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Kraft Ends Athenos Greek-Yogurt Line, Exits Fast-Growing Space

--Kraft discontinues Athenos Greek yogurt brand --Kraft launched product in 2010, but it failed to gain traction in a fast-growing category --Kraft says it wants to focus on other Athenos-branded items such as feta cheese, hummus By Paul Ziobro Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Kraft Foods Inc. (KFT) has discontinued its Athenos Greek yogurt, a product that failed to gain traction in a fast-growing category that has been dominated by brands such as Chobani. Kraft stopped selling the product last month, with the company deciding to shift resources to other Athenos-branded products such as feta cheese, hummus, pita chips and spreadable cheese. "Although we had a loyal following of Athenos Greek yogurt fans, we have decided to refocus our effort on innovating new products for the Athenos brand," Kraft spokeswoman Angela Wiggins said Thursday. Kraft didn't disclose the size of its Athenos Greek yogurt business. Consumer Edge Research LLC analyst Robert Dickerson estimated the brand had $15 million in sales over the past year, a small part of Kraft's $54 billion in annual sales. The decision highlights just how difficult it has been even for deep-pocketed food companies such as Kraft to crack the Greek-yogurt space, which has exploded on the scene in recent years. Barely a blip in 2006, Greek-yogurt sales grew 64% in 2011 after growing at triple-digit percentage rates in each of the previous three years, according to Euromonitor International Inc. Greek yogurt now accounts for about 22% of the $7.2 billion market for spoonable yogurt in the U.S. The growth has been driven largely by Chobani, which is owned by Agro Farma Inc. and which accounts for close to 60% of the Greek-yogurt market. Chobani launched in 2005, churning out yogurt in a former Kraft manufacturing facility. The company said Chobani's annual sales are now about $700 million, with sales growing at triple-digit percentage rates in recent years. General Mills Inc.'s (GIS) Yoplait, by comparison, has about $1.5 billion in total yogurt sales in the U.S. after more than 30 years. The growth in the segment has come despite Greek yogurt being priced at a 93% premium to non-Greek yogurt, according to Nielsen & Co. Consumers, however, have been drawn to Greek yogurt because of its thick texture, high protein and low fat. Greek-owned Fage SA and Group Danone SA's (BN.FR, DANOY) Dannon Oikos are jostling for the No. 2 spot in the Greek-yogurt segment, while Yoplait continues to try to gain a foothold. General Mills plans to outline its latest strategy to do so in June. Private-label Greek yogurt from supermarket chains such as Kroger Co. (KR) are also growing well, creating enough competition to crowd Kraft out of the space. Kraft launched Athenos Greek yogurt in late 2010, under an existing label that already had cachet as a maker of Mediterranean-style foods. It was Kraft's re-entry into the yogurt category, which it exited in 2004 when it sold Breyers Fruit on the Bottom and other brands. Kraft even backed the Athenos Greek launch with television advertisements in early 2011 around the time that Chobani and Fage both launched their first national ad campaigns. Kraft's share of the Greek yogurt market was 2% last summer, according to Chicago-based research firm SymphonyIRI Group, shortly before Dannon and Yoplait relaunched their Greek-yogurt brands to try to catch up with Chobani and Fage. But Kraft's share has since dwindled. Kraft's remaining Athenos products are to become part of Kraft's North American grocery business, Kraft Foods Group Inc., when the company splits up later this year. Kraft's snack brands, such as Oreo cookies and Trident gum, are going to be part of Mondelez International Inc. Ahead of its split-up, Kraft is pruning its product portfolio in North America. It hasn't disclosed how many or which brands will be discontinued, but the move is expected to hurt its sales this year by up to two percentage points in North America and about one percentage point for Kraft overall. Kraft spokeswoman Wiggins said the decision to discontinue Athenos Greek yogurt is separate from that plan to shed products. -By Paul Ziobro, Dow Jones Newswires; 212-416-2194; paul.ziobro@dowjones.com

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