An early pioneer for portability, the yogurt category did away with the spoon years ago. We first saw tubes and then pouches enter the market, particularly targeted toward kids. Now a new iteration is gaining a foothold, one that’s already a major sales player south of the border: drinkable yogurt.
Drinkable yogurt carries a lot of upside, with 2016 sales growth exceeding that of the cup segment, according to Chicago-based Mintel. It was enough to pique the interest of west Texas retailer Randy Morton.
“C-store customers can appreciate a product like drinkable yogurt because it has great portability,” says Morton, a Hallettsville, Texas-based retailer who opened a new single location, Morton’s, last September.
But after a few weeks in late 2015, after positioning one drinkable brand alongside packaged milk in a single cold-vault door, Morton pulled the plug.
Creatures of habit, core yogurt fans see cup yogurt—spoon and all—as the product of record. But industry analysts expect to see the growth in drinkable yogurt continue as a few major brands roll out new products.
As for Morton, he’s undeterred. “We’re going to try it again (later this summer) in a new placement with other types of products,” he says. It’s a strategy echoed by analysts and manufacturers: Success lies in location.
Northern Exposure
Eighty percent of yogurt consumption in Mexico comes as a drink, according to White Plains, N.Y.-based Dannon, and yogurt manufacturers are hoping those same habits will translate up north.
Unlike cup yogurt, a destination purchase for many, drinkable varieties are often lumped in with packaged beverages such as kefir, smoothies and functional shakes. This identity crisis is a challenge, but yogurt drinks allow retailers to capitalize on a host of selling techniques while emphasizing multiple product attributes, says Beth Bloom, food and drink analyst with Mintel. She points to terms such as “fresh,” “protein” and “premium” as key consumer drivers for drinkable yogurt.
More than 80% of adults ages 18 and older don’t consume yogurt drinks, says Bloom. While only two in five are currently interested in trying them, “the majority are eager to learn more before trial as 63% agree they’re interested in information on yogurt drink benefits,” she says.
Despite the low penetration, drinkable yogurt is propelling category growth. While it accounts for just 7% of overall category sales, it grew at an 8% clip in 2015. Cup yogurt’s compound annualized growth rate—once in double digits—is at 3%, according to Mintel.
Brands making inroads in the United States include Lala Frusion C-Charged, Lifeway, Stoneyfield Farms and Yakult, the latter of which saw strong growth in the 52 weeks ending May 2015, with 17.5% sales growth at multioutlet stores, Mintel reports.
Others showing velocity include Yoplait Yogurt & Juice Strawberry Banana Nonfat Beverage and Marquez Brothers El Mexicano Saborico Guava Drinkable Yogurt. And new launches from Dannon and Chobani this summer are poised to bolster the drinkable subset.
With a time-to-market range of six to 18 months, Dannon is offering four types of drinkables.
Light & Fit Protein Smoothie and Oikos Protein drinks “target consumers looking for a portable protein snack,” says Michael Neuwirth, senior director of public relations for Dannon.
New Dannon Drinks and DanUp are yogurt drinks “with a taste profile more targeted toward Hispanic consumers,” he says.
The Dannon protein drinks will launch nationwide, while Dannon Drinks and DanUp will launch in the Northeast, Florida and a handful of Southwestern states, says Neuwirth.
Norwich, N.Y.-based Chobani is also expanding beyond the cup into drinkable Greek yogurt with Drink Chobani.
From a nutritional standpoint, many people “haven’t loved their drinkable options—from snack juices to functional beverages, protein shakes or other drinkable yogurts,” according to a statement released to CSP by the Chobani marketing team.
“They can’t find exactly what they need: a satisfying drink with real fruit and probiotics that’s an excellent source of protein on the go.”
And in June, Borden Dairy Co. rolled out Lala 100 Calorie, a yogurt smoothie targeted toward consumers counting calories.
“Once Dannon and Chobani come out with their drinkable offerings, the floodgates will open” on the selling proposition, says Michael Carlson, category manager for Temple, Texas-based McLane Co.
Drinking the Cultures
The daily snacking phenomenon and reliance on minimeals gives further rise to drinkable yogurt’s potential to join the snacking brigade—and in the c-store environment.
That’s because people like to balance their food-based snack options across the day with liquid offerings. “It seems like consumers are willing to turn to drinks as snacks,” says Mintel’s Bloom.
It’s indeed a newer category for convenience, because only a few chains have added drinkable yogurt. But given the growth in traditional yogurt products in the c-store space, that can change.
“Yogurt sold in c-stores is outpacing mass-merchandising channel sales because a growing number of consumers view the convenience channel as one that carries an assortment of healthy product categories,” says Carlson.
When the major brands enter pockets of the U.S. market, it will help push trial and get more people accustomed to the yogurt-as-a-drink phenomenon. “It’s quick, easy and high in protein—I view it as a great selling opportunity for c-stores,” says Susan Viamari, editor of thought leadership for Chicago-based IRI.
Merchandising Smartly
Texas retailer Morton positioned 8-ounce Lala drinkable yogurt bottles in a strawberry-banana flavor with bottled milk. And while sales were unimpressive, he thinks he can crack the code.
He plans to position yogurt drinks in a refrigerated grab-and-go display paired with fresh products such as whole and cut fruits and vegetables and smoothies.
“It’s more of a natural fit there with the emphasis on fresh,” Morton says.
Dannon’s Neuwirth says operators can expect trial and sustained traction by deploying the refrigerated case first and foremost for merchandising, similar to Morton’s plan.
“It’s the ideal placement as consumers could pick this item as an add-on to their sandwich or salads and fresh fruit options,” Neuwirth says. Promotions should not be price-driven but focused on creating awareness, such as a free yogurt with the purchase of a salad.
IRI’s Viamari thinks co-merchandising is “super-important to drive interest and engagement, so get the yogurt in (your sets) with something that’s more established, like meat sticks or granola bars. Be ready to roll to drive interest and build market baskets.”
Yogurt’s Yin & Yang
Despite similar formulation attributes, many consumers have a mental block when it comes to drinking yogurt vs. spooning it out of a cup. And that thick texture of yogurt that serves as its calling card in traditional cup form? It’s not much desired as a drinkable iteration.
It’s a strange disconnect, but one that Chicago-based Mintel International corroborates. “Most people only think about eating their yogurt and not drinking it. People also told us that they’re not fans of the thicker texture of drinkable yogurt, which is odd because they appreciate that with cup yogurts—and they often demand a thick texture with fruit smoothies and shakes,” says Beth Bloom, food and drink analyst for Mintel.
Yogurt drinks are viewed as a better fıt for on-the-go consumption and not as fılling, whereas cup yogurts are seen as more fılling, says Bloom, citing some niche tendencies from the fırm’s August 2016 report titled “Yogurt and Yogurt Drinks.”
Mintel found that when it comes to overall yogurt consumption motivators, 62% of people consume it for flavor attributes, 43% for digestive health and 41% protein. Bloom referred to the “health cues” that underpin drinkable yogurt, terms such as “chilled beverage,” which epitomizes a “sign of quality—a health and freshness perception that’s a cue for consumers to give it trial.”
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.