Will frozen yogurt firm up in supermarkets?

Articles
April 19, 2010

By marketing the digestive health benefits of yogurt, promoting heavily, and keeping baseline prices flat in the United States this year despite rising milk prices, prominent yogurt suppliers aim to keep their brands competitive - and more importantly for retailers help grow the domestic market.

By marketing the digestive health benefits of yogurt, promoting heavily, and keeping baseline prices flat in the United States this year despite rising milk prices, prominent yogurt suppliers aim to keep their brands competitive - and more importantly for retailers help grow the domestic market.

Per capita consumption in the U.S. is 11.5 pounds, just one-sixth the level in Western Europe, according to a Reuters report from its recent Food and Agricultural Summit. An international yogurt expert who presented there eyes double-digit growth in the U.S. on the way to a doubling of per capita consumption in four years; he said Canadian consumption recently doubled over five years.

If his forecast comes to pass, F3 sees that supermarkets have no clear path to the lion's share, unless they begin to merchandise this category around health and other appeals. Conventional planograms and dump displays that house multiple flavors (too many to reasonably include in shelf sets) lack flair and make shoppers work too hard. Category complexity currently clouds a valuable health message that ought to be the growth catalyst. 

Compare that with the clean, streamlined imagery of a growing number of frozen-yogurt franchises, each with a distinct go-to-market approach. Among them: Red Mango, PinkBerry, Spoon Me, tasti D lite, TCBY, plus a wide array of independents. These operators are shaping consumer expectations and establishing presentation standards. The CPG suppliers and supermarkets competing against them for share need to sync their packaging, messaging and merchandising with the evolving requirements of the U.S. frozen yogurt consumer.

On one hand, these franchises are populating more shopping centers and malls in many parts of the nation. On the other, frozen yogurt sales at retail have a nominal shelf presence (among ice creams, not other yogurts) and, not surprisingly, have failed to catch fire. Fewer than one U.S. household in ten (8.7%) purchased a prepackaged, UPC-coded frozen yogurt product in the 52 weeks ended December 26, 2009, according to Nielsen Homescan Consumer Facts data. More than a third of the time (34.3%), the item was bought on deal, which reflects a willingness to wait on purchases until an appealing promotion is available.

Frozen yogurt dollar sales in U.S. food, drug and mass merchandiser stores (including Walmart) fell 6.7% to $141.4 million in the 52 weeks ended February 20, 2010, on a 5.9% equivalized unit volume decline. This is a reversal from the prior year, during which category dollar sales advanced 4.8% on a 3.2% EUV rise, reports Nielsen.  Both brands and private label took similar percentage hits, so trading down doesn't appear to be behind the current slump; rather, shoppers may be culling frozen yogurt from their lists in order to save money on every trip.


Compared with yogurt overall, where the international expert says vanilla and strawberry drive 80% of sales, the frozen segment has a different flavor profile. According to Nielsen, the Top Two frozen yogurt flavors are vanilla ($31.0 million, down 4.5% in the latest 52 weeks after a 25.4% jump the year before) and chocolate ($8.4 million, up 0.5% in the latest 52 weeks after a 10.5% climb the year before).

On the basis of fat characteristics, only regular frozen yogurt grew this past year, by 2.2% to $26.7 million. By comparison, the non-fat/fat-free segment fell 8.2% to $49.5 million, and less-fat/low-fat segment fell 8.8% to $65.1 million, said Nielsen.