Greek yogurt accounted for 44% of U.S. yogurt sales in 2013 compared to just 4% in 2008. Marketers predict there is still a lot more room to grow the category in the United States.
What is the next cultured dairy product that could command such market success? If I knew the exact answer to that question I sure would not be telling you! Nonetheless, we might just get a few hints that can help answer this question if we analyze the conditions that catapulted Greek yogurt from obscurity to its enviable position today.
A perfect storm
In 2007, yogurt processors were battling for market share primarily on price. You could buy two or three 8-ounce cups of nonfat or low-fat yogurt for a dollar. To keep unit costs competitive and maintain a reasonable profit margin, yogurt manufacturers used more starches; the more expensive dairy solids were reduced to their legal minimums.
Product differentiation was of little importance. Price was king. Then larger tubs of “high-value” yogurt appeared. Higher-protein Greek-style yogurts were considered a specialty product for a narrow consumer niche, not for mainstream price-conscious consumers.
But a few individuals thought yogurt should have a different, more premium product profile. What they knew as yogurt when growing up was not being sold in supermarkets. They expected yogurt to be a naturally rich, creamy and tasty product without all the gums, starches and sugars.
On a seemingly different front, others knew that in different parts of the world such simple, naturally good-for-you yogurts could be successfully produced and marketed. At the same time, U.S. consumers were becoming increasingly aware of the obesity epidemic that was also fueling a type II diabetes crisis. Coincidentally, we were starting to hear that eating more protein might help in improving lean body mass, appetite control and the battle of the bulge.
A few entrepreneurs connected the dots and linked these market forces to a product innovation opportunity. They made a high-protein yogurt and priced it at up to three times the cost of other brands.
Undoubtedly the road to success was not without its challenges and setbacks, but no one can argue with the tremendous success of Greek yogurt. I am sure there is a whole lot more to the story, but certainly there were a few key things that helped to create this market opportunity:
- Erosion of traditional product quality to a near-commodity market mentality,
- Readily available technology to produce alternative superior tasting (clean and simple label) products,
- Growing consumer trends that demanded convenient, tasty, more healthy and natural products, particularly with higher protein content to be consumed as a satisfying breakfast, lunch, dinner or snack,
- A product category that already had a generally healthy halo that was easily amenable to capture this opportunity, and
- Individuals who were courageous enough to take business risks and persistent enough to challenge conventional wisdom and stick with it through valleys and peaks. (This was likely the most important.)
Higher milk fat: the next big thing?
So fast-forward to 2020. What type of product innovations are we now talking about that challenged conventional wisdom in 2014? Well, I can’t say for certain, but I think milk fat will play a key role.
Since the 1980s, health professionals convinced us that fat was bad. It contributed to obesity and was a risk factor in cardiovascular disease. That notion has been challenged. A Time magazine cover story in June was “Eat Butter – Scientists labeled fat the enemy. Why they were wrong.” It will take more than a magazine article to change consumer behavior, but it is significant that a mainstream consumer magazine made the case for rethinking how we view milk fat (and other dietary fat) in a healthy lifestyle.
As more scientific studies supporting the benefits of milk fat in the diet get translated to consumer news media, consumer behavior will likely change and drive the food industry to respond. Who wouldn’t want to have good reasons to consume more milk fat-containing dairy foods? Couple this with the fact that the full-fat counterparts of nonfat or low-fat cultured dairy products are clearly superior in eating quality (great taste and texture), and you have several pieces of a puzzle for the next Greek yogurt story.
So will it be higher-fat, higher-protein yogurts, cultured creams, cottage cheese, or something else that rivals the Greek yogurt market development? Will it be in a new form and in a new package with novel flavors? The answers will depend on the final piece of the puzzle, that is, individuals who can connect the dots.
Consumers are a strange bunch, so keep this in mind: As my financial advisor says, past success in the marketplace may not always be a good predictor of what will happen in the future. See you in 2020.