Danone and Chobani lead ‘two horse’ US Greek yogurt race - analyst

Danone and Chobani have taken a clear lead in what has become a “two horse race” to dominate the US Greek yogurt market, Wall Street analysts have claimed.

According to New York-based research firm Sanford C. Bernstein, Greek yogurt is set to continue to capture a larger share of the US yogurt market from non-Greek offerings – with manufacturers, Danone and Chobani, driving the growth.

The product, which is viewed as healthier alternative to regular yogurt, has witnessed dramatic growth in recent years – increasing its share of the overall US yogurt market from 1% in mid-2007 to 35% in mid-2012.

Chobani holds the largest share of the US Greek yogurt market – accounting for around 47%. However, Danone looks set to “continue its momentum and become a major player in the Greek yogurt market” through two operational expansions in 2012.

Yoplait, which is manufactured by General Mills, and Fage continue to hold a cut of the US market – although the increasing popularity of Chobani and Danone has significantly reduced their share.

“Two horse race”

“We expect Danone to continue its momentum and become a major player in Greek… effectively making it a ‘two horse race’ with Chobani,” said the Bernstein research.

“We believe that this will become even more evident as Danone’s capacity increases are completed in 2012.”

“Chobani has driven growth in Greek yogurt since its launch in 2007 and captured 47% of the market. Share gains were triple or quadruple-digit in every period over the past 4 years…but in the last 3 periods Chobani has lost share to Danone and Private Label,” the research report added.

Danone is increasing its efforts to gain a larger share of the segment, after it failed to capitalise on Greek yogurt trends as it should have.”

“Management misread the consumer and wanted to avoid ‘chasing fads’ (as it did with low-carb), plus it had capacity issues. Now, with renewed focus and investment, Danone has taken 20% of the market, with accelerating share growth that should continue given capacity expansion,” said the research.

Chobani has also outlined plans to increase operational capacity, in an effort to protect its share of the Greek yogurt market.

Greek yogurt 'revolution'

While Chobani witnessed dramatic growth during the Greek yogurt “revolution”, segment veteran Fage has seen its share of the market drop from 94% in 2007 to 14%.

General Mills was a late entrant to the US Greek yogurt market, with its offering, Yoplait Greek, not launched until early 2010.

According to the research, the product has failed to impress consumers and its share of the market has steadily decelerated to around 5.7% after hitting its peak of 8.1% in May 2012.

“General Mills has missed out on Greek… from having started late to poor positioned of the product, we considered that General Mills is unlikely to become a major player in Greek yogurt.”

“We expect Greek yogurt to continue to gain share from non-Greek offerings. This could compound the problems of General Mills….a ‘double-negative-whammy’ of lack of success in Greek and lost share of non-Greek where General Mills is still strong.”