Culture wars are being waged at a supermarket near you. Traditional yogurt is under attack from upstart Greek-style brands. For a dairy industry that is starved for product innovation, this could be a great thing. Greek yogurt is leading the charge and winning by far the largest share of the marketplace. When was the last time you talked about your new “healthy snack”? Greek yogurt which is creamy, thick and slightly tangy is a tasty subject not only in North America but around the world as well. New brands continue to strive for marketplace position as they try to meet the insatiable appetite for this dairy product.
It could mean the challenge is now to other dairy products.
Over a third of the yogurt in a typical grocery store is now Greek, in varieties from low-fat to fruit-on-the-bottom to tubes for kids. Because shelf space is limited, the Greek squeeze means consumers have had to say goodbye to some varieties of traditional-style yogurt and more obscure flavors. In addition pudding cups, margarine and other products with the misfortune of usually sitting near yogurt also are harder to find. This could turn into a civil war where there are losses in other parts of the dairy marketplace.
Global Yogurt Products Set a Good Example
Looking globally Europe has much more choice to entice consumers. With the North American focus on eating yogurt primarily for breakfast there are still opportunities to expand into the lunch and dinner specific markets. Marketing that emphasizes the health benefits are also realizing expanded sales. Yogurt is a great addition to the diet to help meet the recommended three servings of low fat and fat free dairy. The reality is that most North Americans are currently consuming only about half of the recommended servings. Here is a ‘better for you’ dairy industry opportunity waiting to happen. If you’re still not convinced, look at the lineup outside the next Yogurt Bar that you pass.
Yogurt consumption around the world, and especially in the U.S., has boomed.
We are decades past the yogurt reputation as an odd hippie concoction. Today yogurt sits at a North American eating-trend sweet spot. Today many people are eating fewer sit-down meals and favor hearty snacks on the go. Yogurt provides many options and may come as a drink, frozen product or dessert. Some brands are also fortified with extra vitamins, minerals and fiber. Yogurt is portable, high in protein and consumers often perceive it as healthier than other sweet snacks (though many varieties are high in sugar). On the bright side, this rapidly growing market has room to continue to evolve as emphasis on kid friendly lower sugar snacks are sought out. (Read more: MILK MARKETING: How “Got Milk?” BECAME “Got Lost” and “Got Milk” is becoming “Got More”)
Riding that healthy wave, Greek products have shown phenomenal growth.
Most yogurt with Greek on the label is strained, making even low-fat varieties dense and creamy. The process leaves more protein and fewer carbohydrates, making it a hit with the health-conscious crowd. In 2012, Greek yogurt sales were 34 percent of total yogurt dollars and 22.5 percent of total yogurt volume sales. From 2011 to 2012, non-Greek yogurt fell 10 percent by volume while Greek volume rose 71 percent in the same time period. Market analysis indicates that sales were primarily from two types of consumers: women who were already yogurt eaters and men who saw Greek yogurt as a new sports nutrition product. These men were new consumers who were substituting Greek yogurt for other protein supplements. Over half of U.S. households bought Greek over the last 12 months, according to data from retail research firm IRI.
Yogurt Could be Cannibalizing Other Dairy Product Sales
Greek varieties are bringing new customers to the yogurt aisle and driving overall sales.
But what is the cost of this Greek yogurt trend? It is likely that newer Greek products increased the overall usage of milk. But the product is often touted as a substitute for sour cream, buttermilk, cream or other cooking uses and thus has cannibalized other dairy product sales. Then there is also Greek yogurts dirty little secret. The production of Greek yogurt creates a nasty byproduct called “acid whey.”
Working on the Downside of Yogurt
Of course, every upside usually is accompanied by a corresponding downside. In the case of yogurt that downside is the liquid waste by product that can’t be dumped, because it would prove too toxic. Now yogurt companies and scientists are trying to find some productive — and preferably profitable — use for acid whey. One scientist wants to extract the small amount of protein to use in infant formula. Other scientists believe they can extract the sugar to be used in other foodstuffs. And one farmer is converting the lactose into electricity generating methane. One thing for sure is that with the Greek yogurt market now worth $2 billion and still growing, it’s a problem that’s only going to get larger.
The Bullvine Bottom Line
One way to keep both our industry and ourselves healthy and growing is to keep producing new innovative dairy products like Greek Yogurt that taste good and meet healthier diet initiatives at the same time. There is no question that as an industry we need to get our heads around new product innovation. From targeting youth in North America with exciting new healthy treats, to getting milk products into the diets of regions around the world that are experiencing massive population growth, milk needs to be the product that is literally on the tip of everyone’s tongue.
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