Don’t look now, Chobani. Danone is taking back some of the yogurt-market turf that the Greek-style giant claimed out of nowhere over the last few years.
Specifically, Danone—known as Dannon USA in America—has rallied behind its Oikos brand of Greek-style yogurt and is wresting back sales from Chobani, as Bloomberg Businessweek reported. New York-based Chobani essentially established thicker, creamier, tangier, protein-packed Greek-style yogurts as a mainstream segment beginning a few years ago.
Relying on tactics that only a big, established player in a market can use, Paris-based Groupe Danone has hiked its share of the US Greek-style yogurt market to 29 percent from practically nothing two years ago, while Chobani’s has slipped by roughly half to 39 percent over the last 18 months.[more]
“What has happened in the US is an indication of Danone’s perseverance,” Jon Cox, an analyst for Kepler Cheuvreux, told Businessweek. “They’ve shown that when they see the problem, they move very quickly.”
Danone has been getting more attention lately for its strategic transactional moves, such as purchasing Happy Family Brands to give the company a US presence in the fast-growing organic-baby-food sector, buying the YoCrunch brand that caters to kids with fun products, and partnering with Starbucks to introduce its Greek yogurts into cafes under Starbucks’ recently acquired Evolution Fresh brand, with the yogurts being “Inspired by Dannon.”
Of course, the Starbucks deal is one of the ways that Danone has been fighting back specifically in the Greek segment, which remains about the only part of the US yogurt business that is actually growing these days. As Businessweek pointed out, Starbucks perhaps could have partnered with Chobani instead “but the bigger company offers A-level supply-chain confidence.”
Danone also has been relying on its big-company heft to squeeze prices to attempt to undercut Chobani, even though the Greek-style segment has retained premium pricing through its huge boom. Chobani has responded with its own price discounts but is much smaller than Danone and so may have a harder time sustaining them.
Also, the French company has always been willing to try just about any possible innovation to keep its yogurt franchise growing in the United States, such as launching Activia probiotic yogurt when Americans were still a little uncomfortable with the idea of eating yogurt to help their digestive tracts. So it’s not surprising that Danone’s innovative twists on Oikos have included offering Greek-style dips and running a trial of frozen Oikos varieties. (Oikos is also the brand name of organic-only Greek yogurts offered by Danone-controlled Stonyfield Farm.)
It may be a while before the outcome of the Danone resurgence against Chobani becomes clear. But it’s pretty certain the top two have vanquished all other comers in the Greek-style category: Fage, the original maker of Greek-style yogurt on America’s East Coast, now has less than 10 percent of the US Greek market, the magazine said. And while General Mills’ Yoplait brand is attempting a late make-up in the Greek-style segment, it appears to have made the fatal mistake of waiting too long.