The yogurt market in America represents approximately $7.6 billion of annual sales. It’s a market that has grown exponentially since the early 90s. In 1993, Americans consumed three times as much milk as they did yogurt. In 2004, yogurt surpassed milk oi average annual consumption. Since 2004, yogurt sales have increased dramatically, and milk sales have dipped steadily.
According to industry insiders, three factors have impacted yogurt sales in America. The first factor is directly related to the current concern around personal health. Concerns about health and diet have played an integral part in driving demand and yogurt brand association. The public perception of yogurt is that it is a healthy food, despite the fact that yogurt brands vary in nutritional value. Some brands are “healthy,” while others are less healthy, but still suitable for recommended dairy portions. However, regardless of the brand, the current public perception is that all yogurts are healthy for you – and according to some brands, their products can make you even “healthier”.
The debate among yogurt producers on who produces the healthiest yogurt is never-ending. But the truth is in the hard facts, or at least on the nutritional value label located on the back of the yogurt container. However, even with the (more or less) plain truth of nutritional labels, consumers should be prepared for an onslaught of health driven advertising. Some marketing campaigns and advertisements have even had to have been withdrawn for invalid claims, such as in the case of Danone’s probiotic-based Activia.
In 2009, Danone was taken to court by a consumer to challenge its claim that Danone’s yogurt was “clinically proven” – wording the company used in its campaigns and on brand labels. A settlement was finally made and Danone agreed to recant the claim and also agreed to soften future claims – specifically those regarding personal health.
The second factor is visibility and accessibility. Today, there are more than a dozen brands on the shelves in small local grocers, and as many as two dozen brands in mega grocers. More and more brands are finding their way into retail stores and competing for shelf space. It means that consumers now have more and more choice, and are not limited to specific brands or specific types (ex: fruit filled, Greek yogurt, etc…). Most of the mega grocers charge for shelf space, but that does not seem to faze yogurt companies, which happily pay for more and more exposure now that the iron is hot.
The third factor is advertising. Marketing yogurt campaigns are tremendously influential in directing consumers to new brands. In comparison to other industries, yogurt is still quite new to success, and brands do not seem to have the same consumer loyalty as other dairy products like cheese or milk.
Take Greek yogurt for example, the rising interest in Greek yogurt is due in large part to new marketing campaigns launched by larger yogurt producers. Greek yogurt contains more proteins and is perceived to be healthier, but is definitely tastier than traditional American yogurts. Larger companies like Danone and Yoplait did not traditionally offer Greek yogurt in their brand line until they were forced to react to pressure from smaller Greek yogurt producers. The peak in Greek yogurt interest spawned a marketing blitz among top yogurt companies. Now, Greek yogurt is virtually synonymous with yogurt in America.
Continued growth is on its way. By 2005, yogurt sales eclipsed milk by a large margin and many dairy producers jumped on the yogurt bandwagon. For a brief moment, yogurt production consisted of many smaller companies. Today, larger companies like Danone and Yoplait represent a bulk of the market.
Over the last 10 years, the high demand in yogurt has caused top yogurt producers to grow via acquisition. The key strategy for companies like Danone and Yoplait was to expand their brand line and market share - the fastest way to do that was to buy their way through. That meant buying smaller local producers who already had ongoing operations and a retail presence. This also helped eliminate any threat of a smaller producer gaining traction and also helped play defense against the competition. Today, relative to the market demand, with such a low number of yogurt producers out there, the market is practically monopolized.
The future of yogurt is not uncertain by any means – it’s a hockey stick on a growth chart just moving up and up. Despite a dip in growth between 2012 and 2013, industry experts predict that by 2017, yogurt sales will hit over $9 billion. The current Greek yogurt craze will have the largest impact on sales over the course of the next two years. With sales on the rise, who are the top producers that control America’s $7.3 billion industry?
5 FAGE - $1 Billion Annual Sales
FAGE is a Greek yogurt producer located in Athens. The company employs over 1,200 people and makes and sells yogurt, cheese, ice cream, and milk. Most of its sales are across Europe. The company was first introduced to the US in 2001, and since then has featured in magazines, on billboards, and even in television commercials.
4 Ehrmann AG - $1 Billion Annual Sales
Ehrmann AG is a family-run yogurt company located in Germany. The company has manufacturing plants in Germany, Russia, and the Czech Republic. It currently sells in over 40 countries around the world and employs over 1,500 people. It is known for excellent product quality and has recently entered the US market.
3 Chobani - $1.2 Billion Annual Sales
Chobani Inc. is an American based yogurt producer. The company was one of the first to introduce Greek yogurts to the American market. The company was founded in 2005 by a Hamdi Ulukaya, who bought a closed plant. The plant originally belonged to Kraft Foods. Some employees of Kraft were hired by Chobani, including the “yogurt master”.
Today, Hamdi Ulukaya is regarded as a “land of opportunity” success story. The Turkish immigrant is the sole owner of the highly successful Chobani brand. Chobani represents approximately 17% of the market share.
2 Yoplait - $1.95 Billion Annual Sales
Yoplait is a jointly owned yogurt producer. It is part owned by American food conglomerate General Mills and a French dairy company Sodiaal. Yoplait was one of the first yogurt companies to experiment with different packaging. Their brand is extremely popular among children and includes a wide variety of fun products.
Today, the company uses a franchise and distribution system to extend its global reach. Many companies around the world are exclusive distributers of Yoplait products for their respective countries. For many years, Yoplait was the number one producer of yogurt. Unfortunately, the company experienced an eight percent dip in market share following lower than expected sales.
1 Danone - $2.05 Billion Annual Sales
Oikos, Activia, DanActive, Danino, Coolision, Silhouette, Danone Creamy, Brown Cow, YoCrunch, and Stonyfield Farm are all under the Danone umbrella. Danone is primarily a dairy producer, but also owns several known brands such as Aqua and Evian. In addition to dairy products and bottled water, Danone also produces cereals and baby foods.
The company’s growth has been so widely recognized that other, larger companies, such as Nestlé, Kraft Foods, and PepsiCo; have expressed interest in acquiring it. Acquisition seemed eminent until the French government drafted a law to protect foreign companies from purchasing national companies such as Danone. Oikos, its latest brand, is leading its Greek yogurt campaign and is expected to drive yogurt sales for 2014-2015.
For now Danone sits at the top of yogurt supremacy, but there’s still plenty of room for other competitors to push them right off. Consumers should expect competition to stiffen as more producers launch new brands, new innovative packaging and hybrid recipes. It will be unavoidable for most consumers to miss as advertising dollars increase.
The fight for first continues. In addition to the five listed here, there are another dozen international companies who are vying for a slice of the American yogurt market. The war for yogurt supremacy is expected to be the equivalent of the cola wars from the 80s and 90s – full of clever marketing, cheap shots, and outrageous claims.