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    Going Greek

    The Greek yogurt craze is giving the yogurt market’s bottom line a much welcomed boost.

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    Joanna Cosgrove08.11.11
    Thicker, creamier and tangier than traditional yogurt, Greek yogurt is a hit with the healthy minded because it packs higher protein and less carbohydrates than traditional yogurts. Hardly even an entity five years ago, the Greek yogurt subcategory is expected to ring up about $1.5 billion in sales this year—a quarter-sized dip into total yogurt market sales, which are worth an estimated $6.8 billion (Euromonitor International).
     
    In a market dominated by yogurt giants Dannon (Groupe Danone) and Yoplait (General Mills), the Greek subcategory is best known through products from Chobani and Fage, two New York-based brands. In fact sales of Chobani Greek yogurt make up more than half of the Greek yogurt sales, while sales of Fage brand Greek yogurt comprises about 20% of all Greek yogurt sales.

    Fage (pronounced Fa-yeh) is owned by FAGE USA Dairy Industry Inc., and originated in Greece in 1926. The company expanded its European distribution in the 1970s and 1980s, and opened its U.S.-based yogurt production facility in 2008.
     
    Chobani is part of Agro Farma, a company founded in 2005 by Hamdi Ulukaya, a native of Turkey and a third-generation maker of Mediterranean foods. Chobani yogurt debuted in 2007 and derived its name from the Greek word “chopani,” which means “shepherd,” and “is a symbol of safety and good,” according to the company.
     
    Two years ago, the company had a scant 2% market share in the entire yogurt segment. Now the company’s current market share is nearly 9% (Symphony IRI). Earlier this year the company even expanded its market success into a new product line, Chobani Champions, which is billed as the first Greek yogurt developed for kids’ tastes. Sold in Honey-Nana and VeryBerry flavors, Chobani Champions is a preservative-free blend of low-fat yogurt and real fruit. The products are sold in a four-pack, 3.5-ounce cup format. Since each cup is 100 calories, the product is billed as a sensible snack not only for kids, but also for parents.
     
    Industry analysts have said the Greek yogurt boom caught General Mills and Danone by surprise and the two companies have been working steadily to make up ground on the new product front. Both companies launched Greek yogurts last year, however, the products fell somewhat short of consumer expectations.
     
    After seeking inspiration from its Stonyfield brand Greek yogurt (the number three Greek brand overall), Dannon renamed its Greek yogurt Dannon Oikos. General Mills also tweaked its Yoplait Greek yogurt product by moving the fruit to the bottom of the cup, rather than pre-blending the fruit and yogurt.
     
    Market Snapshot
     
    A recent report on U.S. Yogurt and Yogurt Drinks from Mintel Group Ltd. confirmed that the refrigerated yogurt category has been reinvigorated by the booming popularity of Greek-style yogurts (as well as Dannon’s Activia yogurt products), with premium pricing helping to boost the value perception. The products also tap into the healthy-eating trend that’s driven by “increasing consumer awareness of diet-related health issues and growing interest in healthier eating.”
     
    Mintel said Greek yogurt leaders Fage and Chobani have relied less on major advertizing blitzes and more on public relations, word of mouth and targeted advertising to grow their consumer bases. “Fage’s ‘ridiculously thick yogurt’ campaign, in spite of its small budget, helped to establish the brand and the key product attribute of the Greek category as a whole,” the research firm stated, while “Chobani’s ‘nothing but good’ expands on the Greek story by encompassing both the taste experience and the wholesomeness and healthfulness of all-natural ingredients.”
     
    While most yogurt marketers have done a great job of capitalizing on yogurt’s image as both healthy and delicious, Greek-style yogurt “appears to be succeeding, not by offering something entirely different, but by offering even more of what people like about yogurt in the first place: an even thicker and creamier texture, higher protein levels and less carbohydrates,” Mintel noted. “Consumers who view yogurt as a smart alternative to other snacks may view Greek-style yogurt as an even smarter one.”
     
    The Mintel report also spotlighted Greek yogurts’ lower sugar content and their shorter, all-natural ingredient list, which aligns with the trend toward simpler, less-processed foods, and added that “the rapid rise of Greek-style yogurts is in part a sign of the market potential for natural and organic in the mainstream yogurt category. Chobani and Fage bill themselves as all-natural; and Oikos, from Stonyfield Farm, is organic.”
     
    Despite the explosive growth in the Greek yogurt subcategory, Mintel stated that it is still able to accommodate more growth. “Yogurt in the U.S. is far from a saturated category, with per-capita annual yogurt consumption only a fraction of what it is in Europe. While the U.S. is unlikely ever to match Europe, the trend is positive,” the company found. “According to Experian Simmons data, the average frequency of eating yogurt has increased from seven to 7.5 times a month over the last five years. Incidence of use has increased from 52% to 58% of all adults over the same period. The gain suggests that more consumers are turning yogurt-eating into a habit rather than just an occasional treat, a healthy sign for the future.”
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