Dannon is maintaining its market-share leadership in a US yogurt category that has been declining lately overall. But Sergio Fuster, president of the US yogurt portfolio for the brand’s new parent, DanoneWave, believes that the segment’s troubles are overstated and that Dannon will lead a new wave of growth for yogurt consumption in America that remains far behind the per capita levels of Europe.
The woes of Yoplait, the General Mills brand that pioneered American-style yogurt, dragged down the entire category last year as the company struggled to make Yoplait relevant again in a category that has shifted to Greek-style yogurts and beyond. US dollar sales of yogurt fell by about 1.6 percent to $7.5 billion in 2016 according to IRI, a Chicago-based market-research firm.
Meanwhile, Dannon—through its brands Dannon, Oikos, Activia and Danimals—remains the largest yogurt seller in the US, but Chobani has overtaken both Dannon and Yoplait as the leading single brand in the market. In addition to diversification of yogurt types by the leaders, such as “mix-in” varieties and more drinkables, a proliferation of new brands and yogurt styles has come upon the scene to provide the giants with more competition, including Australian and Icelandic formats.
Such vibrancy in the category is one reason, actually, that Fuster is heartened. “In recent weeks the category already is showing signs of getting back to growth very soon, partly because we have two of the large players pushing in a very strong way and moving the market,” Fuster told brandchannel, referring to Dannon and Chobani. “The category is flat or back to growth in the short term, and my bet is that this will continue to be the trend in the coming months.
“There’s still a lot of growth [to be had], and yogurt has been on trend for the last two decades. I don’t see that changing … Many things are turning in our favor, and those are the areas where we’ll be focusing in order to make sure growth in the category continues.”
Two areas where Dannon is establishing leadership in the increasingly crowded category is in product purity and transparency, and in broadening its horizons from dairy-based, true yogurt to plant-based varieties.
Last summer, Dannon launched a major effort to increase yogurts with non-GMO ingredients and to label them clearly as such beginning this year, embodied in what it called the Dannon Pledge. Also, Dannon moved to ensure that the cows that supply Dannon’s milk for Danimals, Oikos and Dannon brands will be fed non-GMO feed, a first for a non-organic yogurt maker. Fuster told brandchannel to expect a major digital advertising campaign around this promise to be launched this summer.
Groupe Danone, its parent, recently completed the acquisition of White Wave, the leader in plant-based “dairy” substitutes including yogurt, “reflecting the bringing together of two very much aligned businesses and complementing plant-based as well as dairy and yogurt,” as Michael Neuwirth, Dannon’s senior director of public relations put it. DanoneWave now is the name and company for reorganized business of Danone in North America and the largest public benefit corporation in the country, meaning that its charter purpose is to serve the public benefit in addition to the traditional corporate goal of maximizing profit for shareholders.
Earlier this year, Dannon also relaunched its probiotic Activia brand with a new campaign, titled “It Starts Inside,” starring Sarah Thomas, the first female NFL referee. It is supposed to further distance Activia from the days of depending on Jamie Lee Curtis’s digestive ease to promote the brand and to help reverse a recent decline in Activia sales and market share.
brandchannel talked with Fuster about DanoneWave and how its US yogurt business is transforming.
bc: How does the merger with White Wave to form DanoneWave benefit your US yogurt business?
Sergio Fuster: The main benefit is right now we are the company with the broadest portfolio in terms of addressing different segments and consumer needs. Some were missing—on premium yogurt and more specifically with plant-based, and right now our portfolio is complete. Before we had the broadest and now it is even broader. That will strengthen our leadership.
The category has softened in growth in the last months, but mainly that has been driven by one of the major competitors [through its] lack of investment in communication and promotion and innovation. When you have that from one of the major players, even if we continue to grow and have market-share acceleration, it’s not enough to compensate.
bc: Challenges to the category include the dietary trend to reduce sugar and carbs and consume more more protein, market saturation and the appearance of more novel foods. Are those all factors going forward?
Fuster: If the category does nothing about them, they’ll have an impact … Right now the softening has been driven by the competitive situation more than by those micro drivers. But we’re addressing the micro drivers. It is clear that consumers are demanding foods with less and less sugar, and we have programs to reduce sugar over last couple of years and will continue to do so. In Danimals over the past years, for instance, we’ve decreased sugar by 25 percent, and that business continues to grow double digits.
Second, there’s a demand for more transparency in products and so last year we announced the Dannon Pledge. There are a couple of big pillars in that. One is a commitment to transparency. We declared that regardless of any [legal] obligation we will declare the presence of GMOs whenever there are GMOs.
We’ve been doing that since the end of last year and at same time have implemented a move in flagship products … toward Non-GMO Project certification—that famous butterfly stamp. That’s not easy to get for the dairy industry. It’s one thing to talk about non-GMO ingredients, but another thing to talk about full non-GMO milk. The only way to guarantee that is to guarantee going non-GMO in what the cow eats. We have partnered with farmers and changed completely what’s happening in the upstream to be able to be the biggest yogurt brand that will have this certification in the coming weeks.
bc: Has the Dannon Pledge and your campaign helped the brand so far?
Fuster: The biggest impact is yet to come (and) commitments yet to come this year. The first big physical event in terms of consumer visibility will be the introduction of the non-GMO range for Dannon and Danimals … when things will start to change in a big way. We also are preparing a significant campaign that is going to run mainly through digital; the relevance of that messaging isn’t one necessarily that you’d go on TV with today. The story needs a different format to be told than just a 15- or 30 second ad. It will be a very interesting campaign which has been designed through a crowdsourced platform and is going to go into the market toward the summer, especially in certain regions of the US.
bc: What are you doing in mix-ins and drinkables? You had drinkable yogurts several years ago.
Fuster: We will continue to develop ourselves in [new] segments and formats like drinkables and “toppers,” or mix-ins. We have Oikos and Light & Fit Crunch lines, a format that we started a couple of years ago; they won’t be the only thing that we do.
We had drinkables a few years back, then we kind of moved away from them for a time because the company was pursuing a different strategy. Now we’ve had a renewed focus on drinks since about a year ago. Apart from just having small Danimals drink bottles, in the kids’ segment for many years, last year we introduced Light & Fit drinks and Oikos drinks [with zero calories]. We’ll also have a big launch of Light & Fit drinks with zero artificial sweeteners.
The fact that many competitors are coming with drinks is helping us in a way to create a much more differentiated drink segment in the market and make it more visible for consumers. With a few drinks here and there, nobody was aware of it. More drinks will help the segment as a whole. The consumer trend is stronger now than it’s ever been. In terms of the rise of portability and snacking, when you look at today versus 10 years ago, eating habits have changed dramatically … toward more portable and smaller and more frequent meals, and snacking throughout the day.
bc: Has your marketing relationship with the NFL been affected by the league’s own marketing issues?
Fuster: Oikos is the only official yogurt of the NFL, but we haven’t thought a lot about [the NFL’s issues]. The NFL is still the largest sports platform in the US, and there is a great fit with our strategy. We believe the NFL is taking the right steps to move in the right direction.
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