What’s Your Flavor-ite? Yogurt Taking Over Dairy Cases as Sales, Varieties Skyrocket
The Recorder, September 7th, 2015, by Richie Davis
It’s no contest.
A supermarket clerk stands beside a cart piled high with yogurt of several brands and flavors trying in vain to replace containers pulled from the dairy-case by Greek yogurt shoppers. Yogurt — with honey, with cherries, with blueberry acai — are pulled from the shelves faster than the clerk can push new Fage, Yoplait, Chobani and Stonyfield replacements into the vacant slots. It’s just another scene from the yogurt wars, as the exotic, ancient fermented food — now a faddish dairy staple — proliferates in staggering variety. It seems impossible for shoppers, supermarkets and yogurt companies in our region and the country as a whole to keep up.
There’s YoCrunch, YoBaby, and YoTot, Petite Creme, Danimals, YoKids Squeeze and a mind-numbing array of flavors: StrAWESOME, Strawberry-Beet-Berry, Watermelon, Key Lime Pie and on and on and on. Yoplait’s Trix yogurt, with pictures of Hello Kitty on the packaging, even comes in cotton candy flavor.
“It’s just mind-boggling,” says Mary Brosnan of Greenfield as she scans 20 linear feet of Stop & Shop’s dairy case, five rows high, recently. “You see all kinds of stuff, but is there really much difference in them?”
Yogurt began in ancient Greece, and was virtually unheard of in this country until a Dannon marketing campaign that linked yogurt with a healthy lifestyle in the 1960s. It has become a $8.9 billion industry in the United States, boosted in the past few years with the popularity of thicker Greek-style yogurt, according to the food industry market research firm Packaged Facts.
Yogurt makers have seen an growth rate of 7.8 percent to 10 percent from 2010 to 2013, with that rate slowing from 2013 to last year, the firm reported. Much of the growth in yogurt sales has come from the popularity of Greek yogurt, which Packaged Facts research director David Sprinkle, says “has injected a lot of new excitement and activity in the industry. It went from being just 1 percent of the yogurt market in 2007 to becoming the most important trend shaping the industry.”
When Thomas Moffitt, CEO of Commonwealth Yogurt in Brattleboro, Vt., was a dairy buyer for the Stop & Shop supermarket chain, he recalls, “Most of our stores had 8 linear feet of yogurt, with vertical up-and-down shelf space. It started to get really popular with Chobani when I was leaving, and I remember we were doing tests in some of our stores, where we expanded some of our sets from 8 to 12 feet, and then 12 feet to 16 feet, and 16 feet to 20 feet.”
The expanded dairy case just kept paying off for the store.
“As we expanded the shelf space … people were like, ‘We have more choices, so we’ll just buy more. Because now you’ve got 12 great flavors instead of just eight, so I want to try all 12!’ Every foot we added, we got incremental growth beyond what the foot should have given us.”
This region doesn’t just account for yogurt consumption; there’s also a lot of yogurt coming from producers in the Pioneer Valley and southern Vermont. Commonwealth Dairy produces more than 70,000 cases of yogurt a month for sale in supermarket chains and groceries around the country.
Five years ago, there were four brands of Greek yogurt, says Moffitt. Supermarket buyers tell him they’re seeing 60 to 70 presentations of new products once or twice a year, “60 to 70 presentations from somebody saying they have the next best thing in the world. It’s just an amazing amount of innovation.”
Take Noosa for example. It’s billed as an Australian-recipe yogurt, with 25 grams of sugar, 13 grams of fat per serving — more than three times that of typical full-fat yogurt — and 290 calories, billed as “Aussie culture, Colorado fresh.”
“In three years, they went to $100 million in sales,” says Moffitt, adding that he lived in Australia for a while and believes there’s no such thing as a traditional Australian yogurt. “It tastes incredibly great. A pretty robust cup of yogurt. For the American consumer who wants something that tastes great and doesn’t worry about the health aspects, they built a huge brand in no time at all.”
The challenged store clerk, trying to keep up with this morning’s customers pulling colorful yogurt cups off the shelf, sighs.
“It’s a losing battle after 8 o’clock,” the clerk says, without giving up on the task. “Ideally, you’re supposed to keep the entire thing looking great, but it’s impossible to keep it straight.”
200 Yogurt Products
If the dairy case at a supermarket like Stop & Shop or Big Y seems daunting for customers, the 60-foot case at the new 80,000-square foot Market Basket in Athol is an absolute mind-blower.
There, dairy manager John Phelps estimates there are a couple hundred different yogurt products.
Double dairy aisles, store manager Ron Lambert says, allows the Boston-based chain to have eggs and butter in a separate aisle, so the yogurts have plenty of room to expand.
And expand they do, like yeast.
“Yogurt is up and coming,” he says. “And it’s still coming.”
Even in an 80,000-square-foot supermarket, he says, “There’s a limit to what we can carry.”
As a result, most large supermarkets charge “slotting fees” to yogurt companies.
“At Stop & Shop,” Moffitt recalls, “we were cutting down space on eggs, pudding and refrigerated desserts, cottage cheese — all those categories where there was no growth or slow growth. We were pulling away shelf space, and giving it to yogurt. Large supermarkets have dealt with it by saying, basically, “It’s going to cost you $50,000 to put that on my shelf, for the whole chain. It’s like a reverse auction. So if five years ago I had four people coming to me with yogurt, I was charging $20,000 per SKU (Stock Keeping Unit). Now slotting charges for large retailers is $70,000 plus per SKU.”
Not only do the fees help pay for keeping those larger refrigerators cold, they also slow the pace of product expansion.
At the Springfield-based Big Y supermarket chain, where the share of dairy sections has increased about 20 percent, to roughly 28 feet, in the past 10 years, spokeswoman Claire D’Amour-Dailey guessed the company sells about 400 different yogurt products and guessed that its increased popularity stems from portability, easy use as a breakfast or lunch food, and appeals to all age groups, as an “indulgence” as well as a protein-rich, pro-biotic digestive aid.
A Stop & Shop spokesman was invited to comment but did not.
Stand Out From Crowd
With the amount of innovation he’s now seeing in yogurt offerings, Moffitt says, “companies have to have a true point of differentiation, something truly different, and for every one new item that’s launched, probably 10 fail, because there’s so much stuff. Everything’s being thrown at the wall.”
The sheer volume of choices is also causing what Moffitt calls “price compression,” shrinking profit margins because “growth in consumption isn’t outpacing growth in supply.”
After double-digit sales growth for a decade, and sales reported at $8.9 billion last year by the food industry, that growth in yogurt sales in this country may be showing some signs of slowing, with market saturation.
So prices have been trending down, says Moffitt, and yogurt makers are trying to broaden the market by appealing to more men and more kids, to consumers with specific digestive issues and different ideas of whether they want healthier or more indulgent treats.
That may be good news for the consumer, but it also means more choices still.
You can reach Richie Davis at: firstname.lastname@example.org or 413-772-0261, ext. 269