Greek yogurt: Why it’s taking over grocery store shelves

Greek yogurt: Why it’s taking over grocery store shelves
 Published on Wednesday July 04, 2012 Francine Kopun Business Reporter
As Greece sinks daily deeper into financial crisis, a humble staple of the Greek diet has become a billion-dollar business in North America. Greek yogurt is flying off supermarket shelves in Canada after conquering the U.S. market. The high-protein content, natural ingredients and creamy taste have made it a hit with consumers in a health-conscious culture.

Canadian producers have doubled and tripled facilities to meet increasing demand and grocery retailers have experienced temporary shortages, leaving consumers scrambling for the latest holy grail of a healthy diet.
Chobani, the American company founded by an immigrant Turk that made Greek yogurt a phenomenon in the U.S., has entered the Canadian market with Loblaws and plans to go national in the fall. Existing yogurt manufacturers have jumped on the bandwagon, debuting new lines of Greek yogurt products to compete.
Food retailers are clearing shelf space to stock up on a product that is ruling groceries the way Olympic mittens ruled 2010.
“I can’t remember the last time I’ve seen anything this strong. It’s been explosive in growth, unbelievable,” said Carlo Noce, category manager, dairy and grocery, at Longo’s.
Sales have tripled and quadrupled in some locations, he said.
Greek yogurt is low in sodium and can be used in cooking and instead of sour cream, said Noce.
Dieters like it because it is natural, nutritious, filling and convenient.
Greek yogurt began rising in popularity about 18 months ago in Canada.
Loblaws has experienced occasional shortages in its private brand and there were some shortages of Danone and Liberté in February and April. Longo’s experienced some shortages at the outset as well, said Noce. Shortages at Sobey’s have also been reported.
Liberté has since made major investments in the plant to keep up with demand, said Simon Brisebois, at Liberté’s Canadian head office in St-Hubert.
John Skotidakis, owner of the Skotidakis Goat Farm in St-Eugene, said he added 50,000 square feet to his operation last year and will add another 40,000 square feet this year.
He said he was supplying restaurants and institutional customers when he tried to introduce consumer packaged Greek yogurt at Costco in 2005-2006. It failed to take off.
“It just wasn’t accepted. It was too early in the game,” said Skotidakis.
He credits Loblaw’s executive chairman Galen G. Weston with popularizing Greek yogurt in Canada.
In February, 2011, Loblaw’s launched its own private label Greek yogurt, with a television advertising campaign that featured Weston tossing individual servings to Toronto commuters at Union Station.
Skotidakis has doubled his business since the Loblaw’s ad aired.
Ian Gordon, the senior vice-president of brands at Loblaws who developed Greek product, said it came to their attention when it took off in the U.S.
“I think it still has a huge opportunity to continue to grow,” he said.
Chobani created the Greek yogurt market in the U.S. The company has gone from boot-strap start-up to $1-billion worth of business since launching out of an old Kraft plant in upstate New York in 2007. The number of employees has increased from five to 1,200.
“It’s a real Cinderella story,” said Kyle O’Brien, executive vice-president of sales for Chobani.
Chobani founder Hamdi Ulukaya got the idea when his parents visited from Turkey when he was a student in New York and complained the yogurt available in the U.S. wasn’t rich and creamy enough.
“It’s not like we invented something. We just brought it to life in the U.S.,” said O’Brien.
The timing was right, O’Brien said. Pitched as healthy, natural and nutritious, it hit a sweet spot in the American food market.
It didn’t hurt that Dr. Oz recommended eating Greek yogurt as part of a healthy diet.
A report by UBS Investment Research in the U.S. in 2011 said Greek yogurt brands captured market share more quickly than almost any segment ever in a major food category – at the time 13 points in three years.
But it also concluded the growth in Greek yogurt could spell trouble for existing yogurt makers who fail to innovate and capture market share.
Chobani is now third in market share in the U.S., behind Yoplait and Dannon, sold as Danone in Canada.
General Mills, which bought Yoplait in 2011 for $1.2-billion U.S., has seen sales decline in the category because it wasn’t ready for the Greek invasion, according to U.S. analysts.
Canadians consumers eat three times as much yogurt as American consumers, a fact O’Brien attributes in part to the popularity of yogurt among Quebecers, who take an artisanal approach to food and prefer natural products. According to Danone’s Canadian website, yogurt was introduced to Montrealers at the turn of the 20th Century.
And the market is still growing. Yogurt has seen the strongest growth of any food category over the decade, according to data from NPD.
In the year ending March 2002, the average Canadian ate yogurt just over 25 times per year. In 2012, that number has grown to just over 60.
Canadian Grocer magazine editor Rob Gerlsbeck says the yogurt market has grown in Canada because of innovation in the category, including yogurt tubes and drinkable yogurt.
Gerlsbeck calls Greek yogurt a game-changer.
“In the food manufacturing world, most new products don’t last, but once in a while there’s an exception,” he said.
“It’s a Greek yogurt world.”
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