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Learning from
the Greeks
How Greek yogurt triggered the rebirth of a
category—and the new opportunities it’s creating
Greek yogurt, like kale, cupcakes and quinoa, is one
of the biggest buzzwords in food. But more than just
a fly-by-night fad, Greek yogurt is backed by substantial sales and consumer interest and has awakened
the long-sleepy yogurt category, launching it to
new heights.
More importantly for investors, the Greek yogurt
revolution has changed the way consumers and
retailers think about the category, creating intriguing
investment opportunities with many new small, but
high-potential, target brands.
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In 2013, yogurt took up about 2.2 million linear feet of
U.S. shelf space, up from about 1.9 million in 2011.
A decade ago, Greek yogurt made up less than
1% of all U.S. yogurt sales. Now it makes up
more than half.
Following in the footsteps of original entrant
Fage, Chobani has driven a significant portion
of this growth. Its sales grew 32% in 2013—to
more than $1 billion. Danone is also making
a strong play with its Oikos brand—sales
spiked 165% from 2012 to 2013.i Meanwhile,
Yoplait is hoping its third foray into the
Greek yogurt market sticks.
On the consumer side, Greek yogurt has not
only helped Americans expand their per
capita yogurt consumption but, more importantly, broadened their yogurt palates and
opened their minds to new types of yogurt.
Retailers have responded by carving out
more shelf space for yogurt. In 2013, yogurt
took up about 2.2 million linear
feet of U.S. shelf space, up from
about 1.9 million in 2011.ii
Given this activity, it’s no surprise
that three of the top 10 CPG product
launches of 2013 were yogurts—
Dannon’s Light & Fit Greek yogurt,
Yoplait’s Greek 100 and Müller’s Greek
yogurt, which combined for $376 million
in sales in 2013 alone.iii
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Retailers are also starting to experiment
with allocating shelf space to several
new types of yogurt, including mix-ins,
which are rapidly becoming the next major
wave of yogurt innovation. Most of the large
yogurt manufacturers have shifted their
attention to mix-ins, which commonly
include fruit, nuts, chocolate and granola.
German yogurt company Müller, a newer
category entrant that has a joint venture
with PepsiCo, is helping lead the push in
the mix-in space, with Chobani chasing
aggressively and Danone’s recent purchase
of YoCrunch likely a sign that they will
follow suit.
EXHIBIT 1: U.S. Lags Europe in Yogurt Consumption
Yogurt Consumption
(Pounds per Person per Year)
U.S.
Canada
Europe
9
24
77
Source: Canadian Grocer
However, while the major yogurt brands
focus on the Greek and mix-in segments,
there is a huge white space opportunity for
private equity investors to jump ahead of
them and focus on buying brands that offer
high-growth, differentiated positioning in
other category segments that may become
mainstream in the near future.
Why? For starters, there is still significant
headroom for category growth. Packaged
Facts estimates the category will continue
growing—from $7.6 billion in 2013 to $9.3
billion by 2017. Analysts have compared
today’s yogurt market to yesterday’s cheese
market—relatively uniform and unsophisticated, but developing. It will only be a matter
of time before the yogurt equivalents of
organic, herb-encrusted goat cheese and
fat-free feta grace most large supermarkets.
Industry insiders are looking to Europe as
an example of what the North American
yogurt market could be. Although U.S. yogurt
consumption has grown a staggering 800%
since 1970,iv we still eat only nine pounds
per person per year. In contrast, Canadians
eat 24 pounds a year and Europeans eat 77,v
as illustrated in Exhibit 1. Many European
grocers have not just one but several aisles
dedicated solely to yogurt.
Europeans eat so much yogurt in part
because it’s not relegated to only breakfast.
In fact, many Europeans eat yogurt for
dessert at lunch and dinner and use it as
a base for sauces and other cooking.
In addition to expanding yogurt’s role at
the table, health and demographic trends
should provide strong category tailwinds
to help propel growth.
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We see two particularly compelling investment theses:
focusing on lesser-known international yogurt upstarts
and alternatives to traditional cow’s milk yogurt.
Many consumers view yogurt as a healthy
snack. In fact, 70% of consumers eat yogurt
for digestive health and 82% because it’s a
good source of calcium.vi Hispanic and Asian
respondents were far more likely than other
ethnicities to eat yogurt and thought it was
more important that the yogurt be healthy
and all natural. Yogurt’s health benefits,
namely its newfound focus on protein, are
also helping grow its popularity among men,
who traditionally consumed less yogurt
than women but are now climbing onto the
bandwagon.
Additionally, the heightened role of influencer
grocery channels like Whole Foods, The
Fresh Market and Sprouts creates avenues
for emerging brands to develop a national
footprint and grow awareness before moving
into the mainstream market. And with
Chobani’s recent exit from Whole Foods,
the time is ripe for new, smaller brands
to take its place in this key
influencer channel.
These factors all collide to
create a promising market
for investors. We see two
particularly compelling
investment theses: focusing
on lesser-known international
yogurt upstarts, like Australian,
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Icelandic and Asian styles, and looking
at alternatives to traditional cow’s milk
yogurt, including lactose free, sheep’s milk,
goat’s milk, soy and Chia Pods.
According to a Kurt Salmon survey of more
than 1,000 U.S. yogurt purchasers in March
2014, most consumers are still purchasing
regular and Greek yogurt, with these “secondary” yogurt types purchased by only
6% to 12% of respondents. (See Exhibit 2.)
There are also many smaller brands—selling
both Greek and traditional yogurt as well as
many secondary types—that a majority of
consumers are not currently purchasing but
show strong growth potential. In fact, major
brands are paying attention to these smaller
players: Yoplait snapped up two fledgling
but well-liked brands—Mountain High and
Liberté—in late 2010.
EXHIBIT 2: Regular and Greek Purchasers Dominate the Current Market
Percentage of Respondents Currently Purchasing Various Yogurt Types
72%
Regular
65%
Greek
100 calorie
(regular)
47%
100 calorie
(Greek)
43%
42%
Mix-ins
32%
Probiotic
28%
Kids’
Soy
Lactose free
12%
11%
Australian
7%
Goat’s milk
7%
Chia seed
pudding
6%
Sheep’s milk
6%
Icelandic
6%
Primary household shoppers that buy yogurt, purchased within last 3 months
Source: Kurt Salmon Consumer Survey
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EXHIBIT 3: Brands with High Advocacy and Low Awareness May Have High Growth Potential
Fage
Net Advocacy
Müller
Skyhill
Wallaby
Lancashire Farm
Noosa
Onken
So Delicious
Evolve
Nancy’s
Siggi’s
Nu Lait
WholeSoy & Co.
Smári
Emmi
Redwood Hill
Bellwether Farms
Liberté
Brown Cow
Voskos
Almond Dream
Greek Gods
Silk
Athenos
Old Chatham
Latta
High investment potential
Investors looking to grow these small brands
or help foster the success of a lesser-known
yogurt type in the United States have plenty
of options. Prime acquisition targets include
brands that currently have low awareness
but high advocacy among consumers currently purchasing them. (See Exhibit 3.)
Wallaby and Noosa represent two promising
entrants in the Australian yogurt category,
which are billed as Greek-style yogurts
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Stonyfield
Mountain High
Brand Awareness
sweetened with honey. With its unique packaging (think one of those round deli to-go
containers) and high-end positioning, it’s
no surprise Noosa is one of the fastestgrowing yogurt brands in the
country. In fact, its sales
grew 130% from 2012
to 2013, and that’s with
distribution on only about
35% of U.S. grocery store shelves.
Dannon Activia
YoCrunch
Chobani
Danimals
Yoplait
Dannon
Yoplait Greek
Dannon Oikos
Store Brand
2010, Siggi’s was sold in 1,500
stores, up from just two in
2006, and had racked up $2.6 million in
sales. By 2013, its estimated annual sales were
approximately $17 million.vii It’s no surprise
that private equity firm Revelry Brands
bought a minor stake in the brand in 2009.
(Revelry has since exited the investment,
selling its stake to Emmi Group, a European
milk processor and dairy.vi )
The yogurt market’s resurgence also paves
the way for related categories to grow. This
includes options like Chia Pods—containers
of chia seeds, coconut and fruit that are
dairy free and vegan—that are positioned
to take advantage of the ever-expanding
American palate.
Source: Kurt Salmon Consumer Survey
Siggi’s is also one to watch. This Icelandic
yogurt with unique flavors like orange
ginger is less sweet and packs more protein
than many others, Greek or otherwise,
giving it tremendous appeal to healthconscious consumers. And while the
yogurt is expensive—at nearly $3 for a sixounce container—Siggi’s has successfully
broadened its distribution to stores from
Whole Foods to Wegmans to Walmart. By
These brands are all poised to benefit from
growth in the Greek yogurt category and a
resurgence of the category in general. Savvy
investors can get in now and reap the sweet
rewards as the market continues to expand. v
AUTHOR
Dan Goldman, Senior Manager
daniel.goldman@kurtsalmon.com
i Mintel
ii The Wall Street Journal
iii IRI
iv U.S. Department of Agriculture
v Canadian Grocer
vi Mintel
vii Food Business News
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