[December 05, 2010] Yoplait brings new thinking to dairy aisle Tweet Dec 05, 2010 (Star Tribune - McClatchy-Tribune Information Services via COMTEX) -- Yogurt has been around for more than 5,000 years, so you might think there's little opportunity to do anything new with it. Well, yogurt makers, including the leading U.S. brand, Minnesota-rooted Yoplait, have proven that wrong: Their products are among the most constantly evolving foods in the grocery aisles. Yogurt already is a big food category, yet it still has lots of room to grow. And successful new products, coupled with new iterations of older lines, are the key to capturing more business. "The thing about the yogurt category is that it's very well positioned for innovation," said David Browne, a senior analyst at market researcher Mintel International. "It's just a type of food that's really open to a lot of interpretations." In a report done a year ago, Mintel found that 1,200 new yogurt products -- new styles, new flavors -- had been launched since 2005. Take Yoplait, one of the fastest-growing divisions of Golden Valley-based General Mills. This summer, it came out with Splitz, a dessert yogurt aimed at kids and featuring flavors like Strawberry Banana Split. It's a variant of Yoplait Delights, a successful launch last year of a 100-calorie dessert yogurt for adults -- think flavors like Lemon Torte and Creme Caramel. The idea was to make a more indulgent but still low-calorie product that would lead to more yogurt consumption outside of the traditional breakfast space. In its first year, Delights did at least $45 million in retail sales, and was one of the yogurt category's biggest new product launches, General Mills CEO Kendall Powell said at a July investors' conference. General Mills has held the U.S. license for Yoplait since 1977, and this country generates the most sales globally for the brand, which is owned by French dairy cooperative Sodiaal and PAI Partners, a French private equity group. PAI reportedly plans to sell its 50 percent interest, and there's been speculation that General Mills would be a bidder. The company declined to comment on the matter. Yoplait has been one of General Mills' stars, with $1.5 billion in U.S. retail sales in the company's most recent fiscal year, 15 percent of its total U.S. retail revenues. Though Yoplait's sales grew only 2 percent last year, on average they've posted around 9 percent annual growth over the past five years. A prime sales driver for Yoplait and yogurt generally is its "halo of health" said Becky O'Grady, president of Yoplait USA at General Mills. "Yogurt works because it's more than a 'should' food. A lot of healthy foods are 'should' foods," she said, referring to items that, while good for you, aren't necessarily tasty. Yogurt is growing faster than many other food categories, analysts say. In 2009, yogurt sales grew 9.2 percent, not including liquid yogurt, said Tom Vierhile, director of product launch analytics at Datamonitor. In comparison, ready-to-eat cereal and canned soup, two other big businesses for General Mills, grew 3.6 percent and an estimated 2.5 percent respectively during the same time period, Vierhile said. O'Grady said yogurt consumption rates in this county are lower than in Europe, and they're lower, too, than U.S. cereal eating rates. "There is still tons of upside to go." Browne said that while Yoplait has a strong track record for innovation, it has not been as creative as its chief rival, Dannon, over the past couple of years. About 20 percent of all new U.S. yogurt products launched since the beginning of 2009 have come from Dannon; 10 percent from Yoplait, he said. Yoplait and Dannon, which is owned by France-based Groupe Danone, are the giants of the U.S. yogurt business with respective market shares of 32.9 percent and 28.4 percent for the year ending Oct. 31, according to SymphonyIRI Group, a market researcher that tracks sales in conventional supermarket channels. Dannon's share has remained relatively steady over the past three years, but Yoplait has lost 2.7 percentage points of share since 2008, according to SymphonyIRI. The primary culprit for Yoplait's share erosion is the rise in recent years of premium, smaller brands, particularly Greek yogurt, said Mintel's Browne. Greek yogurt, the business's hottest niche, is a thicker product with more protein and a less-sweet taste than regular yogurt. Greek yogurt specialists like Fage and Chobani have gained ground in the past few years. Chobani's market share stood at 5.1 percent for the 52 weeks ending Oct. 31, up from just 1.9 percent in 2009, according to SymphonyIRI. Fage's share, though still relatively small at 3.1 percent, has almost doubled since 2008. Yoplait introduced a Greek yogurt in January, and while it's helped perk up yogurt sales, the company is relatively late to the Greek market. That's what happened, too, with Yo-Plus, a yogurt launched in mid-2007 that has ingredients to help digestive health. But Dannon's Activia yogurt had established a beachhead in early 2006 in the digestive health space, and today it's one of the country's bestselling yogurts with 6 percent of the market, according to SymphonyIRI. Yo-Plus doesn't even crack SymphonyIRI's top 20. But Yoplait has had its successes. In 1998, it pioneered squeezable yogurt, dubbed Go-Gurt, and in 2002 it created Whips, a unique mousse-like yogurt. Plus, Yoplait is a leader in the new desert yogurt segment, Datamonitor's Vierhile said. Dannon fired back this summer with a new dessert version of Activia. But Vierhile wondered about the wisdom of combining dessert, which connotes indulgence, with a product like Activia, which is so linked to health. "You could be close to jumping the shark with a product like that." Mike Hughlett --612-673-7003 To see more of the Star Tribune, or to subscribe to the newspaper, go to http://www.startribune.com/. Copyright (c) 2010, Star Tribune, Minneapolis Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com. [ Back To TMCnet.com's Homepage ]