Market analyst Mintel says that the sector has already grown by a whopping 432 per cent since 2001, and that 60 per cent of consumers cite health as the chief reason behind buying into the product.
In a new report entitled Yoghurts - UK, Mintel also identified the rising popularity of yoghurt drinks, particularly the functional type, coming at the expense of the traditional yoghurt 'pot'.
"Yoghurt drinks are ideal for eating on the go and tap into the snacking zeitgeist of modern Britain in a way that yoghurt pots struggle to do. However, their real success lies in the fact that many are functional drinks and are designed to have a specific benefit beyond their nutritional value," said David Bird, senior market analyst at Mintel.
"The functional food and drink market is booming in Britain and by offering consumers a quick an easy way to enjoy the benefits of functional products, these yoghurt drinks have come up with a winning combination," he said.
And not only are functional yoghurt drinks driving the yoghurt market, they are also responsible for most of the growth in the total UK functional food market. This point, says Mintel, raises questions as to the amount of shelf space the sector is given.
Yoghurt drinks account for about 11 per cent of shelf space, says Danone, but are behind about 60 per cent of growth for the entire functional food category.
The movers and shakers in the functional drink sector, such as McNeil (Benecol) Yakult, Danone (Actimel) and Müller (Vitality), have delivered very strong growth across the period, 2001-05, said the market analysts.
Danone and Müller are reported to account for almost 50 per cent of the yogurt and yogurt drinks market.
Mintel report that Danone's probiotic Actimel brand has doubled in size as consumer awareness grows. Indeed, sales of the probiotic increased by 15 per cent in the third quarter of 2005. Market research firm AC Nieslen named Actimel the UK's fastest growing food brand in 2004.
In contrast, Japan's Yakult - instrumental in growing the functional drink sector during its infancy - has seen market share stagnate. This stagnation, says Mintel, is due to following an advertising strategy that was more scientific and sensible rather than emphasising taste.
While the yoghurt drink sector continues to drive sales, the humble yoghurt 'pot' is still popular with consumers, with sales reported to have grown by 26 per cent between 2001 and 2005. The sector is set to reach £950m by the end of 2006.
"The majority of growth in the yoghurt pot market has come once again from functional varieties, as well as from organic lines," said Bird.
"The early adopters of functional yoghurts have, to a large extent, come from the fat-free sector having already established an interest in active health within the yoghurt market," he said.
Looking forward however Mintel predicts that the yoghurt drinks sector will continue to entice a "significant proportion of the remaining 27m 'yogurt pot' consumers" to switch to drinks.
"This is likely to be achieved through a classic segmentation strategy, which may include the development of new health benefits, new textures and new distribution channels such as vending machines."
"Other markets could learn valuable lessons from the yogurt industry in how to develop and support value growth, by straddling all the major consumer needs of the moment," said the report.
The report is currently available from Mintel priced £995 (€1,472).