Gen. Mills Works to Up Share of Greek Yogurt Market
Yogurt industry leaders-including Golden Valley-based General Mills, Inc.-are reportedly playing catch-up in the fast-growing Greek yogurt segment, which now captures 20 to 25 percent of the U.S. yogurt business.
According to the Star Tribune, General Mills-which has owned the U.S. rights to the Yoplait brand since 1977 and recently closed on a $1.2 billion deal for a controlling interest in France-based Yoplait S.A.S.-is mounting new offensives to help it compete. The yogurt business is a $4 billion retail market in the United States.
“We've got work to do here for sure,” Ian Friendly, head of General Mills' U.S. retail operations, reportedly told analysts recently at the company's annual investor conference. “But we see no reason why we cannot capture our fair share of the Greek yogurt segment.”
Yogurt is reportedly General Mills' second-biggest business after cereal, and the company reported $1.5 billion in Yoplait retail sales in its most recent fiscal year, up 1 percent from the previous year.
The leading Greek yogurt is Chobani, a product of privately held upstate New York company Agro Farma, which was founded about four years ago. During 2009, Chobani had 2.05 percent of the overall U.S. yogurt market and Yoplait's Original yogurt was the leading brand with an 11.1 percent share, the Star Tribune reported, citing SymphonyIRI Group, which tracks sales at conventional food retailers.
But for the 52 weeks that ended June 12, Yoplait Light was the leading brand with a 9.1 percent share, and Chobani had risen to the second spot with an 8.7 percent share.
In 2010, General Mills launched its own Greek yogurt-a tangier, thicker, and more protein-rich alternative to conventional yogurt. Then last winter, it reformulated the Greek variation, moving from a fruit-and-yogurt blend to fruit on the bottom and yogurt on the top, the way Greek yogurt is typically sold, according to the Star Tribune. A repackaging reportedly came shortly after the reformulation but didn't gain much traction.
Between January 2010 and May 2011, Yoplait lost 7 percentage points of overall market share, falling to 32 percent, according to the Star Tribune, which cited Nielsen Company data reported by David Palmer, a stock analyst at UBS.
Palmer and Goldman Sachs both downgraded General Mills' stock from “buy” to “neutral” last month. Yoplait's “rapidly eroding” share was one of several reasons for Palmer's downgrade, and Goldman Sachs pointed to concerns that the yogurt market is undergoing a “seemingly structural shift,” the Star Tribune reported.
But things may be looking up: Yoplait Greek's share of the overall U.S. yogurt market reached 1.4 percent in the most recent quarter, up from 0.9 percent from the previous quarter, according to the Minneapolis newspaper. And General Mills is reportedly adding yogurt-making capacity that will allow it to boost production of Yoplait Greek later this summer and also plans to launch a new Greek ad campaign.