Big pots: the new kings of yoghurt? Yoghurts category report 2017

Go big or go home. That’s the message to yoghurt brands as shoppers shun single-serve products in favour of big pots that offer greater flexibility and portion control.

Granted, the big pot format has been in growth for some time, but that growth is accelerating. Plain and flavoured big pots are up 14% and 9.3% respectively [Kantar Worldpanel 52 w/e 1 January 2017]. A year ago, we reported big pot growth worth £31.6m; in the past year sales have grown a further £40.3m, with plain delivering £27.3m.

The wider sector, meanwhile, is going sour. Sales are down 1% to £1.7bn on volumes down 2.2% as yoghurts face a range of challenges, from concern over sugar content to stiff competition from sectors such as bakery and cereals in the crowded breakfast market.

It’s hardly surprising, therefore, that suppliers are desperate to grab a spoonful of the big pot action. In November, Müller returned to the big pot segment after a five-year absence with the launch of a 500g Müller Light range.

Alpro, which is already enjoying stellar growth thanks to the surge in demand for dairy-free products, and The Collective have also added new variants to their big pot ranges in recent months, while from April Yoplait brand Liberté will extend its range to include three 450g layered big pot yoghurts.

For Kate Waddell, insight & innovation director at Dragon Rouge, it is Arla in particular that has carved out a clear point of difference within a crowded big pots fixture with its Skyr products. “Skyr has successfully opened up a new segment in yoghurts, simultaneously leveraging Icelandic purity and freshness cues as well as delivering a more satiating yet healthy breakfast and snacking proposition,” she says.

It’s not just pots that are getting bigger. So are the claims about their contents, with brand owners and retailers dialling up protein content, satiety and natural cues in their messaging. Arla’s Protein is a case in point: while not yet available in big pots, there’s nothing diminutive about the product’s claims: “High in protein, Arla Protein is made from all natural ingredients and is a simple way to boost that toned bod in combination with exercise,” says the brand.

But for the most part, it’s yoghurt in big pots that’s outperforming the market. This is partly because of the trend towards natural and Greek yoghurt, which overtrades in this format. Indeed, analysis from IRI suggests it is own label, along with Total, Arla and Alpro, that is driving growth in big pots, with Tesco focusing on natural variants in larger formats and Asda pushing its flavoured big pot lines.

Big pots v little pots

Big pots are also benefiting from the trend towards combining yoghurt with granola or fruit. Dun Rusga, marketing director for Yeo Valley - itself a major player in big pots - also points to the decline of traditional multipack categories such as diet, corners, functional products and low fat “fuelled by the perceived staleness of some established lines”.

Glenilen Farm owner Alan Kingston agrees big pots have gained from other formats, but adds they have also been responsible for growing volume across the category. “With big pots the consumer has the opportunity to manage their own portions along with using natural yoghurt for various uses such as cooking, smoothies, cakes and the traditional breakfast or snack,” he says.

Dairy-free brands also view big pots as a key future growth driver. Research by The Coconut Collaborative shows that not only are big pots used with breakfast, they are also being used as a snack during the working day, as a healthier option for dessert, and as a cooking ingredient. “Our yoghurt is extremely versatile,” says Coconut Collaborative marketing manager Jessica Harvey. “In particular, our Natural big pot allows consumers to be creative in the kitchen; it works really well in soups, curries and dips, too.”

Brands will be hoping big pot growth continues, as elsewhere in the category times are tough, with the three leading brands - Müller Corner, Müller Light and Activia - all shedding sales, albeit Müller Light grew volumes. “Manufacturers are operating in a difficult market and there have been some challenges affecting the category of late, with food price deflation and fragile consumer confidence,” says Sarah Miskell, head of operational marketing at Müller Yoghurt & Desserts.

At the same time, Graham Burgess, head of category at Danone Dairies UK & Ireland, points to retailer range rationalisation as putting pressure on yoghurt brands, while promotional simplification has seen a shift away from multibuy mechanics, which has in turn negatively affected weight of purchase. In addition, “the category has seen a greater focus on own label, which can be seen through increased space, more range in store and packaging refreshes”, Burgess notes.

Danone’s Activia brand has been a notable casualty. Despite investing in a multimillion pound global rebrand and repositioning last year in a bid to make Activia more relevant to today’s shoppers, sales of the brand have fallen by 11% [IRI 52 w/e 28 January 2017].

“It’s true the Activia relaunch has not delivered the brand turnaround we expected,” concedes Art Delia, marketing director at Danone Dairies UK & Ireland. “We’ve spent a lot of time listening to consumers and retailers and have taken their feedback on board. As a next step, we’re looking into evolving our campaign to address the points fed back to us. At the same time, we’re working on some big product news for Activia this year, and we’re confident these will excite retailers and shoppers as much as they excite us.”

’Skyr has delivered a more satiating yet healthy breakfast and snacking proposition’

Not all yoghurt suppliers have found the going as tough as Danone and Müller. Yeo Valley has grown sales by 3.1% thanks in part to its strength in big pots but also to successful innovation. Last March, the brand launched Yeo Bio Live, a low-fat organic yoghurt with bio live cultures and no added refined sugar or artificial sweeteners. The product had racked up sales of £3.5m by the end of 2016. And Yeo Valley is not alone in bringing new products to the market. In November, Arla expanded its Skyr range with a limited-edition pear, apple and cinnamon variant of the Icelandic-style yoghurt.

Yoplait, meanwhile, has launched new yoghurt pouches under the Liberté brand, along with Super Fruitii, a thick 0% fat yoghurt on a layer of fruit flavour combinations.

One of the most significant innovations of 2016 was undoubtedly Danone’s Light & Free, which is targeted at the burgeoning Greek and Greek-style segment of the market. Launched in April last year, Danone says Light & Free is a market first: a ‘double-zero’ yoghurt containing zero fat and zero added sugar. “This makes it particularly appealing to our target audience of millennials,” says Delia. “As such, it is a real game changer within the category.”

Waddell agrees, noting that Light & Free taps the consumer trend for more positive lifestyle-based weight management rather than reductive, calorie-counting based regimes. “The brand has broken classic diet and weight management cues and also succeeded in delivering the ‘holy grail’ of satisfaction and flavour from a low calorie and fat base,” she adds.

Sales of Greek and Greek-style yoghurt increased by 3.8% during 2016 on volumes up 7.6%, with IRI senior insight manager Louise Williamson reporting growth from all the major retailers along with brands such as Total and Oykos. Burgess believes the growth of Greek and Greek-style yoghurts is further evidence of market trends towards authentic and healthy products. “The pure, plain, and simple properties associated with Greek yoghurt are well matched to current trends. We also see natural Greek yoghurts increasingly used within cooking recipes and even being recommended in some beauty treatments.”

Danone Light & Free was a key launch in the segment during the past year, but Müller’s decision to reformulate its Müller Light Greek Style range to feature no added sugar was an equally eyecatching move since it reflected the irresistible shift away from sugar to more natural, healthier products, partly in response to pressure from the government.

The health agenda

In November, The Grocer revealed that Public Health England was calling for a single-size portion cap of 125g for yoghurts, with suppliers in other categories set to follow suit. The revelation came on top of category-wide targets to remove 5% of total sugars from yoghurts (natural and added) by September 2018 and 20% by March 2020.

The backlash against sugar may in part explain the fall in sales of luxury yoghurts, which are down by 10.1%. Onken brand owner Emmi UK believes luxury yoghurts are suffering from consumers’ growing preference to personalise their yoghurts using fruit, nuts or muesli, thus enabling them to maintain control over what they eat. “Consumers are becoming savvier about the additives and processed ingredients used in food items, now opting to make their own natural versions of typically processed foods as opposed to shop-bought indulgent items,” says Gayle Harrison, marketing director at Emmi UK.

The company plans to respond to demand for more natural products by launching Onken Plain Grain this summer, which contains a mix of five wholegrains - barley, wheat, oats, rye and rice.

Pop-up gallery: innovations in yoghurts

The Collective also says it’s responding to the sugar debate, having cut over 17% of sugar from its Gourmet pots. The shift away from luxury hasn’t deterred the brand from investing in NPD, however. In October, it added six new SKUs to its range with a new, supersized 900g variant of its Straight Up line, a smaller 150g tub of its Russian Fudge flavour and four new fruited big pot flavours consisting of Rhubarb, Vanilla & Lemongrass; Blackberry & Sloe Gin; Raspberry Trifle; and Apple ‘n’ Spice flavours.

Despite growing scrutiny over the sugar content of products, brands such as The Collective have shown it’s still possible to grow sales from luxury offerings, so long as the proposition is right. “While a millennial audience is largely focused on wellness and nourishment, if they are going to go bad they do it in style,” says Nicola Thomson, account director at Hornall Anderson. “Therefore, shamelessly indulgent and premium dairy products have a part to play in the mix.”

Dairy-free trailblazers

Alpro, like The Collective, has shown it is more than prepared to innovate to grow. And why not - sales of dairy-free yoghurt products surged 41.2% in 2016 thanks in no small part to the brand leader. Newcomers include a strawberry & raspberry addition to Alpro’s Go On single-serve range, and two big pot launches - Plain with Oat and Go On Plain.

“As the pioneer in plant-based eating, we are proud to have been at the forefront of driving the rise in this amazing category, and have worked hard to grow the category to the position where it is today by continually investing in education, best-in-class marketing and genuinely innovative new products,” says Vicky Upton, head of marketing at Alpro UK and Ireland.

Since launching into the market six years ago, Bethany Eaton, founder of COYO, which lays claim to the title of the UK’s first coconut yoghurt, says she has seen the dairy-free category evolve into a mainstream market. “It shows people are not just buying into the dairy-free category for dietary requirements but as a lifestyle choice too,” she adds.

Retailers are capitalising on the opportunities in dairy-free. Tesco, for instance, has more than doubled its range of dairy-free SKUs in the past year and is working with Alpro to grow sales of plant-based food and drink as part of a major overhaul of the retailer’s chilled dairy alternatives fixtures.

Every few months seem to herald a new category first in dairy-free. In January, Nush claimed a UK-first with the launch of the country’s first nut milk yoghurts, made with avola almonds, while in April last year coconut milk drinks supplier Rebel Kitchen launched an organic dairy-free yoghurt range made from young green coconuts.

The high level of innovation augurs well for the future growth of dairy-free. “People won’t compromise on taste and as we care more and more about what we put in our body, the category will continue to grow,” says Eaton.

For a less buoyant outlook, one need only travel down the fixture to the kids’ segment. Kids’ yoghurt is in trouble, with growth in handheld (+6.7%) not nearly compensating for the decline in pot sales (-13.2%). Concerns over sugar coupled with the introduction of free school meals are cited as the key reasons for falling demand, and while the handheld market has benefited from some strong recent NPD - notably Kerry Foods’ Yollies and Suckies by The Collective - there has not been the same level of innovation as in pots.

Slashing sugar content

With the exception of Yeo Valley, whose Little Yeos variant has outperformed the market, growth has been hard to come by, with Petits Filous sales falling 4.5%. The response of brand owner Yoplait has been to reformulate the recipe to reduce sugar by 17% across the range. It has also launched My First Petits Filous, which it claims is the lowest sugar flavoured fromage frais on the market, with just 4.5g of sugar per portion.

Müller has also reformulated its Kids Corner range to include 50% less sugar.

The Collective, meanwhile, has slashed the sugar in its Suckies pouches by 20%. The brand has also been working in partnership with The Brownlee Foundation to encourage kids to get active with parents able to download certificates, signed by Alistair and Jonny Brownlee, to reward their kids’ efforts.

’Shamelessly indulgent and premium dairy products have a part to play in the mix’

For some suppliers, the health agenda is playing to their natural strengths. Take yoghurt drinks - a segment traditionally marketed on products’ health properties - where sales increased by 3.1%. Better news for Danone came in the shape of Actimel’s performance, with sales up 3.7%. Delia says the relaunch of Actimel with the ‘Stay Strong’ message at its heart has really resonated with shoppers. “Consumers are looking for quick and healthy ways to set them up for their busy day ahead, and Actimel can be part of this. We have big expectations for growth as we keep investing into Actimel across all marketing channels.”

One category in which health is less of a concern - albeit far from an irrelevance - is pot desserts, where a consumer desire for an occasional treat is ensuring that sales remain steady, if not spectacular.

“One growing trend is consumers increasingly legitimising excuses for celebration and indulgence, transforming the everyday food experience into a special occasion,” notes Sarah Baldwin of Gü Puds. “This could be getting through Monday, to celebrating the weekend. As a result, consumers are increasingly expecting excitement and multisensory experiences with their meals.”

Permissible pleasure

Gü recently entered the food-to-go category for the first time as part of a brand overhaul intended to reposition its premium puds portfolio as a permissible pleasure, rather than just an occasional treat. The four-strong range of 50g pots with a spoon attached to the lid launched last September and includes Silky Salted Caramel & Chocolate Ganache and Velvety Blackcurrant & Violet Posset varieties. Baldwin says the launch is aimed at spicing up retailers’ meals deals by “providing an indulgent lunchtime treat”. She also notes that Gü’s promotional strategy has evolved over the past 12 months, to focus less on deep cut promotions but on a clearer pricing strategy, centring on everyday low price.

Elsewhere, a number of challenger brands are innovating to capitalise on what they see as the growth potential of the chilled desserts market. Freaks of Nature is a new range made with nut milk, which aims to tap demand for free-from products. “Our belief in the brand as a superior product on the market and trailblazer for increased growth in the category has been backed by a multimillion-pound investment,” says founder Peter Ahye.

’People are willing to spend more for a bit of luxury and indulgence but without the guilt’

The Coconut Collaborative launched its first dessert pots - Choco Pots and Rice Pudding - in 2016, while rival coconut brand COYO has added salted caramel flavour to its lineup of yoghurts, which are made with coconut milk, coconut sugar and Himalayan salt crystals.

“People are willing to spend more for a little bit of luxury and indulgence but without the guilt,” says The Coconut Collaborative’s Harvey. “We saw a gap in the market for really great tasting free-from desserts.”

Growth in demand both for indulgent and healthier products shows counter-trends don’t necessarily have to result in market losers. For single-serve yoghurts, however, the rise of big pots is undeniably coming at their expense. Unless suppliers start delivering what consumers want, small pots will keep getting pushed around by their bigger brothers.