooperative Inc., a Buffalo, N.Y.-based yogurt supplier. "Shoppers are looking for convenience, nutritional benefits, taste and value."
Among the options gaining momentum are indulgent whole milk and higher fat items along with organic selections, he notes, stating that such products "better reflect the different consumers and reasons they consume yogurt, which is a testament to yogurt’s functionality and versatility."
More than a meal
Though breakfast remains the prevalent yogurt-eating occasion, activity is also accelerating in other dayparts.
In a May 2016 online survey of 1,305 adults who purchased yogurt or yogurt drinks for themselves in the previous three months, 93 percent indicated that they consume the items as a snack, Mintel notes.
In addition, 84 percent stated that the snacking occurs in the morning, and 84 percent said they snack in the afternoon, up from 37 percent and 41 percent, respectively, in 2014.
"Yogurt in the U.S. is frequently consumed at breakfast time, often by itself or topped with granola and/or fresh fruit," Euromonitor reports. "However, the proliferation of savory and spicy flavors has expanded consumption occasions for yogurt, which may now be consumed as an afternoon or evening snack. "
While the entire yogurt category remains healthy, yogurt drinks have perhaps the strongest growth potential.
Volume and dollar sales in the drinkable sector grew 73 percent and 62 percent, respectively, from 2011 to 2016, with 2016 dollar sales up an estimated 11 percent, the second consecutive year of double-digit gains, Mintel reports.
"The segment delivers on convenience," Mintel states. "As adoption of the drinks grows, so too does innovation. It’s one of the few food/drink spaces where launch activity sees brand-new products outpacing simple variations on form."
Similar to the impetus for snacking, shopper preference for ease of use is spurring more drinkable activity, Euromonitor notes.
"Convenience is increasingly important for time-pressed consumers, driving strong growth in portable grab-and-go snack foods," Euromonitor states. "This trend has driven demand for drinkable yogurts, which are far easier to consume during a morning commute than spoonable varieties."
Contributing to the popularity of drinkable options is the more prevalent use of yogurt in smoothie selections, adds Glenn Patcha, chief operating officer of Origin Food Group LLC, a Statesville, N.C.-based product developer.
In addition, more health-conscious shoppers are driving demand for functional cup items, he states.
"These products offer some added nutritional value such as vitamin fortification, premium probiotics or other unique ingredients like phytosterols for cholesterol lowering," Patcha says.
Be conservative with product launches
Indeed, yogurt is filling an increasingly greater variety of roles.
Seventy-seven percent of Mintel survey respondents, for instance, stated that they eat yogurt as a dessert and 58 percent consumed yogurt before, during or after a workout.
Sixty-six percent of respondents, meanwhile, noted that they use yogurt as an ingredient in cooking or baking, with Euromonitor adding that consumers often replace higher fat ingredients such as mayonnaise or sour cream with creamy Greek yogurt.
The versatility of yogurt and consumer interest in different varieties is making it tempting for retailers to expand their private brand lines, yet determining the ideal number of offerings remains tricky. Though national manufacturer SKUs are expanding, retailers of store brands should "not get caught up in trying to copy every product and packaging type that is offered by the national brands,” Rickett says. “It is unrealistic and creates challenges for both the retailer and the private label manufacturers."
Instead, retailers should identity the trends that have staying power, understand their customers, and recognize their brand equity to determine the optimal product matrix for their store brands, he notes.
"Shoppers will continue to become more complex and behave in ways that may seem to contradict themselves," he says. "Some may want to save money where others are willing to pay a premium for something they value."
To generate maximum consumer interest in store brands, retailers should spotlight product attributes on packages and also embrace such tactics as secondary displays, cross merchandising, in-store demos, free trial coupons and placement in circulars, Ricketts states.
"It is very important to make sure that store brands are nurtured and merchandised in the same way as national brands," he says. "Customers have to be aware of the product, have the opportunity to try it and understand the value it offers."
Trust in teamwork
Achieving such aims also necessitates that retailers work closely with their store brand suppliers and leverage each other's competencies, Ricketts states.
"Communication is critical," he notes. "There is a ton of data available, but the interpretation of that data is what sets the best apart. Each party comes to the table with a unique vantage point, so having an open mind and understanding both perspectives can go a long way. It is very important to align goals and mutually define success."
Such collaboration can result in decisions on whether to launch specific varieties of store brands and on the appearance of packages, including the printing, imagery and messaging, Ricketts states.
"The product must look on the shelf as though it is equivalent to or better than the national brand," he says. "Many store brand offerings have quality standards as high or higher than national brands which needs to be communicated to consumers."
Retailers sometimes should just develop and merchandise "me too" selections instead of launching unique items that differentiate their private brands from the national brands, Ricketts notes.
"In many cases it makes more sense for retailers to wait and evaluate the performance of national brand innovative offerings before attempting to launch their own," he says. "They should stick to managing the successful lines well and offering flavors and seasonal programs that support the growth of their product line consistently."
Mitchell is a freelance writer based in Wilmette, Ill.