Rising Tide

Yogurt processors position themselves for long-term growth, while cottage cheese makers seek to profit from the low-carb craze.
by Julie Cook
POLYTAINERS
rigid plastic packaging systems


We’re Polytainers, North America’s premier supplier of rigid plastic
packaging for the food and dairy industries, and we’re proud to support as vital and vibrant a sector of the industry as cultured products.
The yogurt category in particular has enjoyed nearly non-stop growth over the past 20 years, responding to consumers’ ever-increasing interest in health and nutrition, and their ever-increasing demand for convenience. It is truly remarkable how processors in this category have continued to innovate and expand their product offerings, avoiding cannibalization of their core product lines and expanding the base of users with what, it turns out, are in many cases actually higher cost-per-ounce, value-added products.
We see no end in sight to these trends. In fact, compared with many European nations, we believe that yogurt consumption still has a long way to go — and grow — in this country. Its growing acceptance and popularity as a healthy snack for children, addressing growing concerns over childhood
obesity, etc., means that future generations will grow up even more in the habit of eating and enjoying yogurt every day of their lives.
As a supplier of containers to many leading dairy processors, we believe innovative and attractive packaging also plays an important role. Increasingly, we see processors looking to us to help speed their time to market with new product introductions, to better integrate their processing and
packaging lines, and be more flexible and responsive in delivering made-to-order rather than made-to-inventory solutions.
As they grapple with ever-changing labeling requirements, we also see processors looking to us to help provide sparkling, punched-up graphics to help deliver shelf impact and give a lift to sales. More and more are realizing the package can be one of the strongest selling features of the product.
Polytainers is proud to be part of this exciting product category and proud to be a partner to so many of you leading dairy processors.
Bob Barrett
President
Polytainers Inc.

Courting the children’s market paid off in spades for the yogurt category throughout the 1990s. From Go-Gurt and YoBaby to Danimals and Trix, child-oriented products made healthy eating fun. Sales soared, parents were happy, and yogurt processors were thrilled about developing a whole generation of yogurt-devotees.
In recent months, however, the vigorous growth that defined the past decade has begun slacking off somewhat. Figures from Chicago-based Information Resources Inc. (IRI) show dollar sales up 6.3 percent and unit sales up 2.9 percent in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, during the 52-week period ending May 16, 2004. Last year’s figures for roughly the same time period and the same outlets show much healthier increases — 10.7 percent and 9.7 percent, respectively.
You’re not about to find any yogurt processors wallowing in their misery, however. On the contrary, they remain incredibly optimistic about the category, confident they have the product offerings to satisfy both the taste buds and the health requirements of today’s consumers.
“The value of yogurt in the diet has been communicated and validated, so now it’s just about making it relevant to the consumer,” says Jim Rossiter, director of brand strategy and retail marketing, Wells’ Dairy Inc., Le Mars, Iowa. “That entails driving excitement and innovation and occasion and trial, and hopefully, over time, you’ll increase your base of heavy users.”
These days, those heavy users might very well be found swigging their yogurt from a bottle, rather than scooping it up with a spoon. After years of trial and error, processors have finally developed a generation of drinkable yogurts and smoothies that connect with consumers.  Such products already encompass nearly 10 percent of U.S. yogurt sales, according to Gary Hirshberg, president and chief executive officer, Stonyfield Farm, Londonderry, N.H.
And while they may not even begin to approach 50 percent of sales as they do throughout Latin America, they could very well reach 25 percent of U.S. sales, predicts Eric Leventhal, senior vice president of marketing, The Dannon Co. Inc., Tarrytown, N.Y.
“My belief is that drinks are going to be a huge part of the yogurt category,” Levanthal says. “When you think about the 290 million Americans and combine that with the potential for lifting per capita consumption, the opportunity for the yogurt category is just enormous.”
Rolled out nationwide last year, Dannon Light ‘n Fit Smoothies are available in Strawberry Banana, Mixed Berry, Peach Passion Fruit, Raspberry, Strawberry and Tropical varieties. Sweetened with sucralose, each 7-ounce serving contains 80 calories — 45 percent fewer than other dairy-based smoothies — and no fat. The company also expanded its popular Danimals line to include Danimals XL, a larger-portion drinkable yogurt geared toward ‘tweens, or children age 8 to 12. The 5.75-ounce drink is available in Strawberry Explosion, Orange Strawberry Banana Blowout, Blazin’ Berry and Watermelon Slice varieties.
In St. Paul, Minn., meanwhile, Old Home Foods received such a warm reception for its original Yogurt Smoothie, introduced last year, the company rolled out a light version early in 2004. Available in Strawberry, Strawberry-Banana, Raspberry, Mixed Berry and Cherry varieties, Old Home Light Yogurt Smoothies contain 11 grams of net carbohydrates and 100 calories per 8-ounce bottle.
Touted as a breakfast-time meal replacement, Yoplait’s Nouriche has reached nationwide distribution, celebrated its one-year anniversary and welcomed a new sister product — Nouriche Light — just in time for summer.
Meanwhile, Northfield, Ill.-based Kraft Foods Inc. rolled out Breyers Crème Savers Smoothies, a 10-ounce drinkable yogurt featuring popular Crème Savers hard-candy flavors — Strawberries & Crème, Raspberries & Crème, Orange & Crème, Blueberries & Crème and Peaches & Crème.
According to Jennifer Jorgensen, marketing manager for Yoplait, yogurt-based beverages have helped bring new users, such as men, to the category. The grab-and-go component of drinkable products appeal to the male consumer, adds Dave Holdsworth, Old Home’s vice president of sales and marketing.
“I don’t see too many men sitting at their desks eating cup yogurt, but if they have a drink that they can grab on the go, it’s easier and more convenient for them,” Holdsworth says.
Courting Carb Counters
Men are sure to be among the consumers gobbling up the many new low-carb yogurt offerings as well. Seeking to meet the demands of Atkins and South Beach diet devotees, a number of processors have developed low-carb products.
Dannon, for example, rolled out Dannon Light ‘n Fit Carb Control, containing 3 grams of net carbohydrates and 60 calories in every 4-ounce serving. Sold in four-packs, Carb Control is available in four flavors — Strawberries ‘n Cream, Peaches ‘n Cream, Rasp­berries ‘n Cream and Vanilla Cream.
Minneapolis-based branded category leader Yoplait threw its hat into the low-carb ring with the introduction of Yoplait Ultra, a 6-ounce cup yogurt featuring 8 grams of carbs and 5 grams of sugar. Current varieties include Strawberry Crème, Peach Crème, Blueberry Crème and Raspberry Crème.
Touted as “an excellent way for carb counters to reap the nutritional benefits of yogurt while watching their waistlines,” Wells’ Dairy’s Blue Bunny Carb Freedom features 5 grams of net carbs, 3 grams of fat and 90 calories. Because it’s made with Splenda-brand sucra­lose, Rossiter says Carb Freedom is also ideal for diabetics and other consumers seeking to cut back on their sugar intake.
“We haven’t specifically gone out and micro-targeted the low-carb user because the opportunity is bigger than just an Atkins world,” he says. “We target more of a health-based consumer, whether that’s someone who’s a diabetic or someone who’s just looking at lowering their fat content.”
While parents certainly want to make sure their children are eating healthy, they usually don’t have to worry about fat and carb intake in early stages of development. Therefore, children’s yogurts, particularly those geared towards toddlers, are typically full-fat, full-carb fare.
Building on the immense brand loyalty of its whole milk YoBaby line, Stonyfield Farm has introduced iron-fortified YoBaby Plus Fruit and Cereal, a cup product that combines Swiss style yogurt with organic apple puree on the bottom. According to Pete Lewis, product manager for kids and baby products, this particular line extension was developed after it was discovered that some parents were mixing YoBaby with infant cereal. In effect, Stonyfield was able to cut out the middleman, providing consumers with a product that features the same end result without all the extra effort.
“It’s a very convenient way for mothers to provide a very nutritious food that also has an additional component — iron — which is lacking in many baby and toddler diets,” Lewis says. “Also, it fits perfectly with what Stonyfield is trying to bring to the category, which is to be innovative in the health arena and to be an organic product.”
Seeking to reach kids with the cartoon characters they love to watch, Wells’ Dairy has partnered with Disney Consumer Products Worldwide, Burbank, Calif., to produce calcium-fortified Yo-Pals yogurt and Swirl’n Magic. Geared toward preschoolers, Yo-Pals features a Winnie the Pooh story under the lid, while Swirl’n Magic aims to please kids age 4 to 8 with Poppin’ Flavor Crystals, which produce a colorful popping swirl when stirred into the yogurt.
According to Bill Haines, vice president of product innovation for Rosemont, Ill.-based Dairy Management Inc., these kinds of investments in research and development are important if the yogurt category is going to successfully re-position itself for the kind of steady growth it enjoyed over the last decade. “Yogurt is a category that’s ripe for product innovation and that speaks to the potential for some good growth trends in the long-term,” he says.  
Cottage Industry
While yogurt processors are busy developing low-carb offerings, cottage cheese manufacturers have the advantage of already producing a naturally low-carb dairy food. The challenge lies in communicating those low-carb properties to consumers.
“When you’ve got a product that fits a niche for a health issue, you need to talk about it, promote it, sample it, and get people to try it again for the first time,” says Molly Murphy, marketing and sales director, Quality Chekd Dairy Association, Naperville, Ill.
Unfortunately, Murphy says she has yet to see anyone rise to the challenge. Consequently, most dairies report no significant increases in their cottage cheese sales, despite the trend towards low-carb foods.
“We haven’t seen this amazing rush to cottage cheese as the new silver bullet for low-carb dining or anything,” says Jed Davis, director of marketing, Cabot Creamery Cooperative, Cabot, Vt. “The folks who already used cottage cheese continue to use it, but I would say that the low-carb craze has done more for snacking cheese than it has for cottage cheese.”
Not everyone agrees. Old Home’s Holdsworth cites “pretty dramatic gains” in his company’s cottage cheese sales. Likewise, Betsy Watson, marketing director for Des Moines, Iowa-based Anderson Erickson Dairy Co., reports double-digit increases in cottage cheese sales. She credits the whole low-carb craze for helping consumers rediscover cottage cheese.
Indeed, after several consecutive years of declining sales, cottage cheese did seem to enjoy a slight rebound during the 52-week period ending May 16, 2004, rising 1.6 percent in dollars and 1.2 percent in units in throughout supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, according to IRI.
Although that growth could certainly not be described as vigorous, Davis says the fact that this past year’s sales figures are relatively flat, rather than down, should be viewed as a victory. But the opportunity to boost cottage cheese sales even further by promoting its low-carb properties has processors understandably excited.
“This is a really great positioning opportunity to let people know that cottage cheese is naturally low in carbs because oftentimes, they don’t think of it in terms of carbs and they don’t necessarily think of it as an alternative snack,” says Sandy Kelly, director of marketing, Shamrock Farms, Phoenix. “We need to ask people who have yogurt everyday whether they have thought about the sugar content and then suggest that they might want to try cottage cheese instead.”
Answering the demand for products with less sugar and fewer carbs, Shamrock introduced two no-sugar-added varieties of its single-serve cottage cheese with mixed-in fruit. Sold in 5.5-ounce cups, the Splenda-sweetened No-Sugar-Added Strawberry Banana and No-Sugar-Added Apple Cinnamon contain 10 grams of carbs and 75 percent less sugar than regular yogurt.
Kelly says sales of single-serve cottage cheese are incremental, even though it’s likely the same consumer buying the single-serve cups and the traditional tubs. “A lot of people pick up the larger tub for their family and then opt for single serve when they want to take it on the go with them,” she says. “They’re looking for something different in terms of having a quick snack and with these products, they don’t have to mix in their own fruit; it’s all ready for them.”
When it comes to marketing its cottage cheese, Shamrock openly targets moms, seeking to help them understand the nutritional aspects of the product, particularly in comparison with the more widely accepted healthy kids snack, yogurt.
While he agrees that taking a page from the yogurt playbook and building up a following from an early age would be beneficial for cottage cheese, Dennis Roberts, sales manager for Foster Farms Dairy, Modesto, Calif., believes processors have their work cut out for them. “Anything you can do to get a product into the hands of consumers early on and extend that life cycle is a great thing,” he says, “but getting kids to eat cottage cheese is pretty tough.”
Before cottage cheese processors can even begin to dream about achieving the same kind of success that yogurt processors have enjoyed, they must address many of the same issues as those addressed by yogurt two decades ago — namely, a unique taste and texture that’s not necessarily mainstream. That advice comes from Davis, who reveals that Cabot is keeping an eye on other processors’ R&D efforts involving flavored cottage cheese.
Among them will surely be Anderson Erickson, which is about to launch a product that Watson says will open the door to flavored cottage cheese for the company.  Though she could not reveal specifics at press time, Watson called the new 24-ounce product “unique” and said it would match up well with the trend toward low-carb/high-protein foods.
Thinking Outside the Tub
That trend should bode well for sour cream and dips as well. Like cottage cheese, however, both categories failed to achieve any significant gains in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, during the 52-week period ending May 16, 2004. In fact, both categories experienced losses, according to IRI, which reported sour cream sales down 0.5 percent in dollars and 1.5 percent in units and refrigerated dip sales down 0.8 and 3.3 percent, respectively.
Davis blames high prices for the poor performance. But Ron Schroeder, director of marketing for Swiss Valley Farms, Davenport, Iowa, claims poor economic conditions have actually increased demand for such products. “When the economy is down, people reach out for smaller indulgences,” he says. “They may not be buying a new car or going on an exotic vacation, but they are enjoying some of the smaller indulgences like snacking.”
So consumers don’t run out of options when looking for something in which to dip their favorite snacks, Anderson Erickson recently rolled out new Southwestern French Onion Dip, which relies on chipotle peppers to give it an extra kick. Plymouth, Wis.-based Sargento Foods, meanwhile, introduced Sargento Cheese Dips, positioned for adult snacking or a light meal. Available in convenience stores, dollar stores and other alternate channels, the shelf-stable product features 2 ounces of cheddar cheese dip, accompanied by either pretzels, tortilla chips or bagel chips.
In spite of such inventive new products, dips and sour cream maintain the image of being special-occasion foods. Indeed, Davis reports that just 10 to 12 percent of the population consumes dip on a regular basis. The vast majority uses it only when entertaining.
The key to getting consumers to use both sour cream and dip more often, say processors, is to encourage consumers to find new ways to incorporate it into their cooking. Watson says Anderson Erickson has heard from customers who have taken to putting dip on their hamburger bun in order to give the sandwich a “fun kick and a different flavor.”
“It’s just thinking about dip and sour cream a little bit differently and how you can use it in your cooking, rather than other products like mayonnaise,” she says. “Our goal is to give them a whole new way to think about it, and then maybe they’ll start coming up with creative ideas on their own.”  df

Top 10 Yogurt Brands*
  $ Sales
(In Millions)
% Change
vs. Year Ago
Dollar
Share
Unit Sales
(In Millions)
% Change vs.
Year Ago
Total Category $2,685.4 6.3% 100.0% 3,093.4 2.9%
Private Label 328.6 0.8 12.2 574.8 2.0
Yoplait 272.5 -2.3 10.1 411.4 -1.8
Yoplait Light 161.2 9.1 6.0 245.8 9.5
Dannon Light ‘n Fit 159.1 2.1 5.9 203.4 7.1
Dannon Danimals 133.1 7.1 5.0 56.5 -1.8
Yoplait Go-Gurt 123.8 3.9 4.6 46.5 3.2
Yoplait Trix 93.5 0.5 3.5 37.1 0.4
Yoplait Whips 85.8 -5.1 3.2 133.8 0.8
Dannon Fruit on the Bottom 81.0 157.2 3.0 132.7 178.1
Yoplait Nouriche 79.8 164.5 3.0 49.1 172.5
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending May 16, 2004.
Source: Information Resources Inc.
Top 10 Cottage Cheese Brands*
  $ Sales
(In Millions)
% Change
vs. Year Ago
Dollar
Share
Unit Sales
(In Millions)
% Change vs.
Year Ago
Total Category $867.4 1.6% 100.0% 418.1 1.2%
Private Label 311.6 -1.1 35.9 160.1 -0.6
Breakstone 81.5 11.2 9.4 31.6 10.9
Knudsen 76.6 2.1 8.8 29.0 -2.0
Breakstone Cottage Doubles 27.3 6.9 3.1 24.4 8.3
Friendship 27.3 4.9 3.1 13.4 5.2
Dean’s 26.0 -1.9 3.0 12.2 -2.0
Hood 22.3 103.3 2.6 10.7 96.3
Light ‘n Lively 19.2 -2.3 2.2 7.5 -2.3
Prairie Farms 18.4 17.0 2.1 9.0 20.2
Hiland 17.0 -4.5 2.0 8.7 -5.6
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending May 16, 2004.
Source: Information Resources Inc.
Top 10 Sour Cream Brands*
  $ Sales
(In Millions)
% Change
vs. Year Ago
Dollar
Share
Unit Sales
(In Millions)
% Change vs.
Year Ago
Total Category $648.7 -0.5% 100.0% 441.7 -1.5%
Private Label 187.5 -5.5 28.9 147.5 -6.9
Breakstone 100.8 -0.4 15.5 70.1 1.5
Daisy 70.5 20.5 10.9 41.9 18.9
Knudsen Hampshire 51.0 -4.3 7.9 22.9 -6.7
Daisy Light 28.1 9.8 4.3 16.8 8.9
Friendship 13.1 10.8 2.0 11.8 9.9
Knudsen 10.5 -14.4 1.6 5.3 -16.8
Dean’s 9.8 -8.0 1.5 7.4 -6.7
Cacique 9.5 -2.1 1.5 2.8 -2.2
Tillamook 9.2 14.9 1.4 5.5 13.9
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending May 16, 2004. Source: Information Resources Inc.
Top 10 Refrigerated Dip Brands*
  $ Sales
(In Millions)
% Change
vs. Year Ago
Dollar
Share
Unit Sales
(In Millions)
% Change vs.
Year Ago
Total Category $387.9 -0.8% 100.0% 194.9 -3.3%
T. Marzetti 73.3 0.2 18.9 24.6 -2.3
Private Label 65.5 -1.2 16.9 41.5 -5.2
Dean’s 49.5 16.3 12.8 29.0 13.4
Kraft 30.8 -11.7 8.0 19.0 -12.3
Heluva Good 27.9 8.2 7.2 16.0 9.5
Classic Guacamole 18.2 6.9 4.7 4.7 0.6
Marie’s 9.6 -15.8 2.5 3.1 -19.9
Calavo 4.7 -22.3 1.2 1.2 -24.8
Bison 4.7 -4.4 1.2 2.9 1.8
Yoder’s 3.9 7.9 1.0 2.6 3.8
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending May 16, 2004. Source: Information Resources Inc.