Low sugar Greek yogurt Two Good now a $227m brand, Light & Fit back to growth, says Danone North America
Stevia-sweetened Two Good contains no added sugar and 2g of total sugar (most of the lactose is filtered out of the milk, with cultures consuming most of the remaining sugars), and has rapidly become one of Danone’s most successful launches, Surbhi Martin, VP Greek Yogurt & Functional Nutrition at Danone North America, told FoodNavigator-USA.
“Since we launched in 2019, we’ve grown into a $227m retail sales brand [52 weeks to November 27, 2022], and in the three-year timeframe 2020 to 2023, Two Good has driven 31% of the total yogurt category’s dollar growth in that three-year period versus the prior period."
Meanwhile, 43% of Danone North America's growth in yogurt between 2019-2022 has been driven by Two Good (as of Nov 27, 2022), she revealed.
"Two Good continues to experience rapid growth through trading up our loyal consumer base, with sales up 8.4% year-on-year in the 52 weeks to Nov. 27, 2022 [IRI MULO data, total US]."
Increased competitive dynamics in low/no sugar yogurt segment
That said, growth rates have slowed down, "which is natural as brands mature and evolve," she added.
Some of the slowdown has been driven by "increased competitive dynamics in the low sugar segment [rivals Chobani and General Mills have both brought out products in this segment in recent years, although Two Good has a 23.8% share of the lower/no sugar yogurt segment in 2022, says Danone],” she acknowledged, while some has been driven by “supply challenges on some of our materials, such as lids and labels.
“However, despite some of those challenging headwinds, Two Good increased household penetration a full point in the last year, so we're now up to 7.5% household penetration.”
SPINS data, US retail sales of yogurt 52 weeks to Dec 4, 2022: Dollar sales +11.4%, units -4.9%
According to SPINS US retail data shared with FoodNavigator-USA, the overall yogurt category (spoonable and drinkable yogurt, natural enhanced and MULO/conventional grocery channels) grew 11.4% in dollar sales to $8.175bn in the year to Dec. 4, 2022, while units were down -4.9%.
In the 12 weeks to Dec 4, dollar sales were up +14.3% and units down -6.8%, reflecting inflationary pressures impacting most categories in grocery.
Dollar sales of plant-based yogurt were up 4.8% to $391.92m in the 52 weeks to Dec 4, 2022, with units down -4.7%, with all the growth coming from coconut- and cashew-based products. In the latest 12 weeks, dollar sales were up +2.1% and units down -9.3%.
Launched in January 2019, Two Good cups contain no added sugar, and 2g of total sugar.
Ingredients, Two Good Strawberry Banana: Cultured reduced fat milk, water, less than 1%: tapioca starch, pectin, natural flavors, vegetable juice & turmeric (for color), lemon juice concentrate, stevia leaf Reb M, sea salt, vitamin D3, active yogurt cultures L. bulgaricus & S. thermophilus.
Nutrition: Each 5.3oz cup has 80 calories, 12g protein, 2g sugar, and 0g added sugar
Image credit: Danone North America
Two Good Smoothies: Incremental growth?
Danone is also hoping its recent move to take the brand into the drinkables segment with Two Good smoothies (70 cals, 10g protein, 3g sugar per 7oz bottle) will bring incremental growth, she said.
“We launched Two Good Smoothies in October of 2022 and we're really excited about taking that low sugar proposition into the convenient portable format of a low sugar drink, which has really been lacking in the adult yogurt drink segment.
“Low or zero sugar [spoonable] yogurt has 25% household penetration, whereas low sugar adult yogurt drinks only have a household penetration of about 0.5%, so that tells us there's a huge opportunity for Two Good in that segment, and we've gained great distribution on the smoothies in the first six months.
“In addition, we're planning to continue to grow our Two Good core range by investing more media to drive awareness of the brand, so we'll be investing two and a half times in media and consumer promotions in 2023 versus 2022.”
She added: “We've also worked hard to ensure security of supply so that we can fully address some of the out-of-stock issues that was a headwind to our growth in 2022.”
Light & Fit back in growth
Asked about the performance of other brands in her remit, Martin said: “Our Light & Fit zero sugar innovation that we launched in the summer of 2022 is another great example of us innovating across our yogurt portfolio beyond just Two Good to be able to meet that consumer need for great taste and low or zero sugar.
“Our Light & Fit portfolio has returned to growth, and since the launch of zero sugar, we've attracted new households to the Light & Fit brand and driven some solid household penetration in the first six months of launching zero.
"For the latest five weeks ending Jan. 1, 2023, Light & Fit dollar sales are up 14.7%."
Meanwhile, Oikos Triple Zero (zero artificial sweeteners, zero fat, zero added sugar) and high protein line Oikos Pro are also performing well, she claimed. “We are really pleased by the growth we've seen in the last year on Oikos in totality driven by the performance of Pro and Triple zero and we will also be returning to the Super Bowl in 2023 for the fourth time."
FDA 'healthy' definition'
Asked about the FDA’s proposed new definition of ‘healthy' for food labeling purposes, which would prevent yogurts containing more than 2.5g added sugar from making 'healthy' claims, she said:
"Both Two Good and Light & Fit Zero Sugar would be in the 'healthy' category under the new guidelines when it comes to sugar."
A Danone North America spokesperson added: "We will prioritize new reduced-sugar, low-sugar, and no-added-sugar options in children’s products, pledging 95% of them will have less than 10 grams of total sugar per 100 grams by 2030."
While a sizeable chunk of ‘ugly’ or ‘imperfect’ produce that isn’t pretty enough for grocery retail markets goes into industrial food processing markets (jams, juice etc), there is a third category of fresh produce that for various reasons doesn’t get into either stream, and ends up as animal feed or waste, said Martin, who said Two Good is expanding its partnership with Full Harvest to use ‘rescued’ produce.
“We’re using verified rescued fruit from Full Harvest, which runs a b2b online marketplace that connects farmers with commercial produce buyers, where they can purchase either imperfect or surplus produce that would otherwise go to waste.
“We've expanded beyond the original Meyer lemon flavor to include pumpkin and mandarin orange seasonals and to date we've rescued 500,000lbs of produce that would otherwise have been wasted.”