In what some think is a mature market, manufacturers thinking outside of the box find opportunities. Mature market? Nonsense!

Cultured dairy products—cottage cheese, cream cheese, dairy dips, sour cream and yogurt—are considered by many processors to be mature markets; however, just the opposite is true. In fact, what we have seen in the past few years is that processors who are willing to give any of these products just a little attention—getting innovative with flavors and formulations, providing convenience packaging features or marketing to a specific consumer segment—the pay-off is incredible.

Yogurt, specifically drinkable yogurt, is the category’s shining star this year. Drinkable yogurt retail sales grew 36.6% this past year (see graph) to an impressive $132.8 million, according to ACNielsen. Impressive? Yes, impressive. After all, back in the early 90s, this category was virtually non-existent.

It was in this exact same April cover story one-year ago that Dairy Foods magazine predicted a surge in drinkable yogurts. Within a few months, the prediction became reality. The most notable introduction actually came within weeks of the prediction when Minneapolis-based General Mills Inc., rolled out Nouriche, a single-serve, nonfat yogurt smoothie with 20 vitamins and minerals and protein. By the time Nouriche hits its one-year anniversary, it will have achieved national distribution, says Pam Becker, senior mgr, public relations.

Krista Frederickson, marketing mgr., adds, “Yoplait Nouriche is doing very well in the market because it offers busy consumers something that they are looking for—a breakfast option that is convenient, delicious and healthy. It provides the nourishment that consumers are looking for when they don’t have time to stop for a meal, with the great taste that consumers expect from Yoplait.”

Wallaby brand organic yogurts possess a subtle sweetness, similar to Australian and European yogurts, which it attempts to mimic.
Old Home Foods, St. Paul, Minn., recognized the opportunity in drinkable yogurt and recently invested in drink manufacturing and packaging equipment (see accompanying story on p. 32). The company plans to roll out its single-serve line in May.

Twin-city neighbor Marigold Foods, Minneapolis, a National Dairy Holdings company, Dallas, has been successfully selling Yo-J since 1992. This yogurt juice drink was introduced before its time, but, because of a great name and delicious formula, managed to hold its own and today is a very successful line for Marigold Foods. The company recently added a fifth flavor to its 64-oz carton line—Orange Cream—joining Raspberry Orange, Strawberry, Strawberry-Banana and Wildberry.

The Dannon Co., Tarrytown, N.Y., continues to succeed with its Frusion and Danimals Drinkables lines. In October, the company expanded distribution of Actimel, a probiotic dairy-based dietary supplement, placing it in Whole Foods Market stores nationally. Since 1999, Actimel has been in test market in Denver, where the company reported an extremely positive consumer response; however, many in the industry wondered if Actimel would ever make it out of the mile-high city. It did!

Yogurt tubes continue to be popular with older kids for grab-and-go snacking.
Actimel is the first of its kind to be produced and marketed nationally in the United States. It is described as the “little bottle with a big defense.” Made with live and active probiotic Lactobacillus casei cultures, Actimel helps strengthen the body’s natural defenses by having a favorable effect on beneficial bacteria in the digestive system.

“Consumers are interested in doing everything possible to keep their body at its best. With the introduction of Actimel [to Whole Foods Markets], we are providing more healthful and innovative options for our consumers in stores that they already rely on for the latest in nutrition products,” says Eric Leventhal, v.p. marketing for Dannon. “Actimel is very popular in Europe and we are pleased to now offer this delicious cultured dairy supplement drink to Americans.”

Each 100g/3.3 fl oz serving of Actimel contains milk, skim milk, sucrose, glucose and 10 billion active L. casei and yogurt cultures and contains no artificial colors, artificial flavors or preservatives. Actimel comes in three flavors: Orange, original and vanilla. Four packs sell for about $2.39.

Whole Foods Markets were the introduction platform for Stonyfield Smoothies from Londonderry, N.H.-based Stonyfield Farm Inc. Available since early 2002, Smoothies are now available in mainstream grocery stores around the country. The line is so popular, that a fifth flavor—Wild Berry—recently joined Peach, Raspberry, Strawberry and Tropical Fruit.

Actimel is the first nationally distributed probiotic dairy-based dietary supplement in the United States.
“Smoothies have provided incremental volume sales for us,” says Gary Hirshberg, CEO and pres. “The line is not positioned to compete with yogurt drinks, rather to go after other beverage occasions such as for replenishment after exercise or as a grab-and-go thirst quencher.”

Stonyfield Smoothies are the only nationally distributed organic smoothies yogurt line, which Hirshberg believes is part of the reason for its phenomenal success. “The other is that it tastes great. It has a thin _viscosity, which makes it refreshing and light to drink,” he says.

The company recently made six-packs of the strawberry variety available through Costco stores, with plans to add other flavors, “We are hitting our sales targets and extremely pleased with consumers’ response,” Hirshberg concludes. The multi-packs sell for $6.99, which is an impressive cost-savings when compared to the fact that individual bottles sell for $1.49-$1.99.

In February, Stonyfield Farm purchased Brown Cow West Corp., Antioch, Calif., which also markets a drinkable yogurt line called Yogurt Quencher through Whole Foods Markets and regional natural foods stores. The acquisition brings together two of the nation’s leading natural yogurt producers, providing beneficial synergies to each brand. Stonyfield Farm will establish western family farmer agreements and begin processing organic yogurts in California for its western customers. The Brown Cow brand will benefit from Stonyfield’s east coast base and also its sales, marketing, operations and management resources. The combined 2003 revenues are projected to be approximately $130 million.

Yogurt’s image is changing

“Consumers are catching on that yogurt is an easy way to improve the nutritional quality of their daily diet,” says Hirshberg, who adds that Stonyfield yogurt sales were up 38% for the first two months of this year, as compared to the same period in 2002.

Betsy Watson, marketing specialist with Anderson Erickson Dairy, Des Moines, Iowa, says, “At Anderson Erickson we are promoting our yogurts as a great diet food. We tell consumers about the importance of adding calcium to the diet. Of course, we also try to keep excitement in our yogurt line by offering unique flavors. Never before has it been easier for consumers to grab a yogurt cup and know that they are living a healthier lifestyle and keeping weight under control.”

Napa County, Calif.-based Wallaby Yogurt Co., which prides itself on manufacturing smooth, creamy organic yogurt inspired by the yogurts of Australia and Europe, has experienced such phenomenal reception from consumers since the company started in 1996, that by 2002, the company had achieved national distribution.

The entire retail refrigerated yogurt category, which includes cups, drinkables and spoon-free tubes, was up 13.6% in 2002, as compared to 2001, according to ACNielsen.

“The yogurt category continues to grow because today nearly every shopper believes yogurt is a healthy food choice,” says Pam Vallone, g.m. for Mountain High Yoghurt, Englewood, Colo., part of Dean Foods Southwest Region, Dallas. “With the average retail food outlet stocking over 200 different yogurt items, there are more styles, flavors and sizes than ever before. This increased variety assures the primary shopper that it will be possible to buy yogurt for every member of the household.”

In most cases this means a different kind of yogurt for each member of the household. “Prior to the increased variety in the yogurt category, the primary shopper was most likely purchasing yogurt for some, not all members of the household,” says Vallone. “Score one for marketers. They now have everyone eating yogurt, from babies to grandparents.”

Another reason why the yogurt category continues to grow is marketers want everyone that is eating yogurt to eat more. “While the first strategy for growth came from variety, the second strategy for growth came from occasion-based consumption,” Vallone adds. Today there are yogurts for breakfast, such as Mountain High Breakfast Style. For lunch, some Oscar Meyer Lunchables includes Yogurt Jammers. When it comes to dessert, there are indulgent products like Dannon la Crème.

It’s not just branded yogurts that are doing well. So is private label.

The Meadow Gold facility in Englewood, Colo., also part of Dean Foods Southwest Region, produces about 50 million lbs of yogurt for various private label customers.

“We have seen steady increases in sales for the past five years,” says Bill Weyhrich, sales mgr. “Certainly the growth in flavor selection has been a huge factor. We’ve seen some lines grow from six flavors to 15 within a relatively short time. We now produce fruit-on-the-bottom, Swiss style and non-fat yogurts.

Color-coded lids help consumers easily identify Dannon yogurt varieties.
“Another trend in the yogurt category is the improved quality of private label formulas,” Weyhrich adds. “They can certainly hold their own against the national brands. Also, many of the major retailers have made great strides developing attractive packaging [for private label] with a strong message.”

Vallone concludes, “U.S. yogurt manufacturers may be patting themselves on the back for one of the longest runs of sustained growth in the food industry. What they really should be doing is scratching their heads as to why some members of the world community eat almost 10 times as much yogurt as Americans.”

Innovations in formulation and packaging keep consumers interested in cultured dairy products.

The other cultured products

Sour cream and dairy case dips, though not experiencing double-digit growth like yogurt, are still faring very well in retail sales.

In 2002, sour cream sales were up 5.4% to $685.5 million, as compared to 2001, according to ACNielsen. A great deal of this growth is attributed to the growth in the Hispanic population, as well as a general population trend towards consumption of Hispanic-style foods, where sour cream is a common condiment.

“Sour cream is marketed to Hispanics in the Southwest by as many as five different companies,” says Don Seale, national accounts mgr., Dean Foods Southwest Region. “There are even some private label products in stores such as Fiesta Market. Such sour cream comes in several varieties, including El Salvadorian crème, Mexican crème and other culture-specific names.”

The American Dairy Association says that snacking and entertaining are the two overall hottest food trends for 2003. And dairy case dips, for all obvious reasons, complement these two trends perfectly.

Dairy case dips, unlike produce case dips and many snack-aisle, shelf-stable dips, use sour cream as a base. This might very well be one of the reasons why this cultured dairy product category grew 5.5% in 2002 to a $432.3 million business.

“Dairy-based dips are simply better tasting (than oil-based products) and offer more real dip flavor,” says Seale.

Another reason is that dairy dip marketers have broadened their offer- ings beyond French onion dip, and consumers have embraced the variety.

Heluva Good LLC, Sodus, N.Y., a National Dairy Holdings company, has a great deal of success with its Special Flavor Limited Edition dip concept. New flavors are rolled in and out about every six months. Very soon the company will be debuting it latest creation: Southern Style Sweet Onion Dip.

Dean Foods’ Oak Farms brand has rolled out a fifth flavor of Dipzz. Roasted Garlic joins French Onion, Jalapeno, Mexican Fiesta and Ranch.

“The Dipzz real sour cream dip line debuted in January 2002 and has developed a huge following,” says Susan Meadows, v.p. and dir. of marketing, Dean Foods Southwest Region. “Both Oak Farms and Schepps Dairy in Texas are carrying them as well as Borden in Oklahoma and Browns Dairy in New Orleans.

“In the past year, our sales doubled and in 2003, we’re predicting a million-plus units to be sold in Texas alone,” Meadows adds. “We’ll probably roll out at least one, maybe two new flavors in 2003. We’ve also developed a boxed variety four-pack of Dipzz for club stores.”

The last two cultured dairy products categories—cottage cheese and cream cheese—have both been stagnant in recent years.

Seale says, “The demographics in the United States have changed and the aging population has always been the major consumer of cottage cheese. Many younger people are never exposed to cottage cheese, except at the occasional salad bar. A lack of innovative, youth-oriented marketing has failed to grab the teenagers to create interest. They think cottage cheese is old fashioned.”

Hopefully by this time next year, the story will change for cottage cheese and cream cheese. The opportunities are endless when you look at innovations that suppliers of ingredients and packaging have to offer. Keep growing those cultures!

Single-serve Stonyfield yogurt cups no longer are topped with plastic lids and plastic inner seals. New foil seals provide a 6% net reduction of solid land waste.

Yogurt Face and Lid Lifts

Television and big screen headliners aren’t the only ones investing in aesthetic makeovers. Two nationally known yogurt manufacturers recently decided it was time for their yogurt packages to undergo a change in appearance, and what a more perfect time to do it than right after ringing in the New Year. In January, packaging for the No. 1 and No. 3 refrigerated yogurt brands—Dannon and Stonyfield—underwent some significant modifications.

The Dannon Co., Tarrytown, N.Y., debuted a brand new look for its entire single-serve yogurt line. New eye-catching, boldly colored graphics provide consumers an updated, cleaner look; while color-coded lids help consumers easily identify their favorite Dannon yogurt variety. For example, blue lids top the Fruit on the Bottom line and purple lids are used on the Whipped variety.

Also, all of Dannon’s single-serve yogurts now come in 6-oz cups. Research indicates that consumers prefer smaller portions so that they can enjoy yogurt as a snack or as part of a meal, according to the company. The new-sized cup leaves room at the top for consumers to easily add and stir in their own mix-ins.

“We are very excited about the new Dannon packaging and are pleased to offer consumers a consistent refreshing look that assures they are getting a wholesome, great-tasting yogurt,” says Bart Adlam, senior marketing director. “The new look and size of the cups reflects our consumers’ preferences and makes it easier for them to find their favorite Dannon brand and flavor.”

Stonyfield Farm, the nation’s largest organic yogurt producer, replaced the single-serve cup’s plastic lid and plastic inner seal with a foil seal. Stonyfield Farm’s quality assurance team performed extensive tests on the new lid and found that foil performed superbly. They actually tested several different cup closure options, including a plastic coated paper. Although the environmental benefits of the paper were superior to all other options, the paper lid did not meet product quality, performance and safety requirements. The foil closure was the best option.

To help achieve environmental efficiencies, Stonyfield Farm works with the University of Michigan’s Center for Sustainable Systems, Ann Arbor, Mich., to help identify ways to improve the environmental attributes of its packaging.

The change from plastic to foil means significant environmental savings for the planet, the company says. By replacing the plastic lid and plastic seal with a single foil lid, landfills are spared more than 270 tons of plastic annually. After adding back the waste from the foil lids, a net reduction of 6% or 106 tons of solid waste will be achieved in the first year alone. Other environmental savings that go into making and using the foil seal, as compared to both a plastic seal and lid, include using 16% less energy, which is enough to power more than 180 U.S. households for a year, and 13% less water, which is more than 800,000 gal of water.

The new foil seal is recyclable, just like aluminum foil, as it is made from a layer of aluminum foil coated with plastic. Information about the company’s products and environmental initiatives will continue to be printed on the foil lids.

For consumers who do not eat a whole cup of yogurt in one sitting and would prefer to have a plastic lid to reseal it and finish later, upon request, Stonyfield Farm will send them some reusable plastic lids.