Quite possibly the greatest crossover success from the health-food store to the mainstream supermarket, yogurt’s popularity among American consumers continues to grow.

In recent years, yogurt makers have significantly boosted yogurt’s consumption through a variety of initiatives and R&D efforts designed to encourage yogurt-eating at just about any time of time, as a dessert or between-meal snacks. They’ve also developed a thriving kids’ consumer base, thanks largely to innovative products, such as Yoplait’s Go-Gurt, Dannon’s Danimals and Stonyfield Farms’ YoBaby.

As a result, sales have risen year after year. During the 52-week period ending June 18, 2006, sales of yogurt in supermarkets, drugstores and mass merchandisers, excluding Wal-Mart, rose 5.3 percent in dollars and 4.6 percent in units, according to Chicago-based Information Resources Inc. (IRI).

The seemingly unstoppable nature of yogurt’s comes as no surprise to Ron Schroder, director of marketing, Swiss Valley Farms, Davenport, Iowa. He points to the product’s numerous positive attributes. “Yogurt is ideally positioned for today’s consumer needs,” he says. “It’s got fantastic health benefits, it’s convenient and it’s portable.”

TOP 10 INDIVIDUAL YOGURT/YOGURT DRINK BRANDS*
	$ Sales (In Millions)	% Change vs. Year Ago	Dollar Share	Unit Sales (In Millions)	% Change vs. Year Ago
Total Category	$3,078.5	5.3%	100.0%	3,484.5	4.6%
Refrigerated Yogurt (Cup)	2,640.3	4.8	85.8	3,254.7	4.0
Refrigerated Yogurt Drinks	438.2	8.3	14.2	229.9	13.3
Private Label	362.2	3.3	11.8	639.2	3.0
Yoplait Original	341.2	11.4	11.1	506.8	7.9
Yoplait Light	251.9	26.1	8.2	396.3	25.4
Dannon Light n Fit	211.5	15.7	6.9	260.0	11.9
Stonyfield Farm	116.5	22.1	3.8	89.6	17.1
Yoplait Go-Gurt	104.1	-15.3	3.4	37.2	-18.7
Dannon Danimals	100.5	1.8	3.3	36.6	-3.1
Yoplait Whips	94.4	15.7	3.1	153.7	17.2
Yoplait Trix	85.5	-7.0	2.8	33.5	-7.1
Dannon Fruit on the Bottom	81.1	-1.6	2.6	135.0	-2.4
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending June 18, 2006. SOURCE: Information Resources Inc.

It’s the health benefits of yogurt which are front and center these days, as processors have embraced the trend toward so-called “functional yogurts,” specifically those yogurts which offer added benefits beyond the standard calcium, protein and live and active cultures.

Kyle Duea, marketing manager for Yoplait USA Inc., the Minneapolis-based subsidiary of General Mills Inc., agrees that added health benefits are currently one of the major focuses of the category, although he argues that “all yogurt could be described as functional.”

Widely available throughout Europe for two decades, functional yogurts have only recently begun showing up on American shores. Introduced initially in France in 1987, Dannon’s Activia contains billions of beneficial cultures, including the company’s proprietary Bifidus Regularis. According to Andreas Ostermayr, vice president of marketing, The Dannon Co., White Plains, N.Y., Activia is clinically proven to help regulate the digestive system in just two weeks, when eaten on a daily basis.

Recognizing the importance of digestive health, Antioch, Calif.-based Brown Cow Farm recently introduced Brown Cow Low Fat Yogurt with Fruit & Whole Grains. The mix of lowfat yogurt, real fruit, whole grains and sunflower and flax seeds also features a unique live, active culture blend of S. thermophilus, L. bulgaricus, L. acidophilus, and Bifidus, widely considered to be beneficial in digestion.

Meanwhile, CoolBrands International unveiled Breyers Light Probiotic Plus Yogurt, containing Bifidobacterium cultures, which have been shown to help maintain the balance of bacteria in the intestine. According to Matt Smith, vice president of marketing, it’s all about giving consumers what they want. “Consumers’ demand for healthy yogurt goes beyond just vitamins and nutritious ingredients,” he explains. “It also includes health benefits like aiding in digestion.”

Likewise, Swiss Valley Farms rolled out new and improved versions of its lowfat and light yogurts, both containing inulin, an emerging source of fiber derived from the chicory root. Containing 100 calories, the light variety is fat free with no sugar added, another attribute which keeps popping up in the yogurt category. Introduced at the end of 2005, for example, Dannon’s reformulated Light ‘n Fit nonfat yogurt is sweetened with Splenda. Meanwhile Londonderry, N.H.-based Stonyfield Farm uses erthritol — an all-natural, no-calorie alternative — in the company’s light yogurt line.

While a number of no-sugar-added yogurts are now available, Miriam Erickson Brown, president and chief executive officer of Anderson-Erickson Dairy Co., Des Moines, Iowa., balks at the suggestion of producing a kid-oriented sugar-free product.

“We don’t want to ruin the appeal of yogurt for kids by taking out what they like,” she says. “I would rather have them get a little sugar and get all the nutrients of yogurt, rather than picking up a nutrient-empty alternative snack product.”

Stonyfield Farm boosted the nutritional value of its kids’ line late last year, unveiling YoBaby Plus Fruit & Cereal with DHA, an omega-3 fatty acid considered an essential building block for optimal brain and eye development in babies and toddlers. In Hayward, Calif., Omega Farms, a subsidiary of Pacific Cheese, sells four varieties of yogurt — plain, peach, strawberry, and vanilla — all containing 75 milligrams of EPA/DHA omega-3 fatty acids. According to Cindy DiFerdinand, corporate nutritionist and director of sales, dairy products are the ideal carrier for the fatty acids.

In Canada, Dannon unveiled Cardiva fat-free yogurt with omega-3 fatty acids. Asked whether we can expect to see the product in U.S. supermarkets anytime soon, Ostermayr is tight-lipped: “We are not at liberty to speculate about product introductions before they’re announced.”

Considering yogurt’s popularity and the potential windfall that a successful new product introduction could produce, the majority of yogurt processors are not about to tip their hand with regard to ongoing R&D efforts. It’s easy to justify investments in R&D when a category has enjoyed such long-term growth, however.

“The sky is the limit with yogurt,” Brown says. “When you have a category that’s growing like that, the sky’s the limit. The possibilities are endless.”

Unfortunately, not all cultured products have enjoyed the same kind of seemingly non-stop growth as yogurt. Take cottage cheese, for example. The ailing category’s struggles continued this past year, as hopes of any kind of lasting positive impact from the low-carb craze were all but dashed. According to IRI, dollar sales of cottage cheese fell 2.2 percent and unit sales fell 1.8 percent during the 52-week period ending June 18, 2006.

“It fascinates me that the low-carb craze wasn’t that trigger that all of a sudden led to a doubling of cottage cheese demand,” says Jed Davis, director of marketing, Cabot Creamery Cooperative, Cabot, Vt. “The fact that it wasn’t makes me more concerned that this is by no means going to be an easy category to ring out even high single-percentage growth on a broad market basis.”

In an action that symbolically hammered the final nail in the low-carb coffin, Le Mars, Iowa-based Wells’ Dairy Inc. discontinued its Blue Bunny Carb Freedom Cottage Cheese. Not everyone is convinced that the low-carb craze failed to provide a boost to cottage cheese, however. Brown claims that low-carb dieting “brought a huge awareness” to the category which continues to this day. In particular, she says, the craze brought younger consumers to the category, as they sought out low-carb, high-protein foods.  

Anyone who’s been following the category in recent years is well aware that the aging cottage-cheese consumer is of paramount concern. While marketers bat around ideas of how to entice younger consumers — particularly children — to the category, processors say it’s hard to justify any significant investment in R&D when demand is so low.

There are exceptions, however. Faced with the choice of whether to invest in new cottage cheese-making equipment or get out of the category altogether, Cabot took a chance and installed a new closed-vat system in a special room dedicated to cottage cheese production. According to Davis, the new system not only allows Cabot to produce a more consistent, high-quality product, but it also opens the door to future innovation, including flavored cottage cheese.

“We’ve always kept half-an-eye on flavored cottage cheese, but we just weren’t in a position where we could consider that type of product, given manufacturing constraints” he says. “We’re hopeful the new equipment will provide some opportunities for us to look at opportunities that our cottage cheese-making facility just didn’t support before.”

TOP 10 INDIVIDUAL COTTAGE CHEESE BRANDS*
	$ Sales (In Millions)	% Change vs. Year Ago	Dollar Share	Unit Sales (In Millions)	% Change vs. Year Ago
Total Category	$847.8	-2.2%	100.0%	406.2	-1.8%
Private Label	303.8	-2.4	35.8	156.1	-2.8
Breakstone	86.2	2.2	10.2	32.9	1.3
Knudsen	72.9	-3.6	8.6	27.0	-4.2
Breakstone Cottage Doubles	33.5	16.9	3.9	31.2	19.2
Dean’s	28.1	1.7	3.3	12.4	1.3
Friendship	27.5	-0.5	3.2	13.5	2.0
Hood	22.7	0.4	2.7	10.1	-2.0
Prairie Farms	17.4	-8.9	2.1	8.3	-7.2
Light ‘n Lively	16.0	-9.0	1.9	6.1	-9.4
Knudsen Cottage Doubles	12.9	23.6	1.5	10.4	27.5
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending June 18, 2006. SOURCE: Information Resources Inc.

Even if Cabot does embark on a flurry of new product development, Davis says the company remains somewhat handcuffed by high slotting fees that make product introductions prohibitively expensive, particularly in a stagnant category like cottage cheese.

“We’re confident we can make a really dynamite flavored cottage cheese,” Davis says. “It’s just a matter of whether we can foresee adequate sales to make the payoff on some of these slotting fees be appropriate.”

At least Cabot is now in the position to physically produce new varieties of cottage cheese. Other dairies simply don’t have that luxury. Brown says a variety of cottage cheese innovations are on her “wish list,” but the company’s production is simply not set up for such endeavors at this time.

Meanwhile, Swiss Valley was experiencing success with its single-serve 1% cottage cheese, introduced in fall 2004, but changes in the company’s production plant eliminated its ability to produce that particular offering.

Despite numerous challenges, processors remain hopeful that cottage cheese will someday reap the same kinds of rich rewards as yogurt. Remarks Davis: “It’s so hard not to point to yogurt’s success and say, ‘Et tu, cottage cheese?’”

While cottage-cheese makers are free to dream of kids begging their parents to buy their product, dip makers would be happy just to see more of a year-round trend in sales. Because dip is largely viewed as a special-occasion product, processors say they experience definite spikes at certain times of the year, such as Christmas, the Fourth of July and Super Bowl Sunday.

TOP 10 INDIVIDUAL SOUR CREAM BRANDS*
	$ Sales (In Millions)	% Change vs. Year Ago	Dollar Share	Unit Sales (In Millions)	% Change vs. Year Ago
Total Category	$679.6	-2.0%	100.0%	437.2	-1.5%
Private Label	194.7	-4.4	28.5	148.6	-3.1
Daisy	142.5	15.0	21.0	80.4	16.3
Breakstone	100.7	-4.4	14.8	67.6	-2.8
Daisy	50.6	-1.5	7.5	23.0	2.3
Knudsen Hampshire	13.8	2.3	2.0	11.4	5.1
Daisy Light	12.2	3.2	1.8	3.4	4.3
Friendship	10.9	1.2	1.6	5.4	4.5
Knudsen	9.1	-6.3	1.3	6.0	-4.5
Cacique	8.2	-7.0	1.2	4.7	-9.7
Dean’s	6.9	-11.5	1.0	4.9	-11.3
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending June 18, 2006.SOURCE: Information Resources Inc.

Not content with the number of holidays for which consumers purchase dip, Heluva Good LLC, a Sodus, N.Y.-based subsidiary of Chelsea, Mass.-based HP Hood LLC., has taken to pushing “non-traditional holidays,” like Halloween, according to Jay Snedeker, general manager and vice president of sales.

“Halloween becomes a bigger and bigger holiday every year,” Snedeker says. “They don’t get the day off, but a whole bunch of people party on Halloween. Raising that awareness level and timing our promotions to fit in with the Halloween timeframe has been pretty successful for us.”

Anderson-Erickson, meanwhile, views those spikes as opportunities to expose more consumers to their products by increasing their sales efforts and tailoring their marketing messages to convey the wide variety of dips available. That includes their newest dip variety, French Onion Garlic, an offering Brown says has actually resulted in “love letters” from consumers. In raving about the product, consumers describe the many ways in which they are using it, including making “awesome mashed potatoes.” According to Brown, that’s not unusual, as consumers frequently recount using their dips in “non-traditional ways” — on sandwiches or burgers, for example.

TOP 10 individual refrigerated DIP BRANDS*
	$ Sales (In Millions)	% Change vs. Year Ago	Dollar Share	Unit Sales (In Millions)	% Change vs. Year Ago
Total Category	$403.5	0.7%	100.0%	183.9	-3.0%
T. Marzetti	80.9	0.9	20.1	26.5	-0.5
Private Label	79.6	10.8	19.7	40.3	-0.5
Dean’s	45.1	-5.2	11.2	26.1	-4.8
Heluva Good	30.3	2.4	7.5	16.2	6.2
Kraft	24.8	-9.8	6.1	15.7	-8.7
Classic Guacamole	17.3	2.2	4.3	4.3	-1.4
Calavo	7.0	64.4	1.7	1.8	63.0
Litehouse	5.3	12.0	1.3	2.1	6.7
Salads of the Sea	4.9	-2.7	1.2	1.4	-10.6
Bison	4.3	-6.1	1.1	2.6	-6.6
* Total sales in supermarkets, drug stores and mass merchandisers, excluding Wal-Mart, for the 52-week period ending June 18, 2006. SOURCE: Information Resources Inc.

Versatility is at the heart of marketing efforts for IncreDiples, a line of lowfat, yogurt-based snack dips from Wells’ Dairy. Marketed as a vegetable/cracker/wing dip, salad dressing, sandwich spread or recipe ingredient, IncreDiples have proven so successful that Wells already has several new flavors “on the drawing board,” according to Troy Davis, Wells’ marketing manager for retail dairy.

Citing the growth in the Hispanic food market, Pete Kondrup, general manager of Westby County Creamery, Westby, Wis., says his company has a Jalapeño Cheddar dip in the works that could possibly hit store shelves later this year. Swiss Valley has already experienced success with a new Hispanic-oriented flavor, Chipotle Ranch, as well as a new Garden Vegetable variety. And, recognizing that consumers frequently buy a tub of dip, use it once or twice, and then throw out the remainder once the use-by date passes, Swiss Valley has converted its entire dip line from 16-ounce to 8-ounce tubs.

“Taking down the size not only makes it more convenient from a usage standpoint, but it also takes the price point down,” Schroder says. “Our everyday price point on dips is now 99 cents, which is a fairly low barrier to trial or purchase.”

Dip makers say consumers would be more open to trying refrigerated dips if they were merchandised near popular carriers, like chips or crackers. While Kondrup says he’s seen some stores place small refrigerated cases of dip in the snack aisle, he concedes that’s a prohibitively expensive undertaking for many retailers. That said, dip makers would still like to see more favorable placement of their products.

“From a merchandising standpoint, there’s something really compelling about being able to be right there,” says Cabot’s Davis. “In the politics of the dry grocery department, too often there is refrigerated grocery and there’s dry grocery and never the twain shall meet — or at least we haven’t seen as much marrying between the two as we would like.”