Bergen Merey on Müller driving growth in the yoghurt market

He may be the new kid on the block, but Müller Dairy’s new MD Bergen Merey is already in no doubt about who holds the power in UK dairy. And no, it’s not Ronald Kers. It’s the consumer.

“Our company ends up with profit, but at the beginning is one person, how many packs they buy, at what price, how often and how much. This is an election. The yoghurt category is purchased 38 times a year, so that’s 38 elections you need to win.”

And if Müller needed a good electoral prospect, it has one in Merey. The Turkish-born fmcg veteran joined the dairy giant in May after spending 25 years with Procter & Gamble. His experience working across 15 categories and more than 60 brands at P&G, including six years heading the Pringles brand, made him a catch for Müller. The fact he’s fluent in German, having spent six years in Frankfurt, won’t have hurt either.

Merey liked what he saw, too. Müller UK & Ireland has tripled its revenues over the past three years to £1.5bn and is clearly ambitious for growth: its bid to acquire Dairy Crest’s liquid milk business being an obvious example. But with dairy commodity prices crashing, growth will depend on its ability to add value to milk – and that’s where Merey comes in.

“One of the clear challenges in dairy is: how do you take a commodity business and manage it like an fmcg business, adding value through branding, marketing and innovation?” he says.

Müller has been successful at growing its yoghurt and chilled desserts business to date, something Merey attributes to its focus on NPD. “Even just in the last 18 months, the amount of innovation Müller has brought to market is unbelievable.”

But he believes future growth will require a more sophisticated, category-based approach that looks at increasing overall consumption, not just market share. “The big challenge for yoghurts is the fact the category is not in growth. Instead of fighting over the same pie we need to work together to make it bigger.”

And Merey has a plan. His belief in the power of the consumer means he is keen to start discussing the idea of “shopper-based design” with retailers.

“Shopper-based design is a threefold concept that aims to make the shopping experience more pleasurable,” he says. “First, you get the fundamentals right – ensuring the right products are in the right place at the right time; second, you guide consumers by making it easy for them to find the chiller and arranging products in a logical and appealing way; and thirdly you provide more theatre in store.

“The category is currently very confusing for consumers and there is no consistency between stores.”

Merey used the concept of shopper-based design extensively while working for P&G, and says it delivered “huge improvements”, not only for individual brands, but for whole categories.

“If you make the experience more pleasurable, people will spend more time shopping that category, which results in bigger baskets,” he says. “Beauty is a good example of a category that is getting it right.”

Merey also wants to see more radical changes to the way in which yoghurts are merchandised in stores to unlock new sales potential. “Why can’t we use mobile chillers to expand the category into different parts of the store? We need to get rid of some of the barriers to thinking around chilled.”

War on sugar

Of course, growth won’t be down to just merchandising. Health is a big challenge to the category, particularly around the sugar content of some yoghurts. Merey has first-hand experience of handling similar situations, having been at the helm of the Pringles brand at the pinnacle of the debate around fat and salt. “When I listened to the news and read the SACN report it was like déjà vu,” he recalls. “I immediately called a meeting with my executive board to share my lessons from snacks – the biggest of which is to take it seriously, don’t deny it, embrace it.”

In time, this will mean Müller has to gradually reduce sugar across its entire portfolio, he believes. Importantly, it will have to do this without compromising on taste. “Consumers judge performance by experience – and one of the most important elements of experience is taste. So we have to keep that taste experience up, even if it comes with low sugar content,” Merey says. “Our role is to make sure the journey towards less or no added sugar happens gradually, at the right pace, without losing sight of what the consumer wants.”

Beyond health, retailer range rationalisations loom large, and yoghurt – with its myriad flavour variants – is an obvious target. But Merey puts a positive spin on SKU reduction. “I don’t think any of our customers are in the business of cutting SKUs simply to maximise their own profit. I believe they are trying to simplify the shopper experience and win the hearts and minds of consumers in the category. If that is the case, I am all for it, though as category leader I would like to work with my customers and do it together.”

The challenges facing yoghurt are big, but Merey insists growth is nevertheless possible. “In recent months the category has seen some volume and value growth. The challenge now is to sustain it – and I believe we can by putting the consumer, the boss, at the heart of everything we do.”