Chris McDonough, marketing and R&D director of Müller UK, shares his thoughts on the yogurt market.
“There has certainly been plenty of challenges facing the industry over the past year in terms of fairly hefty increases in commodity prices, and also a number of environmental challenges, but there has also been a lot of positive news within the chilled yogurt and pot desserts (CYPD) category,” says McDonough.
Figures from Nielsen reveal that CYPD sales as a whole are up by 4.8%, adding £96m to the £2.1bn category. “Total yogurt sales have increased by 6.7%, children’s yogurts are up by 3.2% and even functional yogurt drinks – which were in decline at this point last year – grew by +1.9%, so every major sector within the category is now back in growth on an annual basis.”
The Müller brand portfolio has accounted for 30% of this upturn. Over the past 12 months, there has been strong growth from Müllerlight – up by 17% – and Müller Little Stars, growing by 19.1% – almost six times the children’s sector increase of 3.2%.
Healthy eating trends
Müller UK cites a number of factors that are contributing to volume and value growth. Although value (+6.7%) is growing well ahead of volume in the yogurt sector (+1.5%), due in part to a combination of general food price inflation and less focus on aggressive deep cut price promotions, the company says that increased penetration and consumption are also contributing to the growth. It attributes this to healthy eating trends, high levels of marketing investment by manufacturers and an increase in usage occasions, but the company believes there’s still an enormous potential for growth.
“We’ve come a long way in two decades," says McDonough. "In terms of penetration levels, most households (91% – TNS) in the UK now purchase yogurt, but per capita consumption is still way behind the European average and that's where the opportunity to grow the category lies.
“When yogurt first became widely available in the UK, it was just standard yogurt which was by and large consumed solely as a dessert. Today, we have more types of yogurts to choose from to meet different consumer needs and changes in lifestyles. We’ve got functional yogurts, everyday yogurts, indulgent yogurts as well as yogurts specifically aimed at children and even breakfast yogurts.
“Because of the variety of different styles of yogurt available, they play a much bigger role in consumers’ diets, but further expansion of usage occasions is undoubtedly one of the keys to unlocking the full potential of the category. Breakfast and snacking in particular are prime target occasions.”
So far, the recession hasn’t had a major impact on consumer purchasing habits, though there have been signs of a slowdown in growth rates over the last 4-12 weeks: “There hasn’t been a significant shift in people’s shopping patterns,” explains McDonough. “They're buying in the same quantities and the same frequency. There has been a slight move away from the luxury end of the yogurt sector – sales in the top third price bracket are down a little, while sales are up in the mid to lower sectors. This is partially attributable to people opting out of organic yogurts that sell at a price premium, but some is probably due to an element of general belt tightening and trading down.”
Turning to consumer trends, Chris McDonough says: “Among the key category trends is the consumer quest for great taste, naturalness and simplicity, and a desire to get back to basics which is also being experienced in many other grocery categories.
“There’s also a huge amount of consumer focus on the provenance of food in general and the dairy category is no exception. People want to know where their food is sourced, they want to know how many miles it has travelled and they're more concerned about animal welfare and husbandry than ever before. They're increasingly looking to suppliers and manufacturers to provide this information.”
Switching to brand activity, McDonough adds: “In terms of product developments over the past year, there has been a lot of renovation activity taking place through brand extensions, new flavours and repackaging, all of which keeps the category moving forward.”
Chris McDonough concludes: “Last year, Müller accounted for almost 30% of the CYPD category growth (Source: IRI) and we also accounted for a 25% share of the category’s £89.7m media spend in 2008 (Source: Ad-dynamix). We're continuing to focus on growing and developing the category through continued investment which will build brand equity, bring new users into the category, encourage lapsed users to re-appraise our brands and increase useage occasions.”
Chris McDonough is marketing and R&D director at Müller UK, Britain’s leading yogurt maker.
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