Wellbeing goes down a treat, naturally

Yoghurt has gone au naturel. Concerned by what’s being used to sweeten it, consumers are reaching for the unadulterated pleasures of natural yoghurt.

Plain big pots have continued their impressive sales streak with value up 11.9% on volumes up 11.6% , and their fruity counterparts are up 6.8% [Kantar 52 w/e 24 May 2015].

The overall market, however, is turning sour. Value may be up 0.6% but volume has fallen by 1.2% as the likes of kids pots and fat-free small pots take a hit.

So, as perceptions of what constitutes ‘healthy’ change, what are suppliers doing to ensure their products remain relevant? Will those with added sugar and sweeteners be stripped from shelves? And just how big can ‘natural’ get?

The previous darling of the yoghurt category, the fat-free small pot, is in the doldrums. It’s lost £11.1m over the past year alone as volumes tumble 5.8%.

“A lot of fat-free yoghurts sit in the everyday sector of the category, which has seen consumers switching into natural, Greek and fruity big pots,” says Samantha Dolan, senior brand manager at Arla. “As consumers begin to realise that low fat can translate to high sugar they are looking for healthier alternatives.”

With concerns over fat put aside, natural is now seen as the healthiest option. “We’re witnessing a shift in shopper behaviour away from calorie counting to a focus on naturalness and wellbeing,” says Gregory Pitts, head of category development at Danone.

Yet fat-free small pots are still the second-biggest subcategory, at £414.6m. “Many traditional brands are experiencing a challenging role in the marketplace, but this segment still has a vital role to play,” says Pitts. “To be successful the offering to the shopper must remain relevant by focusing on wellbeing while still delivering the qualities of the traditional brands.”

Wellbeing is a core focus of Danone’s Activia, which continues with its ‘feel good’ message on top of a £2.5m media campaign featuring Gok Wan championing Activia Fibre. Stablemate Danio, meanwhile, is enjoying growth as a result of the ‘natural’ trend and interest in protein - sales of its core four SKUs increased by 14.3%, according to Pitts.

Müller is also focusing on wellbeing, and claims fat-free Müllerlight is bucking the wider market trend. “The Müllerlight brand is steaming ahead in 2015, reaching the biggest-ever share of the chilled yoghurts and potted desserts category of 9.4%,” says Müller dairy marketing controller Lisa Brazier. For Müller, the key to success is innovation, which has seen Greek-style Fruitopolis added to its range alongside twin-pots Müllerlight Goodies.

Innovating to keep up with trends is vital, particularly with range rationalisation. “Retailers are all trying to simplify their offers,” says Amelia Harvey, co-founder of The Collective. “You’re at risk from duplication so you have to remain relevant, be innovative and do something different.”

Lucy Evans, trading manager for chilled at Budgens, agrees. “Basic natural and Greek yoghurts are massively up so it’s really about changing our perception of the everyday,” she says.

Greek success

In the big four there’s increasing focus on Greek-style and Greek yoghurt - sales of which are up 26.9% and 23.5% in value, respectively. Big pots are also booming in the mults and here, unlike with their miniature counterparts, fat-free isn’t struggling. In fact, sales of fat-free big pots are up 9.7% while full-fat variants are up 10.5%.

And the trend isn’t restricted to dairy. Alpro yoghurt sales are up 56%, according to the brand. “Rather than seeking options in the yoghurt that are solely ‘low fat’, consumers are shopping for plant-based alternatives that tick the box when it comes to taste, health and convenience,” says Vicky Upton, marketing controller at Alpro UK.

Arla’s Skyr is also flying high, having generated £2.7m since its launch in March. The Icelandic-style yoghurt is fat free, high in protein and boasts a low sugar content. “The key to low-sugar is to do it naturally, which is what we did with Arla Skyr,” says Dolan. “Consumers consider natural as their number one thing in yoghurt so whatever we do to reduce sugar has to be done in a natural way.”

Not that this is a sure-fire recipe for success. Arla’s Reduced Sugar yoghurt, launched in May, boasts all-natural ingredients but is struggling to get traction, admits Dolan, who argues it’s about six months ahead of the curve. “It’s not doing brilliantly well,” she says. “Consumers just don’t see sugar as a massive deal yet but they will. Also, on pack it talks about low-fat and reduced sugar. If Arla is a brand you haven’t seen before, what’s your perception of what that product will taste like? And thirdly, it’s sat in everyday yoghurts, which are suffering badly.” But Arla isn’t giving up on it, and is working on improving the packaging and flavour.

Importantly, reducing sugar can’t be at the expense of taste, argues Bergen Merey, Müller Dairy MD. “Consumers want to have a pleasurable experience when they are eating. So we have to keep that experience up even if it comes with lower sugar content.”

A matter of taste

Careful reformulation will therefore be the name of the game, and Merey is confident it can be done naturally. “In yoghurt, sugar comes in three ways: lactose, which according to the SACN is acceptable as the natural binded sugar in milk; then there is the bit that comes from the fruit; and the last part is the added sugar we put in,” he says. “That is the part we are talking about and that is what we need to reformulate. We can look at adding more fruit, for example, to add sweetness without adding sugar.”

Smaller brands are also taking action: The Collective has cut 15% sugar from its yoghurts over the past year while Yeo Valley increased its share of the kids market through the relaunch of Little Yeos and its ‘no added refined sugar’ claim.

Getting health credentials right is particularly important in kids yoghurts, a sector that is struggling. While handheld formats are showing value growth of 12.1%, volumes are down 3.5%. And potted kids yoghurts are down a whopping 18.7% on volumes down 18.6%.

Despite these challenges, there is plenty of optimism among brands. Harvey at The Collective believes natural and big pots will keep fuelling growth for the category. “Natural is a fast-growing sector and will continue to be so. At the moment, natural yoghurt to some extent is just an ingredient but there is an opportunity for natural to become the hero of the food occasion. Will the category get to £500m in five years? I’m not sure. But will it get there in seven or eight? Yes.”