Focus: Players battle to ride the US Greek yoghurt wave
According to figures from Euromonitor, sales of Greek yoghurt in the US grew from US$974m in 2010 to $1.16bn last year
The Greek yoghurt market in the US has enjoyed some serious growth over the last few years with formidable entrenched players in the category reaping the benefits. But with concerns that General Mills is not being proactive enough and Kraft Foods pulling out last month, analysts question whether there is room for more players in this already crowded category.
Greek yoghurt has been described by some analysts as a booming market in the US, so Kraft Foods' decision to quit the market may have come as a surprise to many in the industry.
Last month, Kraft made the decision to discontinue its Athenos Greek yoghurt range in the US. The food giant said its decision to pull the brand was in order to shift resources to other Athenos-branded products such as feta cheese, hummus, pita chips and spreadable cheese.
Kraft did not give a reason for discontinuing the line, just two years after its entry into the market, but one analyst believes the group may have been "late to the party".
"There are some well-established players in the market who seem to have a lot of momentum and assistance," Technomic analyst Bob Goldin told just-food. "It's probably an awfully crowded field for them. They were late and I don't know if the Athenos brand necessarily translated well to yoghurt even though it does have a good image in dips and hummus, it didn't seem to transition to yoghurt that well."
What was once a niche product, Greek yoghurt has now become mainstream, attracting major players to the category, with both producers and supermarkets racing to add more Greek varieties and ranges to store shelves.
The Athenos Greek yoghurt line was launched in the US in autumn 2010, marking Kraft's re-entry into the US yoghurt category, which it exited in 2004 when it sold Breyers Fruit and a number of other brands.
Virginia Lee, senior research analyst for Euromonitor International believes Kraft's Athenos like may have suffered due to its lack of clear brand positioning.
"Chobani is, in the US, the leading Greek yoghurt brand and it has pretty much come out of nowhere surprising people in the industry. Its brand positioning is 'good tasting yoghurt' and it's positioned as a lifestyle brand for people who want to get fit, be active, and lead interesting lives. It also uses social media to engage with its consumers.
"Fage positioned its Greek yoghurt as gourmet and Danone has its extensive TV advertising. Kraft's Athenos didn't really have a clear brand positioning. In the US, the brand is known more for its hummus and I feel the advertising didn't send a clear enough message."
Kraft was up against a number of major players in the category, most notably companies with large distribution networks and the authentic Greek players.
The market is currently dominated by privately held Agro Farma, whose Chobani brand has around a 60% share of the market. Danone holds second place with 17%, followed by Greece-based Fage, and Yoplait owner General Mills.
General Mills has faced questions over its strategy in the Greek yoghurt category. Yoplait's Greek yoghurt were up 50% in the US during General Mills' third quarter, which ran until 26 February. However, analysts remained concerned about the level of distribution it has secured for its products. General Mills has insisted it will increase production capacity, spend more money on marketing and launch more products.
Last month, General Mills added a variant to its Yoplait Greek line in the US and Euromonitor believes new Greek yoghurts from Dannon and General Mills should do well in particular, as they offer US consumers Greek yoghurt at a more affordable price than Chobani and Fage.
Kraft's exit indicates any companies looking to enter the category could now find it difficult. However, Lee points to PepsiCo as a company that could be looking at Greek yoghurt with interest.
In February, PepsiCo announced it has teamed up with German privately-owned dairy firm Müller to open a US$206m yoghurt facility in New York. The facility will produce a range of new yoghurt products, although it is unclear yet what type of yoghurt they will produce.
Goldin believes, however, there may be little room for new entrants to the market.
"It's going to be about the big guys who are already there. I think at this point the battle lines have been drawn and I don't think anyone else could get in ... it's a pretty set and a pretty crowded playing field, with four pretty competitive companies."
By positioning Greek yoghurt as a high-protein, low-sugar health food, manufacturers have tapped into a growing US consumer desire for this different type of yoghurt.
According to figures from Euromonitor, sales of Greek yoghurt in the US grew from US$974m in 2010 to $1.16bn last year.
In a Euromonitor report 'US yoghurt and sour milk drinks', the researchers note: "During the previous year's research, it was anticipated that the demand for Greek yoghurt would slow down in 2011. Instead, sales of Greek yoghurt continued to rise until mid-2011, and do not show signs of slowing down any time soon."
While Euromonitor could not provide a CAGR forecast for the category, Lee predicts the market has plenty of room for further growth.
"For the next three years it should continue on a growth trajectory," she tells just-food. "Lower growth rates than we've seen in the last three years but still strong. In the US, lots of Americans do skip breakfast, so more yoghurt companies will try to convince people to add breakfast to their daily routines, and makers have also been focusing on promoting yoghurt as snacks."
Goldin echoes the same sentiment, that while the market is "booming", he believes the rapid growth the category has seen is unlikely to be sustained.
"Greek yoghurt has been growing at astronomical rates, to around 30% last year. So the market is huge and it's growing extremely rapidly. At one point it was growing triple digits. But there's no way can it continue at that rate.
However, he added: "It is going to continue to take share from traditional yoghurt and we'll see double-digit growth for the next several years, so it will continue to grow. We're just starting to see new flavours and new packaging, so I think we'll see double-digit in the next three years and some of it will be at the expense of traditional yoghurt though, but it has really just been a phenomenon."
Some of that growth, both analysts believe, may also come from private label.
"It's just starting here," Goldin tells just-food. "There is some but I don't know how big it is yet. We will definitely see more private label, it will become a bigger factor. As these categories get big and grow, it attracts the retailers.
Lee tells just-food that it is likely to "outperform" non-Greek yoghurt private label. "I can see a more speciality chain like Trader Joe's taking it, it would do well there."
Given the interest in this booming market, it is no surprise Kraft had a fight on its hands to make a mark with its Athenos line.
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