Brands are forging a brighter future by embracing some good old-fashioned values
Here’s news that will leave a sour taste in the mouths of Britain’s biggest yoghurt brands: sales of own-label yoghurt have passed the £1bn mark in the past year. That represents growth of more than £100m since 2016.
Brands, meanwhile, are struggling. Value is flat at just shy of £1.8bn and volumes are down 1.3%. That’s a loss of more than 7.5 million kg of branded yoghurt in just a year. Own label is up 6.1% on volumes up 3.8%, driving total market value up 2.2% to almost £2.8bn; volumes have grown 0.7% [Kantar Worldpanel 52 w/e 20 May 2018].
No prizes for guessing the key factors behind this. As the discounters steal share – both Aldi and Lidl have seen value soar by more than a fifth – the big four are cutting branded ranges and prioritising own label to keep a lid on prices and retain customers.
But the outlook is in fact slowly brightening for brands. Kantar figures for the year ending 3 December 2017 revealed that brands had lost 1.4% of their value on volumes down 4%, so the latest figures represent an improvement. So who’s driving this? And what can be learned from them?
For the most part, it’s the brands of the dairy giants that are suffering the most. Müller is down 4.3% in value, Yoplait has lost 10% and Lactalis Nestlé is down 6.3%, according to IRI figures for the year to 17 June.
“Yoghurt has become increasingly fragmented,” says Emmi category development controller Joel Harrison. “Growth from ranges offering solutions to macro food trends is being offset by shoppers seeking cheaper alternatives to mainstream brands. Alpro, the Coconut Collaborative, The Collective and Arla are growing by tapping growing niches such as dairy alternatives, indulgence or protein.”
All are in value growth of more than 20% [IRI], proving that retailers still need a strong branded counterpoint to own label. According to Amelia Harvey, co-founder of The Collective, it’s the more agile players that are winning.
“Millennials are quite untrusting of big brands – they want transparency and values”
“The world is changing,” she says. “Millennials are quite untrusting of big brands – not because they’re necessarily doing anything wrong, but because millennial consumers want transparency. They want values and they want to know where their products are coming from. The smaller challenger brands that can move quickly are the ones in growth.”
For brands, it’s more important than ever to have values. And many punters are prepared to spend more on those that can demonstrate a genuine commitment to ethical, environmental, culinary and health-related standards. “Shoppers are looking to spend their money on brands they feel a connection with,” says Mark Scannell, head of category at Danone Dairies. “It’s important brands tap into relatable customer needs and interests – for example, brands which operate with sustainable business practices or use high-quality ingredients and are transparent about provenance.”
Players at all ends of the spectrum are doing just that. Lancashire Farm Dairies claims to be the first UK dairy to use only free-range milk in its yoghurts. The brand guarantees that all its cows spend a minimum of 150 days a year grazing on pastures.
“Happy cows produce the best-tasting milk,” says MD Azhar Zouq. “Not only does free-range milk improve animal welfare, farmers will also benefit by saving on feed and bedding, as well as receiving a higher price for their milk.”
Less is more
It’s also a way for brands to justify the premium they command. The Collective and Yoplait’s Liberté brand make much of the absence of artificial sweeteners and preservatives in their marketing. The former claims to contain ‘no nasties’. The latter has adopted stripped-back packaging to attract foodies seeking options that have undergone limited processing.
And it’s working. “Liberté has been the fastest-growing yoghurt brand with a retail sales value over £10m in the past 12 weeks, driving growth in premium segments such as Greek and premium indulgent yoghurts,” says brand manager Céline Hasboun. “As consumers look for products featuring high-quality, simple and naturally sourced ingredients, as well as exceptional taste, Liberté is well-placed to continue this trajectory.”
Another proven sales driver is promoting yoghurt on its high protein content. One example of this is Arla’s rapidly expanding Protein range, which was broadened into fat-free milk last October following the success of the yoghurts, cheeses and milkshakes launched in 2015.
And it’s not just Arla that’s playing the protein card. “This past year we’ve launched several protein-rich yoghurts including Protein 22, a high-protein, fruit-flavoured quark, and Skyr, an Icelandic-style yoghurt made in the heart of Scotland – both of which are performing extremely well,” says Graham’s the Family Dairy marketing director Carol Graham.
Müller has also launched a protein-rich quark, as well as replacing its Greek Corner range with Müller Corner Plain, which it claims is high in protein and contains 27% less sugar.
Growing demand for more ‘natural’ ingredients and protein-packed pots is, of course, reflective of the wider health trend in grocery that yoghurt brands both big and small have been forced to respond to.
Sugar remains the biggest challenge here, with growing pressure on manufacturers to cut sugar from their recipes (PHE wants average sugar content of yoghurt to have fallen by a fifth by mid-2021). Onken has been working gradually on reducing the added sugar in its Onken Fruit and Wholegrain yoghurts, delivering a 10.7% reduction since 2015, says Grove. “We have also recently launched Onken Light & Fruity, a range of 0% fat yoghurts with no added sugar and, again, only naturally occurring sugar from the fruit and milk.”
Danone has reformulated its Activia and Actimel ranges to remove sugar, relaunching its 0% Fat ranges as 0% Fat and No Added Sugar – a move it claims has “received a very positive response from consumers”.
Müller, meanwhile, has reformulated its “iconic” Müller Corner Strawberry flavour so it now has 19% less total sugar, and plans to reformulate its wider Crunch Corner and Fruit Corner ranges within the next six months. The brand, which claims the sugar reduction across its portfolio is “substantially ahead” of PHE’s voluntary guidelines, also recently launched new Müllerlight Fruitopolis 0% added sugar, which contains 30% less sugar than standard lines.
Growth of free-from
Müller’s new lactose-free Corner variant also stands out in a busy year of NPD across the category, much of which tapped the rocketing growth in free-from yoghurt alternatives.
“The growing number of UK consumers adopting vegetarian, vegan and flexitarian diets has significantly impacted the yoghurt category over the past 12 months,” says Bethany Eaton, founder of Nush, which recently launched the UK’s first dairy-free yoghurt tubes. Indeed, volume sales of dairy-free yoghurts are up 18.7%, with value up 22.4%, making it a standout segment for growth in the category.
Not that sector leader Alpro cares much for the ‘free-from’ tag these days. “In a move that firmly repositions plant-based away from free-from and into the realms of an everyday, healthy choice in the heart of the store, Alpro has worked closely with Tesco to re-merchandise its dairy alternatives range in 700 stores,” says head of marketing Vicky Upton.
“A six-monthly reset has continued to keep the offering current and resulted in impressive growth for the category and Alpro. Building on this success, Alpro has been working in collaboration with other retailers across more than 1,000 stores to ensure plant-based fixtures remain relevant and appealing.”
Dairy-based brands are also focusing on how their products are merchandised, as well as the occasions they’re aimed at, to stay ahead of own label.
With demand for “permissable indulgence” still high despite growing consumer awareness around health, snacking is now one of the fastest-growing yoghurt consumption occasions, according to Liberté’s Hasboun. With this in mind, the brand last October unveiled Liberté Origins, a French-style yoghurt made with whole milk and set in 135g glass jars, dubbed as perfect for mid-morning or mid-afternoon snacking occasions.
Flavoured with real fruit and containing between 14.3g of sugar per 100g and less than 132 calories per jar, Liberté Origins can “compete with the likes of chocolate, biscuits and slices of cake for the precious ‘me time’ consumption moment, without compromising on permissibility”, Hasboun claims, while the recyclable – or upcyclable – glass jars tap into “consumers’ growing expectations for sustainable packaging formats”.
The rise in yoghurt snacking means on the go is also seen as a key opportunity at Müller. “For those eating on the go, there is a huge opportunity to make yoghurt the lower-sugar and lower-fat alternative that people want,” says commercial director Bill Mathieson. “Shoppers want to see yoghurt in the ‘grab and go’ areas, but there is currently limited or no presence, particularly in meal deals.”
Meal deal opportunities
Things are starting to shift. The Collective reports strong growth through Boots’ meal deals and Danone’s Scannell says retailers are beginning to allocate more space to yoghurts in the food-to-go fixture. He believes breakfast and lunch meal deals are a key opportunity for Actimel and Activia. “Every day almost half the UK population are eating breakfast out of home and 20% of those are consuming yoghurt during this time [IGD],” he says. “We can see dynamic growth in cereal-topped yoghurt, which over-indexes for this occasion.”
Seizing these sorts of opportunities will become even more important as retailers continue to rationalise branded ranges and prioritise own-label in some areas. In June, The Grocer revealed that Tesco had pulled 15 Yeo Valley SKUs and a number of Actimel and Activia lines in the latest round of its Project Reset. Elsewhere, commentators say Asda has been pushing its own kids’ yoghurts particularly hard, while plain has been a key area of own-label expansion across the mults.
For The Collective’s Harvey, this reinforces the need for agility. “The bigger brands have business models geared to provide scale, but they can be too slow to react,” she says. “The market is looking for naturalness and quality. The days of the whole zero-fat thing are behind us. People are now saying that certain fats are good for you.”
In other words, brands need to move with the times. And these days, that means being a whole lot more wholesome, both inside and out.
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