The # Canadian Greek Yogurt

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1 1 The # Canadian Greek Yogurt * GREEK, THE SEGMENT WITH THE STRONGEST GROWTH IN THE YOGURT CATEGORY.** $ EVOLUTION GREEK SEGMENT IN CANADA WHY IS OIKOS THE FAVOURITE? Exquisite creamy texture Protein coming naturally from fresh milk Low in fat Simple ingredients: Oikos 0% M.F. plain yogurt contains only 2 ingredients, skim milk and active bacterial cultures Give your customers lots of what they love. * A.C. Nielsen 52 weeks ending Jan. 11, 2014, National Grocery+Mass+Drug xnfld, Total Greek/Organic Greek ** A.C. Nielsen, National Grocery+Mass+Drug xnfld, Total Yogurt Category Except Plain 2% M.F.

2 RETAIL INTELLIGENCE YOGURT A superfood that s also super popular and profitable looks like things couldn t be much better for yogurt. It turns out, however, that retailers may not be realizing the full potential of this dairy case gem. Opportunities for real category growth exist, say the experts. Hint: it all comes down to space. Making More Space for Yogurt There are so many reasons to love yogurt. Consumers favour yogurt for its delicious taste and abundant nutritional virtues, while retailers appreciate it for its consistently strong sales, which have helped this once niche category become one of the strongest, most dynamic performers in the refrigerated dairy section. A quick look at the numbers reveals consumers now spend more than $1.5 billion on yogurt at retail outlets across this country and that s up 6%, according to Nielsen s figures, for the latest 52 weeks ending December 14, Yogurt s volume share is also growing, at 2% While consumption and, correspondingly, sales have been climbing over the past decade, the reality is that grocery store space dedicated to this dynamic category, has simply not kept pace. The fact of the matter is the yogurt category has exploded over the last 10 years. And when we look at the evolution of space, space for yogurt grew as the stores grew, no more, no less, says Johnatan Lessard, Director Shopper Solutions, Danone Inc. in Canada, a company that competes in the market with popular brands like Activia, Oikos, Silhouette and Danino. In other words, although yogurt grew more dramatically than other categories, it didn t grow its share of the dairy case. With limited space, rationalization has typically been the retailer s go-to strategy for managing the yogurt category. When new products are introduced, the reflex has been to make room for them by purging existing yogurt SKUs, rather than adding more space. With this strategy you quickly get to a point where you are removing items with high velocity that probably rank quite high compared to those in other categories, says Lessard. The imbalance this practice is creating, he adds, is jeopardizing assortment and impacting overall growth. The Problem with Rationalization To illustrate the high cost of rationalization in the yogurt category, Lessard points to Greek yogurt. It seems the very segment that is generating so much buzz is also contributing to some of the category s current challenges. At each launch window the vast majority of products being introduced are Greek, says Lessard. Perhaps this is no surprise given Greek yogurt s meteoric rise in recent years. But what s happening, he says, is retailers are rationalizing products in the other segments notably active health, weight management and traditional to accommodate more Greek items. A PARTNERSHIP MARKETING SUPPLEMENT SPONSORED BY FEBRUARY 2014

3 Here s to 10 years of healthy growth. Double-digit * growth. #1 yogurt for the last 7 years. To celebrate, here s new Activia Greek. Nielsen MarketTrack, period ending Dec. 14, * On Activia regular range representing 88% of TL Activia.

4 RETAIL INTELLIGENCE YOGURT Penetration Share of Requirement Segmentation Yogurt Category Category: +6% +2% $ Shr Vol Shr (kg) -6% -6% 65% 70% -9% -10% 4% 3% -2% -3% 24.1 Active Health Greek Weight Kids Traditional Management As a result, these other segments are struggling. Take the active health segment, for example, which includes probiotic yogurts like the enormously popular Activia. While Activia continues to be a very strong performer, the active health segment is in decline (-6% in both dollar share and volume). This, says Lessard, is a direct result of removing SKUs from the assortment. A similar trend can be observed in the weight management and traditional segments. When making assortment decisions, Lessard says retailers should be mindful of the shopper dynamics at play. When we start to look more closely at shopper metrics such as penetration, we see that in the weight management segment, for instance, despite a decline it is still a segment that reaches 63% of shoppers, says Lessard. He adds that penetration for active health yogurt is 57% while traditional is 51%. The insight is that these mature segments are still the segments reaching the most shoppers. One reason for this is that they are still the everyday affordable solution for many Canadians. Share of requirement is another shopper metric retailers should consider when determining their assortments. Basically a loyalty measure, share of requirement shows how much of a shopper s yogurt requirements are fulfilled by a particular segment. Once again taking weight management as an example, Lessard, citing Nielsen figures, notes that among shoppers who purchased items from this segment in the last 52 weeks, 36% of their yogurt needs were fulfilled by the segment. With active health the share of requirement was 29%. Greek yogurt currently fulfills just 18% of a shopper s yogurt needs. While this is less than the other segments, Lessard notes that the Greek segment is constantly evolving. And it s worth noting, he says, that of the 204 yogurt items that a typical conventional retailer carries, 64 are Greek. So while Greek yogurt accounts for roughly 32% of shelf space, it represents just 23% of dollars sold and only 13% of units. The point is that each yogurt segment has an important need to fill for consumers. Rather than create opportunities for one segment in this instance, Greek at the expense of others, retailers should instead consider expanding their yogurt sections. Retailers are realizing that by rationalizing these yogurt segments they are removing items that are potentially worth millions of dollars, says Lessard. Space needs to grow, because lack of space is the root cause of the imbalance that currently exists in the yogurt category. Room for Innovation Yogurt shoppers like to see new things so making more space for yogurt will also help ensure there will be sufficient opportunity for new products, which are important to the growth of the category. From a shopper perspective, innovation is very important in our category. When we look at shopper behaviour we see that shoppers are very open to trying new things, says Lessard. There are a couple of reasons for this, one being that price isn t a barrier. Adding a four-pack of something new to their basket isn t a big deal. He adds that consumers, typically, are also not that disappointed when they try a new yogurt product, so the perceived risk is minimal. So what new things can we expect to see in yogurt in the coming months? From Danone there will be line extensions to Oikos that will bring two new A PARTNERSHIP MARKETING SUPPLEMENT SPONSORED BY FEBRUARY 2014

5 ! W E N New Danino Greek yogurt for kids. Available now! 2x POFROUOR TREGUELAIN R STIRRED YOGURT PER 100 g 3 delicious flavours especially for kids. Yellow Fruit Grape Banana-Caramel Good source of protein Source of energy Source of calcium and vitamin D No artificial colours or flavours

6 RETAIL INTELLIGENCE YOGURT flavours to the brand (coffee and apple rhubarb) that will appeal to foodies who like to explore interesting flavours. There will also be additions to the Silhouette Greek lineup. Danone s big launch, however, will be the debut of Activia Greek in early Activia Greek will combine the probiotic goodness of Activia with the benefits of Greek yogurt, but with a creamier texture than is typical of Greek. Danino, which targets kids, will also get the Greek treatment. Kids is a dynamic segment and with Danino Greek we really want to accelerate that, says Lessard. To boost its kid-appeal, Danone Greek will offer a creamier, less thick texture, than traditional Greek and will come in fun flavours such as banana caramel, grape and orchard fruit. When we talk about expanding space for the category, we are also thinking ahead to the next Greek and making sure there s room for it, says Lessard. Indeed, as the Greek phenomenon, inevitably, starts to slow down (after all, a category can t sustain triple-digit growth indefinitely) all eyes are peeled for the next big thing to capture consumers attention. It s coming, says Lessard, adding as a teaser: stay tuned! Essential Yogurt Danone s ambition is to get Canadians to eat more yogurt. True, we ve made gains over the last decade or so, eating way more than we used to, but we still fall far behind other areas of globe when it comes to yogurt consumption, notably Europe. At Danone we have a global perspective and we know there s much more to be done in Canada, says Lessard. Our ambition is to have everyone in Canada eat one yogurt a day today we re far from that. One way to persuade consumers to eat more yogurt is to keep driving home messages related to yogurt s health benefits. People do know that yogurt is a healthy food, that s not something we have to work on, says Manon Cormier, Director Health Affairs and External Communications at Danone Inc. in Canada. But they do need to understand a little bit more about what makes it healthy and the role it can play in their general health that s what we need to focus on. One approach Danone is taking is to work with retailers and use flyers as a vehicle to deliver health messages. Along with the product offer the flyers feature different messages explaining why yogurt is so important to our diet. One flyer will talk about calcium and why it s important, another will talk about the benefit of vitamin D or protein, says Cormier. Protein, of course, has become the nutritional darling of the moment, and consumers are seeking more and more ways to include it in their diet. And for good reason, not only does protein help build muscle but it also helps provide satiety, which, overall, can help with weight management. Yogurt has certainly benefited from protein s popularity one of the main attractions of Greek yogurt is its high protein content, but even regular yogurt contains protein. As science continues to evolve, Cormier says, We re learning that current recommendations may be underestimating how much protein the body requires. This may open up further opportunities for yogurt to help us meet our protein needs. After all, when it comes to protein, Cormier says, not all sources are equal. Not only is yogurt a convenient and enjoyable dairy source, she says, but it also provides good quality protein. Milk products, in general, provide high quality protein; it s well used by the body and used quickly so consumers get the full benefit. Another tool with which Danone reaches consumers is through its sponsorship of the Dietitians of Canada s Nutrition Month. With a theme of Simply Cook and Enjoy! Cormier says the program is a great way to show consumers how much they can do with yogurt both as an ingredient and also as a healthy alternative to foods like mayonnaise and sour cream. We ve worked with chefs to create recipes that we ll be publishing in flyers. And this year we ll also be going directly to consumer shows to demonstrate the many uses of yogurt, because for many Canadians it s not something they re in the habit of cooking with, says Cormier. She adds, We re putting more and more effort in trying to educate the consumer about how good yogurt is for them so when they re in front of the yogurt section they will be equipped to make the right choice. A PARTNERSHIP MARKETING SUPPLEMENT SPONSORED BY FEBRUARY 2014

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