Movin’ on Up

Yogurt, snack-cheese sales escalate as categories find new homes.

Abbie Westra, Director, Editorial, CSP

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Probiotics and digestive aids. Greek and Australian. Tart or sweet. Drinkable, freezable, squeezable. Sounds like answers to multiple “Jeopardy!” questions. Yet they’re actually part of the same segment: yogurt.

Yogurt manufacturers have introduced countless niches in the past few years, unveiling the product to vast new populations who used to roll their eyes at their mother’s pushing of the traditional stuff. Seen everywhere from typical supermarkets to gourmet shops, yogurt is having a moment.

Meanwhile, in c-stores, even traditional products are helping buoy an otherwise lagging dairy category thanks to open-air coolers. Moving away from the cold vault, yogurt has a marquee display, capturing meal and snack sales while augmenting retailers’ foodservice offerings. “We saw our sales bump almost three years ago when we started putting these cases in,” says Robert Perkins, vice president of marketing for Rutter’s Farm Stores, York, Pa. “It was a great tie-in with the grab-and-go sandwiches, wraps and salads.”

And on the other coast, yogurt sales have, at the very minimum, quadrupled in the past 18 months at Plaid Pantries Inc. “That is caused entirely by moving it out of the vault door and into an open-air cooler,” says Butch Fulton, merchandising manager for the Beaverton, Ore.-based chain.

Secondary factors such as health and wellness and the rise of drinkable yogurts and Hispanic brands have also influenced yogurt sales. But by and large, the voy age from the cold vault to an open-air cooler—from dairy to foodservice—has stoked a sales surge.

Little Category, Big Growth

Let’s keep some perspective: The yogurt category is small. SymphonyIRI Group reports that the yogurt category rang up $35.1 million in c-store sales in the 52 weeks ending Jan. 23, 2011.

That’s modest compared to other c-store products, but it’s also a 7.2% jump over a year ago. Most other dairy categories have seen decreases from 3% for whole milk to 6% for low-fat/skim.

Core-Mark’s numbers reflect growth as well—about 20% over last year, with slow and steady growth trends in the double digits over the past couple of years. “

It didn’t really catch our radar because it wasn’t a $10-million category,” says Chris Hobson, vice president of marketing for the South San Francisco, Calif.-based distributor. “But it’s become a million-dollar category with great trends, and now it’s beginning to receive category marketing attention from both retailers and us.”

Three different segments are driving yogurt’s growth: traditional products that are capturing more attention, ethnic offerings and the health-oriented consumer.

“Distributors, as well as the retailers themselves, have put some capital toward better merchandising units for this type of product,” says Hobson, echoing Fulton and Perkins. Core-Mark, as well as other distributors, has helped retailers, including Plaid Pantry, bring open-air coolers into stores for mixed merchandising of grab-and-go meals, drinks and sides such as yogurt.

Aside from the power of the grab-andgo cooler, Hispanic products are also taking off—particularly drinkable yogurts. Two such brands are El Mexicano and LALA.

Sales of the three El Mexicano SKUs that Core-Mark carries are equal to the 12 to 14 Yoplait SKUs in its roster, which has seen sizable growth of its own. Yoplait sales are up 37% year over year.

Meanwhile, LALA’s yogurt smoothies saw 45% growth in the c-store channel in 2010, according to SymphonyIRI. Over the 12 weeks ending May 15, sales accelerated to 175% vs. a year ago as the company increased penetration.

Brad Heetland, vice president of small format for LALA-USA, Dallas, explains that Hispanic consumers purchase more yogurt to begin with. Still, the company has seen growth beyond the Hispanic shopper because on-the-go eaters see the product as an addition to or replacement for meals.

A New Home

Redefining yogurt as a foodservice item instead of a dairy product has not only physically repositioned this dairy staple, but also broadened its application. Specifically, customers now are viewing yogurt as a dessert, side, breakfast item, snack or entire meal replacement.

Rutter’s began developing “Fresh Forward” cases in its 57 stores about four years ago. “We try to structure the grab-and-go so they can get all elements or pieces of a meal, if they want a salad, yogurt and dessert or a sandwich, yogurt and side,” says Perkins. Rutter’s stores currently carry six yogurt SKUs, and Perkins is looking at yogurt parfaits and Greek-style yogurt. A similar transition took place at Plaid Pantry stores about 18 months ago. Stores previously had a small, freestanding cooler with doors for grab-and-go foods. “It really limited what we could do,” says Fulton. “They were pretty well maxed out, and it just wasn’t giving us the footage that we needed.” A remodel of the fountain area, including the removal of some frozencarbonated- beverage dispensers, made room for 360-degree open-air coolers. Inside went burritos, fresh sandwiches, packaged salads and specialty juices such as Naked, as well as the four yogurt SKUs from the cold-vault door.

Since then, yogurt sales have quadrupled, Fulton says, and the category wasn’t doing much of anything before. “It was just stuck in our dairy door and it didn’t have a home, so it was overlooked,” he says.

Now that yogurt does have a home, Fulton’s looking to expand into drinkable yogurt and yogurt parfaits. He’s also developing a series of schematics for the open-air cooler so individual stores in the 103-unit chain can customize offerings to their customer base.

Along with merchandising yogurt alongside grab-and-go fresh foods, Hobson of Core-Mark recommends offering 10 to 12 SKUs “to let consumers know you’re in the business.” Focus first on traditional products, then branch into healthy alternatives, he says. If it makes sense for the market, look at Hispanic brands or, for a high-end clientele, Greek-style varieties. He suggests bundling yogurt with a trail mix or energy bar.

Neither Rutter’s nor Plaid Pantry has gotten a strong handle on whom the yogurt customer is, though they are watching.

“Mornings, it’s ladies stopping in on their way to work, picking up yogurt with coffee or cigarettes,” says Fulton. “In the afternoon, it’s Bubba stopping in to get his sandwiches and possibly picking up cheese or maybe some yogurt to go along with it.”

Who moved my Cheese?

Yogurt is not alone in its voyage from cold vault afterthought to grab-and-go side item. Retailers are moving cheese over, too, and sales figures suggest the move was a good one.

“It’s unbelievable, the growth,” says Hobson.

Core-Mark has seen its packagedcheese sales increase 122% over this same time last year. Like yogurt, the category is a small one in terms of volume. But for a category many retailers are already carrying, the increase ought to be noted.

Rutter’s does “tremendous business” with cubed cheese and cubed meats, packaged together and merchandised in the Fresh Forward case. Sweet bologna, a regional specialty of cured, smoked beef sausage, is a popular variety. “The sweet bologna and cubed cheese is a big seller for us; it’s almost like a meal,” says Perkins. Fulton of Plaid Pantry has seen gains in cheese-stick sales similar to that of the yogurt category, which has allowed him to expand the assortment into more flavors, including jalapeño and meatand- cheese combo packs. “Those are probably two of the better items we’ve put into the open-air coolers, as far as gross growth and profit dollars go,” he says of yogurt and cheese.

“We see the same exact trend, and there are even some retailers who stock the product in both spots, utilizing various merchandising tools,” says Michael Heim, senior national account manager for Sargento, Plymouth, Wis. “It also opens up creative merchandising approaches such as bundling with fresh sandwich sales.”

Healthy Horizon

An initial assumption might be that increased yogurt sales are an indication of a consumer desire to eat better. While the short answer is “no,” it might depend on how you define healthy.

Rutter’s doesn’t market its Fresh Forward cooler as a “healthy zone,” per se. But the focus on “fresh”—from the products to the name itself—may resonate with more customers than “healthy,” which still has the stigma of being unsatisfying and, frankly, less fun.

“Healthier is relative,” Perkins says with a laugh. Nonetheless, Hobson does see sales moving upwards among SKUs that promise health benefits such as live probiotic cultures. He sees parallels between growth sales of yogurt and juices such as Naked and Odwalla and fruit smoothies. Heim of Sargento has noticed a similar trend among consumers turning to cheese as a healthier, perhaps more wholesome snack alternative. And while healthy food’s role in the c-store is still uncertain, the power of that open-air cooler—front and center in the store, preferably accessible by all sides and stocked with fresh foods—is quantifiable. Hobson has seen sales of items increase five times once moved from the cold-vault door to an open-air merchandiser. “If you’re selling $100 a week, your sales will go to $500,” he says. Still, Perkins cautions against wasting the space: “That is a very profitable location, so you have to make sure you get the right products in there.”   

The Numbers

7.2% Percent c-store sales of the yogurt category increased in the 52 weeks ending Jan. 23

175% Percent increase in c-store sales of LALA-USA drinkable yogurt in the 12 weeks ending May 15

122% Percent increase in packaged cheese sales Core-Mark has witnessed in the past year.

How to Increase Yogurt & Cheese Sales

  • Stock items near grab-and-go foodservice items.
  • Merchandise them as sides, snacks, desserts or full meal replacements.
  • Focus on traditional items first; then, if it fits your market, add some healthy or specialty SKUs such as Greek-style yogurt.
  • Look at drinkable yogurts, which are seeing significant gains in Hispanic markets.
  • Think of these items more as part of your foodservice set, vs. in the traditional dairy category.

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