Yogurt wars get serious

Yoplait missed the memo on Greek yogurt. Can Canada’s Liberté save the day?

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Niche Canadian brand, Liberté, is playing a pivotal role in the yogurt wars. (Photo by William Jones)

A shortage of liquidity has proven transformative not just for Greek banks, but also for Greek yogurt. The thick, protein rich version of the North American breakfast staple, which is strained to remove excess liquid, has upended a previously stable segment of the food industry long dominated by a handful of conglomerates. Those companies are now scrambling to capture a piece of a rapidly expanding market, lest they land at the bottom in a swift rebalancing of the yogurt trade. And in both Canada and the United States, a niche Canadian brand, Liberté, is playing a pivotal role.

“I think it caught the entire world off guard,” Michael Harad, a marketing director at General Mills, says of dairy’s hottest trend. “The speed and height to which Greek yogurt has grown is unprecedented not only within yogurt, but within any food category in U.S. history.” While General Mills’s Yoplait brand retains the top spot in overall U.S. yogurt sales, it has been a distinct loser in the accelerating Greek yogurt trend and continues to give up market share at an alarming rate. To staunch the bleeding, the continent’s third-biggest food company has placed a bet on a niche Canadian yogurt brand, Liberté.

In July, General Mills took over U.S. distribution and sales of Liberté’s Greek brands, including its fl agship Méditerranée product. The St-Hubert, Que.-based dairy has already established itself as Canada’s top purveyor of Greek yogurt, which was a natural fit for its organic, natural brand identity. “Liberté is very much an artisan brand,” Harad says. “It appeals very much to foodies.”

So far, foodies have forsaken the Greek products General Mills offers under its Yoplait banner. They failed to attract customers suddenly convinced of the inferiority of traditional yogurt. “Traditional-looking packaging and a big-brand name” rendered a product that was “not authentic looking,” a UBS report said.

Yogurt didn’t always need to be “authentic looking.” Just three years ago, Greek yogurt represented only 3% of U.S. yogurt sales. That share has since risen to 28%, with sales of about US$1.3 billion. That could increase to $3 billion in five years, UBS predicts.

The segment was practically created by Hamdi Ulukaya, a Turkish immigrant who founded the Chobani brand in 2007. Capitalizing on a changing palate and growing demand among health-conscious consumers, Chobani grew fast, and still commands more than half of U.S. Greek yogurt sales, leaving the traditional leaders like Danone and General Mills stunned.

“We believe that General Mills has likely missed out on Greek,” a Bernstein Research report states. “We consider that General Mills is unlikely to become a major player in Greek yogurt.” At risk is not just one market segment but the company’s predominance in U.S. yogurt—a distinction it could surrender as soon as this year, UBS predicts.

Chobani has also opened up a Canadian front in the yogurt wars, having overcome a recent Federal Court challenge and objections from the protectors of Canada’s dairy industry supply-management system. Chobani earned a one-year import permit to offer its Greek-style brand products at a number of stores in Ontario. It plans to ultimately open a processing plant in the province.

Liberté says it is not concerned about losing market share. “Chobani, for now, is not something we’re looking at,” says the company’s brand manager, Simon Brisebois. “With the craziness of Greek yogurt and the idea that we’re the leader, we have so much to do with the product that we have.” General Mills also challenges the assertion that Chobani has sealed its position as the permanent U.S. champion. “Greek yogurt in the U.S., as big as it is, has really only been popular for only a couple of years,” Harad says. “There’s a long way to go in this game.” He expects American consumers to embrace Liberté, even if they struggle to pronounce it.

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