Yoghurt in the United Kingdom
Headlines
·
Yoghurt sales grow by 2% in
2008 to reach £1,353 million.
·
Pro/pre biotic spoonable
yoghurt is the most dynamic category, with value sales increasing by 14%.
·
Other functional spoonable
yoghurt sees the largest change in value sales growth, from 22% in 2007 to 12%
in 2008.
·
Value sales increases in
spoonable varieties are offset by ongoing declines in drinking yoghurt products.
·
Müller Dairy (UK) leads sales
of yoghurt with a value share of 29% in 2007.
·
Value sales are predicted to
increase at a CAGR of less than 1% over the forecast period.
Trends
·
There were several core trends
within yoghurt during 2008. Health issues remain the largest and most
significant driver of both sales and product development. However, yoghurt was
also characterised by an inclination towards indulgence items. Key launches in
this regard included the September 2008 introduction of Danone Ltd’s functional
yoghurt dessert product Activia Intensely Creamy and the October 2008 launch of
Rachel’s Dairy Ltd’s dessert-style Divine brand in milk chocolate, orange and
toffee flavours.
·
Any value growth created by
these trends in 2008 was offset by the ongoing decline within drinking yoghurt,
value sales of which fell by -3% that year compared to a CAGR for the review
period as a whole of 13%. There appears to be a certain amount of consumer
resistance to the faddishness of these products; the -9% decline in sales of
other functional drinking yoghurt suggests that consumer cynicism about its
efficacy is rising. Greatly reduced levels of disposable consumer income also
hurt sales; as recession began to bite in the UK, the frankly non-essential
nature of functional products meant that consumers were quick to discard them.
Both functional and non-functional varieties of yoghurt suffered from a
proliferation of healthy (or at least positioned as healthy) alternatives such
as smoothies and juices which became widely available during the review period.
Manufacturers are not keen to give up on yoghurt however, and in March 2008
Unilever Foods UK Ltd invested £15 million into supporting its Flora Pro-activ
brand.
·
Spoonable yoghurt therefore
underpinned any positive overall value development, with growth driven
primarily as a result of consumers perceiving ‘active’ products to be healthy;
brands that saw the strongest growth were those that clearly communicated such
a function. Danone Ltd’s Activia, for example, increased its value share from
3% at launch in 2002 to over 9% in 2007 by following this strategy, and through
the growing perception that it can help to relieve the discomfort of feeling
bloated.
·
Leading company Müller Dairy
(UK) Ltd, on the other hand, saw the value share of its Müller brand slip
during the review period as consumers perceived it to be sugary and not
especially healthy. Nonetheless, the company witnessed sales growth in absolute
terms during 2007 as a result of increased marketing. Its Crunch Corner brand
enjoyed strong growth after having been aggressively promoted as an all-day
snack. New product development has not been so successful; the Müller One a Day
brand, launched in 2007, was abandoned the following year, and the company also
discontinued Müller Light in 2007. Consumers apparently cannot associate this
brand with healthy options, a fact which may partly be related to its livery,
which makes it look like confectionery.
·
Product development in 2008 was
therefore increasingly related to repositioning yoghurt away from its
historical status as a kind of diet snack. This was achieved through new
packaging designs, formats and varieties that were increasingly being segmented
and that helped encourage consumption at all mealtimes. Squeezable yoghurt
aimed towards children has been particularly successful, for example, and
organic variants, led by Yeo Valley Organic Co Ltd’s Yeo Valley and Rachel’s
Dairy Ltd’s Little Rachel’s Organic have also performed strongly. These
products are often bought by parents of young children, whose price sensitivity
is low when it comes to products for their infants. In general, consumer
awareness of the ingredients contained in yoghurt is rising.
·
As a result the price positions
of spoonable yoghurt products moved upwards, showing value sales growth of 4%
in 2008 despite a marginal drop in volume terms. Within this category,
functional varieties grew most strongly – in line with overall UK packaged food
trends – with value sales of both functional spoonable yoghurt and pro/pre
biotic spoonable yoghurt increasing by 14% in 2008.
·
Paradoxically, these products
typically make the same claims as functional drinking yoghurt and pro/pre
biotic drinking yoghurt, both of which experienced a decline in value sales
that same year. The difference appears to reside in the clarity of marketing
activity, since the blizzard of health claims made on behalf of brands such as
Yakult seems to have confused people. Price rises have been partly driven by
the increased costs of raw materials that have characterised dairy products as
a whole, but mostly by production development efforts that have added value.
Competitive Landscape
·
Sales of yoghurt in the UK
continue to be led by Müller Dairy (UK) Ltd, which held a 29% share of total
value in 2007. The company’s Müller brand increased its share that year,
following a series of annual declines, through a mixture of extensive
promotional activity, typically buy-one-get-one-free offers in
supermarkets/hypermarkets, and through repositioning as an all-day snack.
Müller includes a number of sub-brands – Fruit Corner, Crunch Corner, Little
Stars fromage frais, Amore Yogurt and Vitality – but brand equity has largely
been built on the Corners format, whose square packaging and separate
compartments for flavourings added to the yoghurt are highly distinctive.
·
However, the Corners format is
beginning to look a little tired, and the indulgence factor that underpinned
the brand on launch in 1986 has long been eclipsed; moreover, consumer
perception seems to be that these products are not especially healthy, and
Müller is unable to follow price positions upmarket. As a result, its value
share within yoghurt dipped from 35% in 2001 to 29% in 2007. Nonetheless, the
brand did regain some share in 2007, thanks to the aggressive marketing of
Crunch Corner coupled with sustained advertising expenditure. Subsequently in
August 2008, for example, the company launched the ‘Mix it your way’ campaign
for its Müller Corners, part of an £8.5 million marketing spend for the brand
family that year.
·
The most successful company
strategies in 2008 were therefore related to simplicity. Müller Dairy (UK) Ltd
abandoned its healthy Müller One a Day and Müller Light formats in order to
focus on what it does best, and Danone Ltd toned down the health claims for its
functional Activia brand to one that the product makes people feel less
bloated. Confusion amongst consumers about good and bad bacteria inhibited
sales of several functional drinking yoghurt varieties in 2008, and clarity in
branding appears to be the way forward. At the same time, manufacturers which
emphasised the quality of the product, the indulgence factor or an organic
position also benefited; UK consumers eat only half the amount of yoghurt per
head that those in neighbouring France do, and are looking to try new
variations as consumption becomes more normalised.
·
Although yoghurt in the UK
remains dominated by multinationals such as Müller Dairy (UK) Ltd and Danone
Ltd, smaller local players are also emerging. UK manufacturers Yeo Valley and
Rachel’s Dairy Ltd have benefited strongly from organic trends, with the
former’s Yeo Valley Organic brand ranked fourth overall within yoghurt during
2007. Increased consumer interest in provenance is underpinning some of these trends
– Müller Dairy (UK), for example, now emphasises on its website the fact that
its products are made in Shropshire – as are the health trends that have
generated strong growth in overall sales of yoghurt.
·
Pricing trends helped reduce
the share of value sales accounted for by private label over the review period,
as consumer expectations are that these items should be cheap. Private label
also lags behind manufacturer brands in terms of the wide variety of product
development that was seen in 2008, making it more difficult for these products
to move their positioning upmarket.
Prospects
·
Value sales of yoghurt are
expected to increase at a CAGR of less than 1% over the forecast period, with a
CAGR in excess of 1% for spoonable yoghurt offset by a negative CAGR greater
than -2% within drinking yoghurt. Although manufacturers are keen to turn
around sales of the latter – the margins on these products are substantial, and
the category’s development over the review period was expensive in terms of
marketing activity – consumers are becoming increasingly dismissive of product
efficacy, while their high prices and non-essential nature makes them a less
likely purchase during times of recession.
·
Spoonable yoghurt, however,
will see value sales develop as a result of an increasing number of consumers
trading up to more expensive varieties; volume sales are expected to decline at
a CAGR of -1% in comparison to value growth of 1% over the forecast period.
This will be underpinned by continually emerging health trends, including live
functional yoghurt, the growing popularity of organic products and a
generalised perception among consumers that yoghurt is good for you.
·
Average unit sizes may
decrease, however, despite growth in the use of yoghurt as a cooking ingredient
and its sale in large pots. Health-aware consumers also understand that these
items are high in fat content and that small amounts are all that is needed.
The emergence of indulgence products such as Danone Ltd’s Activia Intensely
Creamy will also drive this sizing trend, as will the anticipated emergence of
more child-specific variants; products such as Nestlé UK Ltd’s Munch Bunch
Squashums, Yeo Valley Organic Co Ltd’s Yeo Valley Organic and Fruit Tumbles,
and Dairy Crest Plc’s Frubes are already available, and more are expected to
follow.
·
Per capita consumption in the
UK still lags behind that across the rest of Europe, so manufacturers see
growth potential in encouraging breakfast consumption and also through
developing yoghurt as a healthy on-the-go snacking option. Yoghurt products
with disposable spoons are likely to appear on convenience store shelves in the
future, but may struggle to secure consumer uptake or indeed to obtain retail
listings due to the current focus on the environmental effects of packaging
waste. However, manufacturers are keen to find a niche within yoghurt that has
not yet become saturated.
·
Health issues remain the
biggest threat to the forecast growth of yoghurt sales. Even functional
products have a relatively high sugar content, and the strong media focus on
obesity in 2008, especially among children, could be turned against products
such as yoghurt that are promoted as being healthy but which in fact may not
be.
Sector Data
2003 2004 2005 2006 2007 2008
Drinking yoghurt 35.4 54.2 69.7 64.5 63.2 60.0
(million litres)
Spoonable Yoghurt ('000 390.3 392.2 417.9 425.8 429.0 427.9
tonnes)
Yoghurt (not calculable) - - - - - -
Source: Official
statistics, trade associations, trade press, company research, store checks,
trade interviews, Euromonitor International estimates
£ million
2003 2004 2005 2006 2007 2008
Drinking yoghurt 145.8 226.9 321.5 293.3 281.6 271.9
Spoonable Yoghurt 818.4 890.7 967.5 1,012.2 1,044.1 1,080.7
Yoghurt 964.2 1,117.6 1,289.0 1,305.5 1,325.7 1,352.6
Source: Official
statistics, trade associations, trade press, company research, store checks,
trade interviews, Euromonitor International estimates
% volume growth
2007/08 2003-08 CAGR 2003/08 TOTAL
Drinking yoghurt -5.0 11.2 69.8
Spoonable Yoghurt -0.3 1.9 9.6
Yoghurt - - -
Source: Official
statistics, trade associations, trade press, company research, store checks,
trade interviews, Euromonitor International estimates
% current value growth
2007/08 2003-08 CAGR 2003/08 TOTAL
Drinking yoghurt -3.4 13.3 86.5
Spoonable Yoghurt 3.5 5.7 32.0
Yoghurt 2.0 7.0 40.3
Source: Official
statistics, trade associations, trade press, company research, store checks,
trade interviews, Euromonitor International estimates
% value analysis
Soy-based Dairy-based Total
Yoghurt 0.5 99.5 100.0
Source: Official
statistics, trade associations, trade press, company research, store checks,
trade interviews, Euromonitor International estimates
ranking
2004 2005 2006 2007 2008
Strawberry 1 1 1 1 1
Cherry 2 2 2 2 2
Mixed fruits 3 3 3 3 3
Raspberry 5 5 5 6 4
Fruits of the forest 4 4 4 4 5
Peach 6 6 6 5 6
Apricot 7 7 7 7 7
Orange 8 8 8 8 8
Source: Official
statistics, trade associations, trade press, company research, store checks,
trade interviews, Euromonitor International estimates
ranking
2004 2005 2006 2007 2008
Toffee 1 1 1 1 1
Hazelnut 2 2 2 2 2
Source: Official
statistics, trade associations, trade press, company research, store checks,
trade interviews, Euromonitor International estimates
% retail value rsp
Company 2003 2004 2005 2006 2007
Müller Dairy (UK) Ltd 32.5 30.7 30.6 28.8 29.4
Danone Ltd 12.4 14.7 17.0 19.6 21.1
Yoplait Dairy Crest 7.5 7.5 9.8 10.6 10.5
Yeo Valley Organic Co Ltd 3.6 4.5 4.3 5.6 5.4
Lactalis Nestlé - - - 3.5 2.9
Produits Frais
Onken Dairy (UK) Ltd 3.3 3.0 2.6 2.5 2.7
McNeil Consumer 0.5 1.4 2.6 2.6 2.5
Nutritionals UK Ltd
Yakult UK Ltd 3.1 2.9 2.4 1.9 1.9
Unilever Foods UK Ltd - 0.4 2.0 2.2 1.6
Rachel's Dairy Ltd 0.7 1.0 1.2 1.3 1.6
Nestlé UK Ltd 7.7 6.8 6.1 1.7 1.5
Gorden Conrad Ltd 1.4 1.3 1.2 1.2 1.3
Innocent Ltd 0.1 0.1 0.1 0.1 0.1
Uniq Plc 0.7 0.6 0.2 0.1 -
Friesland Drinks NV/SA 0.4 0.4 0.2 - -
Ocean Spray Int Inc - 0.1 0.2 - -
ND Drinks UK Ltd 0.3 0.0 - - -
Arla Foods Plc 0.1 - - - -
Northern Foods Plc - - - - -
Private Label 17.0 15.8 14.2 13.8 12.9
Others 8.5 8.9 5.4 4.5 4.6
Total 100.0 100.0 100.0 100.0 100.0
Source: Trade
associations, Trade press, Company research, Trade interviews, Euromonitor
International estimates
% retail value rsp
Brand Company 2004 2005 2006 2007
Müller Müller
Dairy (UK) Ltd 30.7 30.6 28.8 29.4
Activia Danone
Ltd 2.8 3.9 7.6 9.3
Actimel Danone
Ltd 8.3 9.7 8.3 8.2
Yeo Valley Yeo
Valley Organic Co Ltd 4.5 4.3 5.6 5.4
Yoplait Yoplait
Dairy Crest 1.2 3.7 4.0 4.1
Weight Watchers Yoplait Dairy Crest 3.8 3.8 4.1 3.9
Shape Danone
Ltd 3.6 2.9 3.3 3.5
Biopot Onken
Dairy (UK) Ltd 3.0 2.6 2.5 2.7
Ski Lactalis
Nestlé - - 2.9 2.7
Produits
Frais
Benecol McNeil
Consumer 1.4 2.6 2.6 2.5
Nutritionals
UK Ltd
Yakult Yakult
UK Ltd 2.9 2.4 1.9 1.9
Flora Unilever
Foods UK Ltd 0.4 2.0 2.2 1.6
Rachel's Rachel's
Dairy Ltd 1.0 1.2 1.2 1.5
Total Gorden
Conrad Ltd 1.3 1.2 1.2 1.3
Sveltesse Nestlé
UK Ltd 0.8 0.8 0.8 0.8
Munch Bunch Nestlé
UK Ltd 1.4 1.8 0.9 0.7
Munch Bunch Lactalis
Nestlé - - 0.5 0.2
Produits
Frais
Petit Filous Yoplait Dairy Crest - 0.0 0.2 0.1
Innocent Innocent
Ltd 0.1 0.1 0.1 0.1
Little Rachel's Rachel's Dairy Ltd - - 0.1 0.1
Organic
Danacol Danone
Ltd 0.0 0.5 0.4 0.1
Tweenies Uniq
Plc 0.5 0.2 0.1 -
Ski Nestlé
UK Ltd 4.6 3.5 - -
Fristi Friesland
Drinks NV/SA 0.4 0.2 - -
Ocean Spray Ocean
Spray Int Inc 0.1 0.2 - -
Teletubbies Uniq
Plc 0.0 - - -
Drinkfit ND
Drinks UK Ltd 0.0 - - -
Bob the Builder Arla Foods Plc - - - -
Nestlé Nestlé
UK Ltd - - - -
Shape Uniq
Plc - - - -
Private label Private Label 15.8 14.2 13.8 12.9
Others 11.5 7.7 6.8 7.0
Total 100.0 100.0 100.0 100.0
Source: Trade
associations, Trade press, Company research, Trade interviews, Euromonitor
International estimates
2008 2009 2010 2011 2012 2013
Drinking yoghurt 60.0 57.0 54.6 52.5 50.8 49.5
(million litres)
Spoonable Yoghurt ('000 427.9 417.1 410.8 406.3 404.1 403.4
tonnes)
Yoghurt (not calculable) - - - - - -
Source: Official
statistics, trade associations, trade press, company research, trade
interviews, Euromonitor International estimates
£ million
2008 2009 2010 2011 2012 2013
Drinking yoghurt 271.9 262.3 255.1 249.1 244.4 240.9
Spoonable Yoghurt 1,080.7 1,093.1 1,107.9 1,121.8 1,136.3 1,150.5
Yoghurt 1,352.6 1,355.4 1,363.0 1,370.8 1,380.7 1,391.3
Source: Official
statistics, trade associations, trade press, company research, trade
interviews, Euromonitor International estimates
% volume growth
2012/13 2008-13 CAGR 2008/13 TOTAL
Drinking yoghurt -2.6 -3.8 -17.6
Spoonable Yoghurt -0.2 -1.2 -5.7
Yoghurt - - -
Source: Official
statistics, trade associations, trade press, company research, trade
interviews, Euromonitor International estimates
% constant value growth
2008-13
CAGR 2008/13
TOTAL
Drinking yoghurt -2.4 -11.4
Spoonable Yoghurt 1.3 6.5
Yoghurt 0.6 2.9
Source: Official
statistics, trade associations, trade press, company research, trade
interviews, Euromonitor International estimates
