Yogurt options multiply as General Mills and its rivals strive to innovate

Star Tribune (Minneapolis)

The dairy aisle is teeming with yogurt options as food companies prospect for the next gold mine in what has become the grocery store’s Wild West.

There’s yogurt made from soy, cashews, coconuts and peas. Others are made from goat’s milk, sheep’s milk or cow’s milk that can either be full-fat, low-fat or ultrafiltered. There’s Greek, Icelandic, French, Australian and German-style yogurt, and varieties range from low in sugar to high in decadence.

This abundance comes as U.S. yogurt sales have stalled after years of booming growth that was driven by the rapid rise of Greek yogurt — a thicker, protein-rich alternative to traditional yogurt that now accounts for close to half of all yogurt sales.

General Mills, based in Golden Valley, Minn., largely missed the Greek cash cow by underestimating its staying power but has over the past year slowed a hemorrhage in sales of its yogurt. Innovations are helping the company’s Yoplait brand. But the path forward remains challenging as mounting competition and consumer preferences evolve.

Danone, Chobani and General Mills collectively control 75 percent of the nation’s yogurt market. They all acknowledge sales have recently flatlined but disagree on the cause and solution. General Mills said consumers aren’t clamoring for Greek like they used to, and that they want something else. Chobani blames General Mills for giving up on Greek yogurt, which it said has had a dampening effect on overall yogurt sales. And Danone believes it’s due to a lack of innovation by its competitors.

On one point they all agree: Bold new ideas are needed to jump-start sales again. Retail sales of yogurt hit $8.8 billion in 2017 with the potential to reach $9.8 billion by 2022, market research firm Packaged Facts predicts.

General Mills sees this as a chance to regain its leadership position.

“The reason we are able to outperform our peers right now is because we have some really good innovation,” chief executive Jeff Harmening said.

That outperformance refers to General Mills’ successful first year of its French-style yogurt, Oui by Yoplait, which comes in distinctive glass pots. The company experienced slight gains in yogurt market share during the most recent two fiscal quarters — the first gains in three years.

Last year, General Mills lost its No. 2 market position in yogurt to Chobani following several years of lackluster performance. At its worst, the company was tallying quarterly sales losses in yogurt of more than 20 percent. By the end of this summer, General Mills had made significant improvement in the category, posting a quarterly loss of only a half-percent.

Mr. Harmening attributes yogurt’s sales stagnation to recent double-digit declines in the Greek variety. He believes yogurt has a strong future because it’s a food that tends to follow health trends.

“As Greek becomes less a part of the category, we think that bodes well for our position,” Mr. Harmening said.

But executives at Chobani — the company that elevated Greek yogurt from niche to its current mass-market status — dismiss this notion.

“Greek yogurt does not have a problem,” said Peter McGuinness, Chobani’s chief marketing and commercial officer. “I would call Greek ‘dynamic,’ not dead.”

There are more than 1,400 brand-flavor-variety combinations of yogurt sold in U.S. stores today, a dramatic increase that is confusing consumers, Mr. McGuinness said. The increase has slowed the industry’s ability to move its product through store shelves.

Market researchers are looking for “the next Greek yogurt,” but Mr. McGuinness said that’s unnecessary. “There are areas within Greek that need to be exploited and expanded on,” he said, like yogurts for men, better options for children and improved portable, drinkable or lower-sugar options.

All the companies are watching one area particularly closely: plant-based yogurts as more Americans ascribe to vegan or semi-vegan diets.