Category Close-Up: Yogurt - Expert Analysis

Carol Ortenberg [00:07] Hi everyone, I'm Carol Ortenberg, the editor of Nosh, and today we're headed to a chilly part of the store that's hot with innovation. That's right, it's time for the yogurt edition of our category close-up show. We've brought together a great group of experts to discuss this category with the goal of better understanding what consumers, retailers, and investors are looking for from yogurt brands. Now, for years, yogurt was a category that saw minimal innovation. But over the past 15 years, new product styles, ingredients, and nutritional benefits have come to the forefront. What has remained constant though, is the category's emphasis on flavors and promotion. So to help us unpack this category and learn more about the strategies for success within it, let's welcome our experts. First up, we have Michael Barber, managing director and head of consumer food and beverage Investment banking for Meridian Capital. Michael's experience includes serving as the exclusive financial advisor to many premium food and beverage companies, including Elenos Greek yogurt, La Penzanella, Knot Pods, and Beecher's handmade cheese. Elenos most recently received an investment from Daniel Lubetzky, the founder of Kind Bar. Next, we have Kenny Houseman, senior category manager for dairy, bulk and frozen at Fresh Time Markets. A fifteen-year veteran of the grocery industry, Kenny first spent over a decade at Topps Markets before moving to the Midwest and Fresh Time, where in his current role, he particularly enjoys discovering new products and brands. Also joining us is Louanne Williams, co-founder and global insights director at Enova Market Insights, a market research firm headquartered in the Netherlands. With 30 years' experience, Luanne is an expert on the trends driving the global food and beverage industry. And finally, we have Bart Adlum, the CEO of dairy alternative brand Good Planet Foods and a member of the board of directors for yogurt brand Lava. Previously, Bart was the CEO of Siggy's, leading the brand through a period of huge growth to its eventual sale to Gallaalis. Bart also spent time at Danone. Now, before we turn to the experts, let's set the stage for this discussion. Yogurt was first positioned to Americans as a healthy breakfast option, achieving mainstream popularity once packaged in single-serve cups with fruit forward flavors. But soon yogurt alone wasn't enough, and consumers turned their attention to new higher protein options, such as Greek yogurt and Icelandic yogurt. And in the years since, the category has exploded, with the addition of indulgent options, snack packs, and plant-based options. So with that, I want to start by taking a more historical overview of the category. Let's start with what was one of the iconic packaging elements of the yogurt category, the single-serve cup. Bart, how important is this to the category and to the brands who want to be part of the set?

Speaker 2 [03:01] Uh, as you said, it is really distinct, uh, the, the single serve element of yogurt. If you think of other, uh, other categories. You, aside from convenience, you're not going to be able to buy single serve cereal, single, single serve soda, single serve cookies. Uh, but in yogurt, you do, which, of course, retailers and, and Kenny you'll jump in later, but retailers hate because it's a ton of work in terms of keeping the shelves. Stocked. Uh, the returns are very high. This is why you always see somebody when you go to the yogurt section, which I, I know well because I've been there so many times. Uh, you'll almost always see somebody there stocking the shelves, about to stock the shelves, uh, because it's a, it's a ton of work. You don't see that same dynamic in cookies where people are buying enough for a sustained period. Uh, the rest of the world, this isn't, this isn't the case. Uh, in, in Europe, you're going to see almost all multi-packs. In Canada, you're going to see multi-serve, uh, a tub type of product, which is much better for the, uh, for the environment. So, there's been a move, uh, largely instigated by retailers to go to some, go to a multi-serve and or the larger size tubs, and consumers are going largely to the, to the tubs as a, uh, as it becomes more of a staple yogurt, and, uh, as in some cases, the, the environmental concerns are, uh, are driving it. So, there's a shift away, but single serve. Is this uh this luxury of flexibility for the consumer that pretty much doesn't exist in other categories and drives a lot of the dynamics in yogurt.

Speaker 3 [04:47] I think just to add on to what Bart is saying in terms of the flexibility, it really is the entry level point for our consumers to the category. And in terms of, you know, multi-serve, yeah, we're seeing an increased emphasis on, on that size of yogurt packaging for sure, with more people working from home and spending time in their own kitchens, we're seeing an increase in purchase and consumer interest in yogurt tubs and multi-serve containers.

Carol Ortenberg [05:11] Bart mentioned multi-packs. Have you seen a lot of that in the US market? Is that something that would be appealing as a retailer, or is it just, you know, doesn't work on the shelves here because of, you know, they're set up for single serve and larger tubs?

Speaker 3 [05:27] It, it, it really is across the board, the multi-serve occasion. I would say the emphasis is primarily tubs just based on kind of space constraints. Obviously depending on kind of the retail outlet will depend on kind of the space you have, but really the trends that we're seeing are specifically with tubs. We are starting to see a little bit of a, you know, kind of bridge into some multi-serve kind of cup yogurt as, you know, businesses start opening back up and kind of working patterns can become a little bit more regularized. That's what we're continuing to see, but most of it is, is driven in the, in the tub business.

Carol Ortenberg [05:59] With COVID, we've heard a lot about consumers stocking up. Um, I'd love to hear from one of you about what that looked like. Did that mean buying more, uh, you know, single serve tubs, or did that, you know, just mean a transition to the larger, uh, product packaging?

Speaker 3 [06:18] Primarily it was a shift into the larger pack sizes, you know, as consumers consolidate their shopping trips, they were looking to really kind of build up that, that pantry, if you will, and we saw a high influx of multi-serve size purchases.

Carol Ortenberg [06:33] I think this discussion of form factor leads really nicely into marketing. Um, how important is promotion in this category?

Speaker 2 [06:43] It's critical to the category. It's not a, you could say this about a number of categories, but it's not like an option to be a, a non-promoted brand or even a lightly promoted brand. The, the price of entry is going to be. Consistent promotions as, uh, as you go along. Now, it doesn't have to be the same 10 for 10 or sometimes uh in the, in the race to the bottom, even worse than that, uh, lower than that, uh, works from a manufacturing point of view. But having promotion, uh, is, is, is a necessity and definitely again drives a lot of the dynamics in the category.

Speaker 4 [07:21] I think it's interesting just looking at consumer data because we just are researching and asking consumers all the time what matters the most. Flavor is almost in every category number one, but in this category cost is number one. And it just tops flavor, I think. Also the format does make it very expensive, especially if you, you know, have 3 kids at home and everybody's eating their own little yogurt. It adds up. And I think also from a European perspective it's really expensive in the US, so I can, I'm not surprised at all that promotion is really important for that.

Speaker 5 [07:54] Promotion is also important for, for, for trying, and for for consumers able to to actually sample the product and then decide which brands they prefer. So, going back to the single serve and uh different container options, kind of the, the category tends to lend itself for sampling and uh for consumers really to find the brands that they love.

Speaker 2 [08:19] Yeah, so the, the bad news is you're gonna have a lot of consumers that really buy on price and will constantly have a number of options that are available to them with yellow tags. But the good news, as Michael just said, is that as a smaller brand, you have a very good chance with a single serve of getting trial because most of these consumers, they're not buying one yogurt, almost none of them are. They're buying 35, 10 yogurts, and they have the luxury. In this category, unlike others, to say, OK, I'm gonna buy a little bit of, uh, uh, I'm gonna buy a little bit of ciggies, I'm gonna buy a little bit of Elios, I'm gonna buy a little bit of this plant-based brand for different people in the family or just different occasions for them, and you can't do that in crackers. You can't buy a little bit of Triscuits and a little bit of Ritz and a little like it just doesn't work in other categories the way it does in yogurt.

Carol Ortenberg [09:11] If promotion is a key marketing tool then, and you know, you see these 10 for 10 promos, how do you avoid as a brand being commoditized and sort of, you know, having consumers wait to shop you when you're on sale and expecting, you know, well, I can get them at $10 for 10, so why would I pay $1.25 for them?

Speaker 5 [09:32] I can speak to that first. I think a key point is differentiation. Because if you're not differentiated, it, it's easy for the consumer just to cycle through uh based on what's being promoted at the lowest price at any given time. So if your flavor profile or your consistency, whatever it might be, is very different than the competition, then it prevents that from happening. And then also I would say the frequency of, of, of that kind of price promotion to try to avoid it. Uh, to do it that consistently because otherwise, uh, the consumer is essentially trained to wait for the, wait for the promotion, so. There can be a race to the bottom, and it's something that the entire category would want, would, I think, want to avoid, um, but that's, uh, typically the some of the things that I've seen brands do to, to avoid getting pulled into that, that price promotion war.

Speaker 2 [10:30] And as a smaller brand, you, you've got to remember you can't win that race to the bottom. You are absolutely going to lose that race to the bottom. So as Michael said, you better be differentiated. And uh if, if you're relying on prices being what's going to uh make it work for you, it's not going to work for very long. You're, you're going to run out of roadway, and we might talk about this later, the potential acquires are not looking for a pump and dump type of branded yogurt. This is a different category.

Carol Ortenberg [11:01] So has this promotion, uh, focus then left the door open for more premium products, or has it made it more difficult to be a premium product and change consumer behavior to view yogurt differently, that it can be slightly more expensive. Michael, I know you work a lot with Elios. How have you seen them, uh, sort of Approach this, uh, change in consumer behavior or thinking.

Speaker 5 [11:25] Sure. Well, the main way has been to stay consistent on pricing and not do too much discounting, you know, very, very, it would have to be very seasonal or something that's unique to that period to do uh some kind of discount program. The other is really around experiential marketing and really pushing the, the sampling of, of the products, so. If you're differentiated, and it's really that experience that drives the consumer to pull that brand into the store, uh, you wanna have those programs that get that that sample into the consumers' mouths to try, and, uh, that tends to counteract the need to do the heavy promotion. So we, uh, Elenos in particular has relied on that from the beginning. It started as a just a small yogurt stand in Pike Place Market. And that's been really the backbone of the entire of the brand and the brand story, uh, to try to continue that into retail is really important. It's been hindered somewhat during COVID, because the sampling really came down significantly, if not completely eradicated for a while. As that comes back, you, I think you're gonna have that brands will have that ability to use that, that kind of marketing, um, approach to make sure that they can counteract just the promotion aspect of it.

Speaker 3 [12:44] Yeah, and to add to Michael's point too, kind of a result of, of kind of the sampling challenges, you know, digital marketing has become that much more important as well and imperative in terms of the total marketing strategy to, to, to push brands, to drive brand awareness, to speak about, you know, your value proposition outside of price has become kind of instrumental, especially for new brands to kind of drive again awareness and excitement for, for our customers, uh, in particular.

Speaker 5 [13:09] That's absolutely correct, and that's another feature that was, I think, somewhat unique to Elenos and the The social media story around Illinois was tremendous, particularly in the Pike or the Seattle area, and so if you went on to TripAdvisor, it was the #1 rated as the #1 restaurant of all things, because that yogurt stand had so many reviews that were 5 star, um, so that kind of activity where across the board consumers are just raving about the product that really speaks volumes.

Carol Ortenberg [13:43] Luanne, you mentioned that in this category, um, consumers look at price first. You know, thinking about even other categories, have you found any strategies around premium priced, uh, items that really help elevate them in the minds of consumers or help, uh, consumers overcome that price barrier?

Speaker 4 [14:04] Well, I think if you look at what consumers say that they're looking for, the convenience is really important in this category. The 10% of consumers are interested in indulgence. We also see in terms of eating occasions, the fastest growth is in evening snacking and dinner. So I think that's also an opportunity to, to, if you're going to serve it as a dessert, for example, that you have that opportunity to do something super indulgent. You also have Always think about like if you think about, I know we're gonna talk about flavors and things as well, but um You'll take a chance on a yogurt because it's a single, it's a single thing, it's relatively low cost. You'll take a risk on a beverage flavor because you can throw it away if you really don't like it or you can, you know, always get through it. So I think there's a lot of opportunity around that because you could find that one flavor that everybody likes. Seasonality is quite easy to do. Seasonal flavors, limited editions, those kind of things are, I think, great opportunities to go for that, that premium. Um, and then again, um, I think, OK, digital marketing has been really important, but I think definitely over the past year we're all looking for those opportunities to connect and also having those experiences at home so I think you have a lot of opportunities to do something to, to make it that little bit more special.

Carol Ortenberg [15:21] Now, Luanne brings up a great point. Uh, speaking of changing consumer behavior, a lot of brands are trying to change the consumer perception of yogurt from, you know, being only something for breakfast and expand the day parts of consumption into dessert or snacking. Um. What are some things that you've seen brands try and, and how successful do you think the category has been overall with that goal? Because there certainly have been some successes, but there have also been some, uh, launches, you know, I think some more savory options that just really haven't connected with the shopper.

Speaker 2 [15:56] There's been lots of efforts. I'll tie it a little bit back to the premium discussion of. Uh, this would be now, I'm gonna say 10 years ago, maybe a little less than that, maybe more like 7 years ago. Uh, Dannon and Starbucks, those are pretty to known and Starbucks, two very powerful, uh, players combined to launch an evolution fresh yogurt. And they made it premium, which, you know, tying back to the previous discussion, uh, I think you almost have to be looking at premium on this just to survive from a margin standpoint and, uh, and not fall into the trap of, of trying to compete on price. Uh, but they failed fast. They launched a very good uh product at a premium price, put on a ton of media behind it, but there really wasn't the differentiation Michael talked about earlier. Uh, there was the, the cost structure that Liuan said in terms of, uh, in terms of a single serve, and the consumers didn't see why they wanted to do it. And with the shelf life in yogurt, if you're not getting the movement, You fail pretty quickly in this category. If you look at examples and more dessert examples, as you're saying, Yoplait failed multiple times trying to do flick of the wrist type of innovation over most of the last 15 years, but when they launched the Wii, They did it right. They had a premium product in a glass bottle. The product was texture-wise, distinct from almost anything else that was offered out there. Nussa was one a few years before that, that also used packaging, texture, and And taste is a way to premiumize and get to more of those dessert occasions. So, I, I think that the two ideas fit, uh, somewhat together, this more indulgent premium and, uh, and the dessert occasions which, uh, in Europe, you see a lot of dessert-type spoonable options, yogurt and otherwise, but in, in the US that hasn't been nearly the same size of category.

Speaker 5 [17:58] We've seen that with uh Elenos in particular around one of its products, the pumpkin pie product, which is tremendous. I mean, even within our and it's somewhat anecdotal, but within our household we've, during the holidays, we've often stocked that and use that almost as as a substitute for actual pumpkin pie. So I think being able to achieve that kind of an experience with the consumer where virtual substitute for the actual item. Uh, really is, is one potential way to do it, and, and achieve that, but also it takes a lot of innovation around, it's not just about the yogurt, but it's also the toppings and the purees, which, uh, you have to pay very much attention to detail around those, those pieces of it to achieve

Carol Ortenberg [18:45] it. Penny, you're, you know, on the front lines of the yogurt category, when someone comes to you and says, hey, I've got a new yogurt, it's not for breakfast, it's uh. Lunch yogurt or snack or dessert, you know, how much of that, uh, new day part are you kind of thinking about inserting into the category? And is that a positive, or is it, you know, there's only so much space you can dedicate to something that's potentially a little more risky?

Speaker 3 [19:11] Yeah, that's a great, that's a great question. You know, it, it, it's kind of a little bit of all those things, but I think, you know, as brands are looking to kind of expand the parts, so are retailers too, cause ultimately that helps, you know, with our volume and and and sales and right trying to reach more consumers, and I think it just comes down to, you know, kind of As consumers are looking to kind of explore flavors more, we definitely do take some, take some risks on taking some different flavor profiles to try to add some additional excitement to the category. I think too, added health benefits is, you know, another trend that we're seeing as well, whether it be, you know, added protein, less Sugar, uh, the focus on probiotics and gut health. We're seeing a lot more functionality come into the yogurt category as of late. And that's really what's driving a lot more excitement and kind of reinducing consumers back to the yogurt category, if they, you know, previously have walked away.

Carol Ortenberg [20:04] Well, I think we definitely should touch upon nutrition and functional benefits. Louanne. We used to see gut health as, you know, a really big marketing message with yogurt. Is this still a point of differentiation, or is it kind of, you know, table stakes and consumers just expect that from yogurt?

Speaker 4 [20:21] It's total table stakes. I think the only, maybe the only place where it might be a point of differentiation, which is also shrinking, is between dairy and plant-based. So the plant-based yogurts are definitely going to become a lot more like the dairy. Um, products, and I think about 40% of plant-based yogurts now in the US are cultured, so I think that's going to change everywhere in the world. I think you're going to see textures becoming a lot more similar, um, but one thing I don't understand, so I'm an American, but I've lived in Europe for 30 years. There are so many ideas that I think would work so well, um, even things like, OK, technically it's a cheese, but like quark, quark has been repositioned for athletes here and for people that, you know, after soccer have quark as your recovery protein. I don't know why none of that is being done in the US. Like it's such a no brainer. I will take anybody for a drive. When we can drive around and we'll start and we'll go to northern France and Germany and there's so many ideas around nutrition and if you look at what Americans care about, I'm looking at all my papers here because I can't remember. Americans like yogurt because it's made with simple ingredients, number one thing they care about sugar is a big issue as well. You're finally starting to see there's a lot of stealth reduction, but of course that's a big shock. Um, if you turn the label over on some yogurts that they are so full of sugar, and that's everywhere in the world, I think, but that whole idea that it's a real ingredient is simple, you can understand it, has a huge appeal. So it's a fantastic product to carry a lot of these health claims. A lot of them can be carried naturally and otherwise they blend really, really well with even things like botanicals. Immunity is a huge thing now, so dairy goes with that really well. Dairy can go, of course, it's a natural source of protein. Tie it into sports and recovery. Tie it into healthy aging. Like there's so many opportunities, I think, that are just really untapped, um, and again, since you still have this, this small product that everybody can, can experiment with, it's a great platform to launch it on until you get into the, the larger formats, you know, a half liter even to liter type of formats, more similar, um, and to the rest of the. World and then that brings you into cooking and all kinds of things as well so I think there's massive opportunities in in dairy but also in plant-based um dairy in the US and back to your question, no gut health is not a differentiator at all um anymore it's just one benefit of many.

Carol Ortenberg [22:39] Well, Bart, maybe you at Good Planet can make a a plant-based quark or uh some of these options, uh, to make Luanne's dreams come true, uh, over here in the states, my dreams as well. I would love a good quark. Um, but you were at Siggy's and the message there really was around sugar. There was a lot of discussion around that and kind of. Making consumers aware of how much sugar was possibly in yogurts. Can you talk to me a little bit about those efforts and how the company realized that was a, a really solid marketing message?

Speaker 2 [23:12] Some of it came from Ziggy's founder vision, right? And what he really wanted, literally wanted as a consumer in the yogurt and saw it as an opportunity. After he, you know, made it at home and that that's the sort of like famous founder story. He started making it at home. People were interested. Eventually they went to a farmer's market. But what we communicated over the years, simple ingredients, which uh which I talked about, not a lot of sugar. So very simple and Um, when, when you have a milk product, you already have some sugar in it. When you have a strained like Greek or Icelandic yogurt product, you have even more sugar because you've got even more, more of the sort of milk goodness and proteins in it. So there is a starting point of a good amount of sugar. What consumers didn't realize until recently was, until recently, meaning the last decade maybe, was, uh, was that that yogurts in some cases have had 28 g of sugar, had 20 g of sugar, uh, much more than they would have expected in the product because consumers had no idea how to look at sugar until like about 10 years ago. Uh, so it's brands like ciggies that really moved the needle and made more consumers turn, turn it over to see not a lot of sugar. What does that, what does that mean? Traditionally in yogurt, we at Deon, we used to call it uh the diet trap in the US. Consumers think of yogurt and they, they think of it for health, but they also think of it in the US specifically for diet, for losing weight. And this is why you saw a brand like Yoplait Light become a huge brand, even though It didn't taste very good. Uh, it was, uh, it was low fat, artificial sweeteners. Uh, it's why you see a brand today like Too Good, doing a modern version of the same, that's doing well, a modern version of the same play, because consumers, not all yogurt consumers, of course, but consumers in the US really see yogurt in a different light than Europe. Uh, we talk about opportunities in the end like, uh, in France, in Spain, it's 10 times the per capita consumption of the, of the US. That pains, uh, uh, Dan, and they're constantly looking at what can we bring over from Europe and what are the Earnings we can bring over. But if you get 2% of the broad, let's call it spoonable yogurt category with a cork in France, you've got a gold mine. That's a big deal. If you get 2% in the US, and if it's split amongst more than one brand, you're going to have a hard time surviving on the shelves. So, so, some of this is just size of the market and the way Americans continue to, to this, uh, day to, to look at the category.

Speaker 4 [26:02] You make a good point that in France yogurt is, it's a dessert. It was never, it was never the healthy breakfast option, and that's how it really, I think when Americans really start to eat it, so the whole fundamentals of the business is, is different, um. But yeah, I, and, but Americans love sweets, so if you look at and go in more, more from the dessert angle, I mean if you look at how many people um eat pudding, you know, and, and in terms of a chilled dairy dessert and, and take it from a different angle and go way more indulgent, but still with those simple ingredients that might be another way in to to do something kind of different that also appeals to Americans but still on that that simple platform. But sugar is uh yogurt, a lot of yogurt is very full of sugar, um, that's what makes it taste so good.

Speaker 5 [26:48] I think that's also one of the challenges to the category of of doing doing versions of the product that are healthier without the indulgent flavor profiles and a lot of sugar, because typically yogurt has to stand on its own. It's not necessarily something you're just mixing with something else, like you would with creamers and non-dairy creamers or plant-based creamers that where you have a A tea or a coffee product that's really the base of the flavor profile that you're adding to it. So, uh, having a stand on its own is a big challenge for the yogurt category. It has to taste really good to, I think, get through to the consumer.

Carol Ortenberg [27:27] Kenny, in the last year alone, we've seen a slew of new high protein launches in the yogurt space. Does this excite you as a buyer? Do you think this is exciting consumers? Um, you know, is this just kind of a buzzword or is there an actual amount of protein that they're, they're looking for from these yogurt products?

Speaker 3 [27:45] Yeah, that's a good, that's a good question. It, it's almost kind of become a buzzword, quite honestly, you know, throughout the category. There's a lot of high protein, low sugar options, and I think now consumers, as they continue to kind of educate themselves more on what fits within their lifestyle, they're looking for, you know, a product that kind of fits their specific needs nutritionally. Now, we've seen growth in all of our kind of functional segments, if you will, that being a, you know, low sugar, uh, low carb, and as well as high protein, but I think there's gonna be kind of a Added layer of consumer awareness of what they're exactly looking for and how they're gonna kind of impact their lifestyles within these products, if that makes sense.

Speaker 5 [28:25] I wonder within yogurt, how much of a differentiator it can actually be given that protein is already a major component of the yogurt category, and to go even higher in protein. Uh, and to try to market that or differentiate with that in some way, it It's interesting to me and whether it will actually, it does it actually mean something if the consumer is the consumer already educated that in general, yogurt is a high protein product.

Speaker 4 [28:53] It would be around positioning, wouldn't it, because yogurt did, and I would think Yoplait exactly it used to be the women's diet product, right? And so then protein became the great. You know, Dr. Atkins and so on, it became the great diet ingredient or nutrient, so I think you would have to differentiate like around recovery, sports recovery, healthy aging. That would be a way to differentiate around protein. I'm just looking at the health claims that are in yogurt in the US, so digestive health is number one, gluten-free, which is interesting, which is just kind of almost a throwaway, but it kind of goes, but then low fat, so low fat is still a big deal, and then protein. Um, and then there's a really long tail. We get all the, the natural ones, the no additives, preservatives, the GMO-free, the natural organic, and then sugar is kind of out there at the bottom, um, the low sugar positioning, but, but growing quite fast. So it's just it's big but I do think there's an opportunity to differentiate around that so that you're not just the diet food. Um, that you can find other benefits for protein.

Carol Ortenberg [29:53] Well, while we're talking about nutrition and ingredients, uh, I think we need to talk about plant-based. You know, this is a trend throughout the store. It's clearly a trend in yogurt. It's very interesting, um, how many plant-based brands, for example, applied for our product showcase compared to dairy brands. Um, yet when When you look at the percent of sales in the category, there's still a lot more sales in dairy. So, how impactful is this subsegment of the category and where do you kind of see plant-based going? Bart, I know Siggy's, uh, launched a plant-based line. Can you talk to me about, you know, why that was an effort the company really wanted to commit to?

Speaker 2 [30:35] You know, like a lot of what we did at Siggy's was really paying attention to our consumer and Kenny talked about uh being very uh digital savvy and digital inclusive. We really listened to where our consumer was going and if you think about it, it's not surprising. That a consumer that would be more on the cutting edge of a product that was simpler ingredients, not a lot of sugar, prioritizing that over the absolute sweetness, the first spoonful, sort of like deliciousness that they said, no, I'm looking for something more substantial and uh and uh and nutrition-based. Those same consumers or many of them would be on the forefront of a shift towards plant-based. So we, uh, we had a lot of consumers that said, you know, quite literally, I miss Cigggy so much, but I've stopped all dairy. Uh, I, I, you know, uh, I, I, I still follow Siggy, they wouldn't say this part, but I still follow Ciggy's on, uh, on Instagram and I love the brand and I, uh, and I love the product, but it's not for me anymore. So it was a very obvious opportunity. For cities to go there. Uh, and one reason we were successful and, uh, I was there for the development, but, uh, but not there for the launch, uh, is it, it had protein. Uh, so tying back to what we were just talking about that most of the, uh, plant-based products didn't deliver the protein, which is kind of a, as Michael said, expectation of cost of entry in yogurt. And they just became, hey, you like putting spoonfuls of something soft into your mouth. Here's another one that doesn't have dairy in it. Uh, that's changing now, and Siggy's was one of the, was one of the leaders in that, but now they've actually made sure that they have the cultures in it, but also, uh, uh, the, the winners going forward will not exclusively, but largely be ones that also match the protein side.

Speaker 4 [32:36] Bart, maybe I can, maybe I can ask you something, but if I, I'm looking at, um, the list of what consumers say that they care about, brand is really high, so I can imagine that that is maybe that logical extension that if people really love the Ciggy's brand that they, that there is that brand affinity that keeps you in the brand, um. If it does go non-dairy, is that true?

Speaker 2 [32:58] It is, uh, and, uh, depending on what your extension is, whether it's plant-based or otherwise, but let's say plant-based. If you can promote it with the rest of the line, again, you'll get that dynamic of like, uh, consumers respond to the suggestion, even if you don't have to buy 5 for $5 consumers will still buy $5 much of the time, Kenny can correct me, but much of the time they're going to take the suggestion. Uh, and when they do that, if you've got plant-based and uh dairy in your lineup or whatever the innovation is, there's a very good chance for them to say, I like this brand. I'm gonna give, we'll talk later probably about flavors. I'm gonna give this flavor a try or I'm gonna give this alternative within the brand a try. So, I think there's the brand element, but there's also, again, this dynamics of single serve and the ability to fill your cart with a, a number of mix and match options.

Speaker 5 [33:53] a quick question for Luanne, are there, is there information on age segments and their preferences around plant-based versus dairy?

Speaker 4 [34:02] Oh, there is, and I came across it when I was pulling it again. It's a younger consumer, really, yeah. So, and yeah, I don't have it with me, but there was definitely a, uh, it's skewed a bit higher and you just saw the curve peak and then kind of go down when it came to preference for, for plant-based.

Speaker 5 [34:19] Wow. Interesting, I would think that as older consumers would start to move away from, it seems like in the in the diet profiles or preferences, they're trying to move away from From too much dairy and that that plant-based would It's just interesting to think through that.

Speaker 4 [34:39] Yeah, the millennial is the plant consumer for alternatives, but you are seeing more and more older consumers, 55 plus, reducing dairy, reducing meat. It's just not, um, in total terms, it's not as high as that, that younger consumer.

Carol Ortenberg [34:55] Michael, I'd love to hear from you what you think it will take to crown a brand, the Chobani of plant-based yogurt. I know Chobani has a plant-based yogurt, but I think at this point, uh, sort of, there's a lot of competition, and we haven't yet seen one clear winner.

Speaker 5 [35:11] Well, it seems like the opportunity is still wide open for there to become a clear winner, and I think it really just comes down to the, the consumer experience and, and having that product that. As the wow factor that checks all the boxes that the consumer is looking for from flavor profiles, indulgence, um, the health benefits, and all the other features that they're looking for in yogurt, I don't think that's necessarily happened yet, so I think people are still trying formulations, different manufacturing techniques that they can get to some product that the consumer. Really is fanatical about, and I think until that happens, it's, it's still a wide open playing field for some competitor to come in and take, take the first spot.

Speaker 2 [35:58] Well, I know, uh, you look at plant-based milk as, you know, uh, uh, the last number I saw was more than 40% household penetration, which is, which is really impressive. But milk is utilitarian. Milk, uh, you're largely using, pour on your cereal, something in your coffee, maybe it's in cooking. Of course, some people are just drinking it pure, but even when they do, most people aren't getting, you know, joy and some great pleasure out of milk. Uh, yogurt, yogurt is something that is absolutely for health, but people are also expecting to enjoy this, to, to savor that snack, that breakfast, whatever occasion they're, they're using it for. Just for fun, I'm in plant-based cheese now. The bar is even higher because people get true joy out of cheese, and there's still a barrier, whether it's yogurt or cheese between plant-based and uh and dairy. And until somebody gets much closer on that, there's going to be a limit on the segment, and therefore, I'd argue there isn't going to be a Chobani of plant-based yogurt for some time. This, to me, the segment needs to become much bigger, and the leader will presumably be a big part of making that happen.

Speaker 4 [37:12] Well, and the purchase drivers are going to be really important. Sorry, Michael, because we also have the emergence of the cellular technologies. So there's a couple of companies doing cellular cheese. We know Perfect Day is doing cellular dairy. So for that consumer that really cares about, you know, being, being the environment or animal welfare as their driver, they might have another alternative as well if the cheese and the and the the plant-based. It's going to be really difficult to get there. It's like artificial sweeteners and sugar. The bar is just so high when it comes to milk. So I think, I think, I think cellular might be the disruptor before we get the plant-based Chobani.

Speaker 2 [37:52] It'll be very interesting to see what they claim about their product because it's not dairy-free. It's not plant-based, but it's a substance-free. Yeah, that, that'll be part of the, that'll be part of the, the, what's interesting and the challenge for them as they go forward.

Speaker 5 [38:07] Yeah. It's a question for Kenny, how it seems like there's a lot of real estate allocated to plant-based yogurt on the yogurt wall currently. How are the, how are the sell-throughs in demand in that, in that section versus the, the already existing, um, dairy base?

Speaker 3 [38:27] Yeah, I mean, from our particular retail perspective, we've seen extraordinary growth in plant-based and it's been, you know, pretty consistent. Obviously not the same level of, of dairy yogurt, but the trajectory is, is, is pretty extraordinary, especially coming out of kind of the current situation, you know, that we're in today. Um, we're, we're mindful with it though, because there are a lot of different. Brands, a lot of different yogurt types, as the category becomes that much more mature, the consumer is not just looking for, you know, a plant-based yogurt, I guess, to check the proverbial box. They're looking for one that delivers, you know, on taste, delivers on nutrition, and, you know, efficaciousness too on all plant-based products, you know, and, you know, think about cheeses that melt, butters that spread, and yogurts that, you know, behave and tastes like yogurt, and we're starting to see it a lot of consumer. You know, reach broad and kind of with the flexitarian lifestyle, and it's becoming kind of more of incorporated in every day and not just specific to kind of the vegan and vegetarian consumer. So we, you know, particularly in our situation, we do dedicate quite a bit of space to plant-based, but we have a quite a developed consumer within kind of that subsegment of business.

Carol Ortenberg [39:36] Well, we're touching on taste, so let's talk about flavor. Uh, What are some strategies and thinking about flavor in this category? Is it about classic flavors that you just have to have as a yogurt brand, or what role do these limited edition flavors like Michael's beloved pumpkin pie, uh, play when you're thinking about the set?

Speaker 3 [39:58] I could start. I mean, having the core classic flavors is essential, you know, especially for cus customers that just really go by flavor type first, you know, you want to have that balance of the right core, but adding additional excitement with seasonal profiles and different types of flavors really just adds a lot of incrementality into the category as well. So, it's really having that that balance of having the core, but also having the innovative flavors, especially from a seasonal standpoint, again, infuse some kind of innovation and excitement throughout the year.

Speaker 2 [40:28] I, I think that's absolutely right. I, I, I think from a brand perspective, if you're looking at launching a new yogurt brand, you're absolutely going to want vanilla, strawberry, blueberry in that lineup, and those will almost definitely, there are exceptions, but that that'll almost definitely be your best seller. But if you're, if you're Kenny, you're also looking for incrementality to the category. You're not just looking for what's best for that brand and just keep repeating. So you're also torn a little bit towards, uh, you know, hey, let's bring some completely, let's bring savory, as you said, Carol, which has never worked. Uh, let's bring things that are, uh, very different flavor profiles. The way we solved that at at Siggy's and you might have been thinking of this one, Kenny, I don't know, uh, we actually had a rotating skew. And, and still do that 3 times a year change flavors. What that allowed us to do is to go to things that are really unique, that consumers would get excited about, that they talk about online, that they want to go try, remembering they only have to buy one of it. So the first time it's a pretty easy thing to do. But we didn't have to then. Live with that flavor and, and the expenses of launching it, etc. knowing that it's not going to be there in 1 year or 3 years, knowing that it's, it's got a certain timeline and consumers are going to go back, as they do in ice cream and other categories, to their core flavor choices and, and that heat is going to come off of some of these. So that was our way of constantly staying interesting and bringing that kind of news while still focusing on the stews that were going to sell the most for us as a brand.

Carol Ortenberg [42:09] Did that give you more flexibility on the production side to uh take on flavors that were maybe more difficult to make or uh monetarily, you know, not as successful when you think about margin or things like that, um, and still have that, but not have it for a long period of time.

Speaker 2 [42:28] Yeah, we did, uh, I wouldn't say we, we did things that were operationally challenging, but, uh, the margin certainly wasn't as important to us on that, uh, on that skew. And it really gave us permission to be very exotic and to do things that would help build the brand. So we did a strawberry lingonberry. It wasn't our most innovative flavor, but it helped to reinforce the Icelandic, uh, the, the Icelandic credentials of the brand. Um, we did like a strawberry basil at one point, which was more exotic. That's, you know, something that people are like intrigued with the strawberries, they're reassuring, the basils, the wow, you know, exotic. But again, when you're just buying one of them, you know, yeah, I'll give that a try. I'll buy my vanilla, I'll buy my blueberry, and instead of strawberry, I'll I'll go for a strawberry basil. So, it allowed us to push the boundaries, and again, that was kind of expected from us. It was even part of the brand's launch heritage was having really unique flavors like orange ginger for Ziggy.

Carol Ortenberg [43:27] To end our conversation, um, you know, I do want to switch gears a little bit and talk about the fact that in yogurt, you have a couple really big players, um, who have several brands in the set each. So, do you have any advice to a smaller brand that's competing head to head with those bigger players for consumer dollars?

Speaker 2 [43:48] Well, certainly Michael said before it'd be differentiated, and that's, you know, very clear. This is, there's a lot of brands. Nobody needs another fruit yogurt, and, and again, you're not going to win in a on lower price versus uh some of the existing players that are out there and regional players that are out there and competing on that. I, I think a key advice that I give, not just in this category, but I think it's particularly true in this category, is start off with a base of retailers that you're, ideally that you're best suited for, might be a little pra pragmatism there in terms of the retailers that take you on. And drive success in those and build from there. Don't try to go everywhere that you can go, because again, in yogurt, if you're not turning, you're going to be out. That's going to be costly, but it's also very hard to get a second chance with that same retailer. So you're much better off building high velocities and relatively small base.

Carol Ortenberg [44:46] As Bart said earlier, almost at the start of this conversation, he said that acquires aren't looking for a yogurt brand that they can pump and dump. So, Michael, circling back to that, looking at these larger companies, what are they kind of looking for when thinking about, you know, adding another brand onto their portfolio of yogurt options?

Speaker 5 [45:10] It's really brands that have just created some kind of cult-like following for whatever reason, whether it's innovation and and flavor profiles or things they're doing in the manufacturing stage that are different than what the larger, larger company can offer. Uh, often you see as these brands come up and get acquired, and then go into further mass production, you'll start to lose some of that edge, so the smaller companies, smaller brands have the ability. To not cut corners, and, and it's important for them to, to, to not cut corners so that they can, can maintain that stickiness with the consumer. Uh, so there has to be some kind of element of fanaticism, um, developing the connection through social media, where there's an opportunity to ship direct to consumer to already have that in place, and that's something that we saw with another client of mine, nut pods on the non-dairy creamer plant-based creamer side. Where they weren't necessarily didn't had hadn't gone to retail yet in a meaningful way, but had built a huge following through direct consumer cause it was something that was shippable in a pretty meaningful way.

Speaker 2 [46:22] I think one unique dynamic you, you have here is when you think of acquires, a, a lot of them are logical acquires are gonna be in dairy, and a lot of the dairy companies around the world, a big part of their business is milk, which is commoditized, which is low margin, which isn't as brand-centric. Now, certainly a Danon would be a different type of dairy company that's now beyond a dairy company. But the traditional ones, a, a lot of the potential acquires are going to have a very different mentality than a beverage company that's looking for just heat and isn't worried about profitability. They're going to be looking for Some margin, they're gonna be looking for some, uh, some sensible uh uh trade promotion, for example, and a business model that they can imagine taking in and making work for them. Again, not in every case, but in a lot of cases, if you don't have that, you're going to be shut out of consideration from, from some of the acquires.

Speaker 5 [47:29] One more thing to add, I would say is, and, and this comes up a lot and just CPG food. is whether to have your own facility or whether to do it through another manufacturer or co-packing. And what I would say is there, there are plenty of examples out there in investing or where people were different companies have been acquired, where the, the entrepreneur actually built their own facility and was it the production aspect of it was really integral to the brand. Elenos is actually one of those where, and I think it, it really is up to the entrepreneurs, so entrepreneurs shouldn't feel like that they have to be just incredible marketers that go out and find the best co-packer, have nothing to do really with the production side, uh, because if, if you're an entrepreneur that loves to be a part of the, to build a plant and be in the facility day in, day out, and that's really part of your DNA. You shouldn't shy away from that cause there's plenty of plenty of examples out there where that was a major differentiator and to why that brand was important to consumers versus others.

Carol Ortenberg [48:37] Luanne, have you seen that in the data, you know, are consumers looking at how a product is made and, and, and the process behind it as well as just, you know, what they're consuming? Oh,

Speaker 4 [48:48] it's huge. It's huge, and transparency is our number one trend this year because it also gives you a way to have some kind of meaningful connection. Um, with your consumer and as we talked about, if you can't be out there sampling while connecting through a meaningful story, you know, maybe you could show that you are in the factory every day and I'm still working hard for you. That might be part of that, that meaningful connection with consumers, and I think it's never been more important like watching the news over the past year of retailers that have gone out of business, especially if you think about clothing. Is the people that didn't find a way to connect with their consumers and be really transparent about it are the ones that suffered the most, so, um, I think that can be a huge part of it. It also shows that you're a craftsman, you know, and, and, and in terms of differentiating that can be certainly a big part of the story.

Carol Ortenberg [49:34] Kenny, as a retail buyer, uh, what does it mean to you if a brand is producing their own product? Does that have positive or negative connotations in terms of what you can expect in terms of inventory or production?

Speaker 3 [49:48] Yeah, it, it it actually means a lot. It means, you know, kind of the brand controls its own destiny in terms of supply. So typically we see less supply disruptions when a brand has their own facility. And as Luanne said too, there's added benefits from a marketing perspective that really tell that brand story and connect with our customers through the brands that that we sell. So there definitely is an advantage from both the supply side and a marketing side.

Carol Ortenberg [50:14] Well, on that note, I could keep talking about yogurt for another hour or two, but I think we're out of time. Thank you so much to our guests for joining us. And for those of you watching, thank you so much for tuning in. Stay tuned tomorrow for the product showcase. We'll hear from some of the yogurt brands directly about their experiences in the category. You can also view all category close-ups on the videos page of Nosh.com. Stay tuned.