Analysis by Sarah Hardcastle - innovation and support deliver - value for money a key driver - both low fat and indulgence thrive - growth slows in children's Decline is inconceivable in yogurts and chilled pot desserts. It's an enviably powerful sector, dynamic, vibrant, and packed with product development. The figures shine. The total market has reached nearly £1.2bn, an increase of nearly 7% for the 52 weeks to February 2001 [Information Resources]. The sector is doing so well because it reflects all of today's major lifestyle trends driving growth in the food market ­ convenience, healthy eating and the desire for value. Müller md Ken Wood has another view: "It's doing so well because we've taken on responsibility for making sure it does. "As the leading yogurt brand with 36% share, we are responsible for three quarters of market growth. "We've achieved it through continued innovation coupled with a a very high level of support. "Last year we spent £10m on support, including a TV campaign that gave us 55% share of voice, because we believe it drives the marketplace. "Yogurt and desserts have reaped the rewards because of the level of innovation and support." Wood adds: "Fromage frais, in which the concentration has been on pricing activity, has had a slight fall in value but a growth in volume." Value for money promotions have dominated the category over the last year. Müller's three-for-99p offer on Corners and Müllerice has been a hugely successful promotional mechanic, creating a benchmark for other brands' promotional activities. Wood says: "This has greatly increased weight of purchase and consumer penetration, but at the same time has maintained frequency of purchase. "Something like 80-85% of these products are sold on a three-for-99p basis. Consumers really understand it as a value for money offer. "And retailers have benefited because this mechanic has flattened demand, making it easier to gauge than on/off promotions. "Tesco, Asda and Sainsbury have fully embraced it, and some independents have as well. We expect to see it running further," Wood concludes. As a result of this activity, Müller's core range Corners has seen growth of between 19% to 31%. Recently it added three cereal variants to Corners through a tie-up with Kellogg which has given the brand a spectacular sales boost in the last few months. But Müller's dominance of adult/family yogurt now faces a fresh challenge from Yoplait which made its first venture into the sector earlier this year with the launch of Best there is!, a layered fruit range with one of the highest fruit contents on the market. Müller's star performer, however, is Müllerlight, a virtually fat free yogurt which has seen sales soar 50% to £96m in the last year. Its performance is partly the result of a successful makeover and relaunch at the end of 1999, coupled with substantial promotional campaigns in sports/slimming clubs and associated media, and partly because it is in tune with one of the market's driving forces. Consumers ­ and especially women who are the biggest purchasers of yogurts/pot desserts ­ want to eat more healthily, and are increasingly buying into the low fat/virtually fat free sector, turning it into one of the most buoyant parts of the market. Müller's new short life dairy products report says the virtually fat free sector, worth £200m, grew 10% last year. Other brands are making significant gains from the lower fat trend. St Ivel's Shape Low Fat Indulgent yogurt is seeing sales rise 14.4% year on year, according to the company, while Eden Vale says its Ski range, which it claims is brand leader in low fat, is growing 11% year on year. Behind Ski's performance is a £5m makeover and relaunch last year, designed to broaden its appeal and attract new customers. The brand has also benefited from a £3m TV advertising campaign, nationwide sampling and a high profile link with fitness guru Rosemary Conley. This year Eden Vale is putting a further £5m support behind the brand. In the light sector, Yoplait says its Weight Watchers from Heinz diet brand has gained significantly from its January relaunch which included new packaging and six more flavours. Head of marketing Gerry Roads says: "Sales have shot up, and we're now seeing 43% year on year growth." This area of the market is seeing a lot of innovation. Onken has recently added a new lemon flavour to its BioPot Lite virtually fat free yogurt and added more flavours to the lower fat version of its Mousse. One thing becoming clear in this sector is that consumers are no longer prepared to compromise on taste. Increasingly they are seeking more interesting and indulgent flavours. Growth in lower fat products has in no way had a detrimental affect on the other end of the spectrum. Luxury yogurt, classed as split pots, wholemilk, thick & creamy and full fat products, has done as well, if not better, growing 11% to £278m according to the Müller report. "The reason for this," says Eden Vale category development manager Claire Chisholm, "is that chilled desserts is a repertoire market. "Consumers enjoy trying lots of different products, purchasing according to different eating occasions. "They may buy low fat for all the family, virtually fat free for healthy eating and dieting, thick and creamy for a more indulgent eat, and treats for indulgence." The children's market, characterised by smaller pots and character packs, is probably the only sector that hasn't lived up to its promise of previous years. This increasingly competitive sector has seen a huge number of promotions which have dented value growth. Eden Vale reckons it has slowed to just under 3% year on year, valuing it at just under £200m [Information Resources]. Marketing manager Antony Robson says there's an underlying reason for this. "It's a maturing market. You can see it in the amount of fragmentation, with so many different products for the various age groups." Eden Vale's Munch Bunch brand has bucked the trend, says Robson, with a healthy 12% rise in sales year on year. This follows its relaunch last summer and increased marketing spend to promote the brand to both children and parents. A marked trend is the increase in character licensed products. St Ivel trade marketing controller James Irwin says this has become essential to capture sales and drive growth. Sales of Tweenies exceeded £3m in the first eight months and continue to grow. In January it launched Bart's Cool Yogurt under The Simpsons licence. Nestlé is a big player in this area with its Disney character brands Winnie the Pooh and Dinosaur fromage frais and mousse. Others include Arla Foods' Bob the Builder fromage frais and yogurt range aimed at pre-school children. Until recently Yoplait has stood back from the character licensing arena, preferring the relative safety and longevity of developing its own character brands, such as the Wildlife range. Last year it snapped up the Pokémon licence for a new range of yogurt and fromage frais aimed at four to eight year old children. Yoplait's Roads says it was too good an opportunity to miss. "Kellogg and Walkers are using it, a second video is coming out, and Nintendo is bringing out new versions of the game, so it seemed the right time to go into character licensing. "The majority of the children's market is now fashion brands, but the skill is entering at the right time." Since launch last September, the Pokémon brand is worth more than £2.4m. For older children and families looking for an organic option, it launched Petits Filous Organic Yogurt in February. Yoplait believes the time is right for major players to enter the organic sector where sales are growing 36% year on year [Information Resources]. Traditional desserts is another vibrant area, growing ahead of the market at 13%, pushing sector value to £376m [Müller report]. Own label dominates and has increased its share largely because the sector is so diversife and consists of a great variety of products, making it less worthwhile and more difficult for brands to establish a presence. Mousse is one of the largest segments and accounts for 21% share [Müller report]. Growth has been fuelled by new indulgent products, such as Onken Mousse, the fastest growing brand in the sector, and Eden Vale's Starburst Juicy Mousse. Eden Vale says the brand is now worth £1.7m and to build on its success has launched single pot versions for the food to go market. Its Milky Way mousse is also doing well and has gained significant sales increase since the introduction of 99p price marked packs last autumn. Other rapidly growing segments are trifle (21% share), rice (10%) which is dominated by Müllerice, and traditional puddings which have risen 26% since 1999. St Ivel recently moved into puddings with Shape Sponge and Custard and says sales are extremely encouraging. The area of greatest potential for the brand players continues to be confectionery desserts. St Ivel recently refreshed its Cadbury brand, the leader in chocolate desserts, with a relaunch of Cadburyland Mousse, and the introduction of a limited edition Mini Eggs Twinpot. Eden Vale, in partnership with Mars, relaunched Galaxy as a triple pack at 99p last year, and says sales have risen 92% as a result. Nestlé, at number two in the segment with Rolo, Aero, Milkybar and Munchies, is now concentrating on developing its Rowntree brand into desserts, recently launching Swirly Yogurt and fromage frais based Fruit Centres. Making Rowntree "a beacon brand"in chilled desserts is the aim, says the company. {{FOCUS SPECIALS }}