Chobani notched up double-digit US growth in 2016, has ‘no plan’ to head back to Europe right now
Speaking to FoodNavigator-USA as Nielsen revealed that US retail yogurt category dollar sales dipped 0.9% to $7.679bn, and unit sales slumped 5.4% in the 52 weeks to December 31 (all outlets combined, plus c-stores), McGuinness said 2016 was “a huge year for us; we beat all of our targets, and have a lot of steam and momentum going into 2017. Last year, we hit our highest share; and we're still the #1 Greek yogurt brand with a distance."
Flip continued to go from strength to strength, with four new flavors (Peppermint Perfection, Carrot Cake Creation, Cinnabun Fun, and S'More S'mores) hitting stores this month, and a marketing campaign launching in three weeks spanning TV, digital, social media and point of sale, he added.
“Flip continues to go gangbusters with sales up close to 70% year on year [although rival Dannon pointed out that such rapid growth was “not surprising” given that Flip is still a relatively new product]. Flip is on fire and my vision of it being our next billion dollar platform for us has not changed.
“We’ve just launched four new nostalgic flavors and we’ll have new innovations in July.”
Drink Chobani exceeded all of our estimates
Drink Chobani - a new protein-packed yogurt beverage featuring fruit and probiotics that hit shelves in July 2016 – had also been a hit, he claimed.
“They have exceeded all of our estimates in terms of volume and the feedback has been phenomenal. We’re just launching four new flavors (vanilla, peach, lemon lime, pina colada) going into retailers’ January resets, so we’ll have eight SKUs in national distribution, and more innovation on the way in July in non-traditional yogurt flavors. We want to do for yogurt drinks what Chobani did for Greek yogurt 10 years ago.”
Yogurt drinks could ultimately account for 30-40% of the yogurt category
The product, which is offering “portable protein with far less sugar than smoothies,” is smooth and not chalky-tasting and has strong potential to generate incremental sales growth for Chobani in an underdeveloped category, he claimed.
“There might be a bit of cannibalization [of the yogurt business] but it’s mostly incremental growth, as you’ve got people that buy juices, smoothies and protein shakes buying them. We think that yogurt drinks could ultimately account for 30-40% of the yogurt category.”
Meze dips a tougher sell
However, Chobani’s first move outside the dairy case with meze dips (now available at grocery deli counters next to hummus), has been a tougher sell, he acknowledged.
“Deli is very different to dairy, but we're not known in deli yet. We’re kind of where we expected to be with the dips, but we love them and we’re sticking with them; the products are phenomenal and the flavors are great.”
Oats: Before its time?
Chobani Oats (launched in 2014), meanwhile, had attracted some loyal customers (if posts on Chobani’s facebook page are anything to go by) but ultimately did not resonate sufficiently strongly with consumers to retain its place on shelf, said McGuinness, who said the line was withdrawn 18 months ago.
“It was maybe ahead of its time, it had a loyal following but it wasn’t huge and we decided to phase it out."
Organic: Not on the priority list…
Asked about organic yogurt, a category in which Chobani does not yet play, he said that founder Hamdi Ulukaya’s mantra remained that of offering better food for more people, and it was hard to reconcile the brand ‘DNAA’ – delicious, nutritious, natural, affordable/accessible – with organic products that carried a significant price premium.
We have no plan to be in Europe right now
So what about Chobani’s international ambitions? Is a move to the UK - which it exited in 2013 but said it planned to re-enter with a domestic manufacturing footprint at a later date - still planned or has Brexit thrown a wrench in the works?
He said: “We have no plan to be in Europe right now, which is not to say we wouldn’t do that in the future.
“We have people all around the world asking for Chobani and we recently launched into Mexico and we have distribution deals in Central America, but the US yogurt market is still so under-penetrated that we are hyper-focused on continuing to grow the category here in terms of function and excitement.”
According to Nielsen data, dollar sales in the US yogurt market dipped 0.9% to $7.679bn, and unit sales slumped 5.4% in the 52 weeks to December 31 (grocery, drug, mass, select dollar, warehouse, military outlets combined, plus c-stores).
Dollar sales of Greek-style yogurt were down 1% to $3.559bn (units -3.1%), while non-Greek was down 0.8% to $4.119bn (units down 7.1%).
By format, dollar sales of spoonable yogurt were down 2.2% to $6.843bn (units -6.3%), while yogurt shakes and drinks were up 12% to $741,220,234 (units +13%).
Chobani tubes head to Happy Meals in SoCal
As for foodservice, Chobani continues to expand its relationship with McDonald's in southern California, where Chobani Greek yogurt now features in Fruit ‘n yogurt parfaits and McCafé smoothies at more than 800 McDonald’s restaurants, and Chobani yogurt tubes are about to get added to Happy Meals.
"We also in American Airlines, United, Delta and JetBlue flights."
General Mills: We know we have a good deal of work to do to turn around our yogurt business
His comments came as General Mills told analysts on its Q2, 2017 earnings call just before Christmas that its US yogurt business had significantly underperformed, with retail sales slumping 18% over the quarter, driven primarily by weak performances in its Yoplait Greek 100 range and the Yoplait Light portfolio.
CEO Ken Powell explained: “Retail sales for the yogurt category also turned negative in the quarter as elevated levels of merchandising generated less incremental lift and as the level of new products news slowed.”
But he added: “On a more positive note, we’re seeing good initial consumer response to our Annie’s and Liberte organic yogurts that we launched in the first quarter.“
“We know we have a good deal of work to do to turn around our yogurt business. We expect some improvement in the second half but won’t return to growth this year.
"We believe the key to success will be fundamentally shifting our portfolio through renovation and innovation [new products include Yoplait Dippers, which combine Greek yogurt with pretzels or oat bites; and Yoplait custard yogurt made with whole milk; while Yoplait Greek is being renovated].”
Ken Powell, CEO, General Mills, Q2, 2017, earnings call, December 20, 2016
Dannon: We reached a historical record market share
Rival Dannon, in turn, told FoodNavigator-USA that it continues to lead the overall US yogurt market, with Michael J. Neuwirth, senior director of public relations, noting that the sharp growth of Chobani Flip was in part a reflection of the fact that it is still a relatively new product gaining distribution, “so it's hardly surprising the growth was double digit.”
He added: “We’ll let the market share data speak for itself as well as the unprecedented level of category captainship we have earned with retailers.
“Dannon reached a historical record market share, and the launch of the Dannon Pledge marked the beginning of an amazing new journey to further improve sustainable agriculture practices, increase transparency and evolve to more natural and fewer ingredients for flagship brands.”