The rise of Greek yogurt has been simply extraordinary by packaged-food standards, as General Mills Inc. has learned the hard way.
Sales and market share of its popular Yoplait brand have fallen sharply as General Mills was late to the Greek party and failed to make a major dent in the category. With Greek now commanding around 40 percent of the overall yogurt market — up from 2 percent six years ago — it almost seems too late for General Mills.
But the Golden Valley-based firm says don’t bet on it, and some analysts agree. General Mills scored its first Greek success this past year with Greek 100, a low-calorie offering that’s been one of Yoplait’s best product launches. And now, General Mills is coming out with an entirely new traditional Greek offering, replacing its earlier, well, flop.
Unlike Yoplait’s past Greek offering, its new Greek yogurt is “strained” in order to build its rich character, a more traditional method preferred by consumers. Flavors are new, packaging is new and marketing — which barely existed before — is new, too.
“We took a clean-slate approach with this,” said Michael Harad, director of marketing for Yoplait Greek. “There is nothing the same between this and where we were.”
Indeed, General Mills has even switched production methods. Straining refers to removing liquid whey, the watery portion of milk, giving Greek-style yogurt its thicker profile and twice the protein of conventional yogurt.
General Mills had been using “milk protein concentrate” to thicken its Yoplait Greek, a cheaper method, but one that raises eyebrows among yogurt aficionados. General Mills first adopted strained Greek yogurt with the launch of Greek 100 a year ago.
Greek 100 is General Mills’ biggest-selling new Yoplait product in at least 20 years, Harad said, and it’s expected to do $140 million in sales in its first full year. To put that in perspective, only about 2 percent of new consumer product launches do over $50 million in their first year.
Greek 100, which refers to the product’s calorie level, filled a niche within the Greek category. “This is the first weight management product in Greek and the only one endorsed by Weight Watchers,” Harad said. General Mills’ new conventional low-fat Greek yogurt has around 150 calories.
Greek 100 helped Yoplait gain ground in the Greek segment over the past year, though its market share is still only in the high single digits. With Greek 100 on board, General Mills’ U.S. Yoplait division — which accounts for almost $1.4 billion in annual sales — finally seemed to turn the corner during the company’s last quarter.
Yoplait’s sales were up a tad, which sounds quite good in the face of two consecutive years of 5 percent declines — striking after Yoplait’s big advances before the Greek era.
With Greek sales eating into Yoplait’s core products, Yoplait’s overall U.S. yogurt market share fell from over 40 percent in 2010 to under 30 percent earlier this year, according to a recent report from a stock analyst at Jefferies.
Greek yogurt’s dollar share of the overall yogurt market — led by the raging success of the Chobani brand — was 42 percent for the 52 weeks ending in early June, up from 8.1 percent just three years earlier, according to data from Nielsen.
“It’s pretty phenomenal to see this much growth in a [packaged food] category,” said Todd Hale, Nielsen’s senior vice president of consumer and shopper insights. “It’s completely taken over.”
Greek resonated because of its high protein levels and particularly healthy halo. It’s tartier taste has helped, too. “It’s all about the tart,” said Melissa Abbott, director of culinary insights at the Hartman Group, a food market researcher. “Something has happened to the American palate in the past seven years.”
As food companies have gotten wise to Greek’s allure, the Greek yogurt cooler has gotten crowded.
From January through May of this year, 57 percent of all yogurt products launched in the U.S. were Greek-themed, said Tom Vierhile, innovation insights director for market researcher Datamonitor Consumer. That’s up from 43 percent last year, 26 percent in 2011 and 16 percent in 2010.
“You don’t see stuff like this happen every day where one segment accounts for so much in product introductions and sales,” Vierhile said.
Which prompts a question: Is the Greek category getting too mature to support much more growth?
General Mills says no, noting that U.S. yogurt consumption is still growing at a strong clip and is well below that of other countries. Americans eat 6.7 kilograms of yogurt per person annually, while Canadians eat over 12 kilograms and the French eat 21 kilograms, Mills says, citing Euromonitor data.
The company is counting on Greek 100’s success to sell retailers — the allocators of precious shelf space — on its new conventional Greek product. The new Greek’s packaging is similar to that of Greek 100.
And General Mills will be launching an advertising blitz as the new product rolls out over the next month. General Mills’ old Yoplait Greek offering got “very limited advertising” support, Harad said.
Larry Finkel, director of food and beverage research at MarketResearch.com, said General Mills still has time to grow in Greek.
“I think Greek yogurt is a newer trend, and like any newer trend that takes off, it will peak and level off. But I don’t think it’s yet at that point, he said. “I think for a player like General Mills there is certainly room for growth because they know how to do it right.”