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Dannon, Yoplait Try To Capitalize On Greek Yogurt's Growth

--Dannon, Yoplait hope to piggyback on Greek yogurt's growth by entering new yogurt segments --Yogurt players trying to increase its consumption by capitalizing on new customers, more shelf space --Both players still far behind Greek yogurt leader Chobani By Paul Ziobro Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- U.S. yogurt brands Dannon and Yoplait hope to ride the coattails of Greek yogurt, whose explosive growth in recent years by privately owned brands like Chobani has created an opportunity to snag more yogurt consumers. While scrambling for a share of the Greek yogurt market, General Mills Inc.-owned (GIS) Yoplait and Group Danone SA's (BN.FR) U.S. subsidiary Dannon are also eyeing other segments, like lactose-free yogurts or a variety geared for the whole family. The growth of Greek yogurt--a thicker, protein-rich variety of the dairy snack--is adding customers to the category, and also getting supermarkets to devote more space to yogurt in the dairy aisle, creating a unique opportunity to get U.S. consumers to buy and eat more yogurt overall. "The buy rate on yogurt is a fraction of what we see in other countries," Rebecca O'Grady, president of Yoplait's U.S. business, said. "We're extremely focused on new items that will drive category penetration and buy rate." To be sure, the yogurt heavyweights have entries in the Greek yogurt segment that they continue to push to compete with Chobani, which makes up 57% of the market. Dannon Oikos, since staging a brand relaunch in September, has taken over the No. 2 spot from Greek-owned Fage SA, a Dannon spokesman said, citing SymphonyIRI Group data. Yoplait Greek's performance, however, has sparked concerns among General Mills investors, who worry that Yoplait is trailing in the fast-growing segment. General Mills says Yoplait Greek sales are up 47% so far in its fiscal year since the brand staged a relaunch in September. But Consumer Edge Research LLC notes that since the relaunch through January, Yoplait Greek has lost 220 basis points of market share to both Chobani and Dannon Oikos. The Yoplait Greek results are overshadowing Yoplait's strong positions in regular, light and kids' yogurts because Greek is where the growth is. Greek yogurt sales grew 64% last year, compared with slight growth for other yogurt, according to Euromonitor International Inc. "They may still lead in those subcategories, but those subcategories aren't driving the growth in U.S. yogurt," Consumer Edge Research LLC analyst Robert Dickerson said. While Greek yogurt booms, General Mills is experiencing softer sales in other segments. The food giant, which reports fiscal third-quarter earnings Wednesday, last month warned that results would be weak on declining sales volume. Still, Dannon and Yoplait executives see another prize in driving U.S. yogurt consumption. The opportunity is there, they say, because while Greek yogurt, with its higher price, is driving dollar sales growth, most yogurt customers still aren't buying Greek. According to Nielsen data, Greek yogurt is about a quarter of dollar sales in the $6 billion U.S. yogurt market, but only 15% of units sold. Greek yogurt "is not building the consumption in pounds or volume in the way that you would think," said Sergio Fusto, Dannon's senior vice president of marketing, in a recent interview. Outside of Greek yogurt, Dannon is going after families with a new product called Dannon Pure, a whole-milk yogurt aimed at appealing to both parents and children at a lower price. It comes with a simplified ingredient list, and sells for $1.99 a six-pack. Yoplait, among other new products this year, has introduced lactose-free yogurt, targeting the 15% of the U.S. population that's lactose intolerant, Yoplait's O'Grady said. Yoplait also plans to keep up advertising support core Yoplait brands, and plans to innovate in the Greek segment with yogurt-and-granola parfaits. The new segments will be hard pressed to replicate the growth seen in Greek yogurt and at Chobani. Sales for the Norwich, N.Y.-based Agro Farma are growing at triple-digit rates to about $700 million a year. After just seven years in existence, Chobani is nearly half the size of Yoplait, with $1.5 billion in sales. Chobani is not letting up. When asked about competitors trying to gain a larger share of the yogurt market, Chobani spokeswoman Nicki Briggs said, "We're just really focused on what we're doing here." The company is expanding production capacity at its central New York facility and also plans to open a plant in Idaho in the middle of this year. -By Paul Ziobro, Dow Jones Newswires; 212-416-2194; [email protected]

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