Phase 1: Brand & Category Summary

2nd February 2016

William Ho, Mishika Narula, Dakota Calvert, Lauren Allegra, Ryan Cullivan

OVERVIEW
As a team, we went to Whole Foods Market and investigated how major yogurt brands

control grocery store shelves. The data and analysis below is a collection of our findings.

COMPETITIVE SUMMARY

Yogurt was first introduced to America in the 1700s by Turkish immigrants but did not

catch on until the 1940s when Daniel Carasso, the son of Danone Founder Isaac Carasso,

purchased a factory in the Bronx of New York City. Danone, which later became Dannon Milk

Products, Inc., made a breakthrough in 1947 by introducing yogurt with a layer of strawberry

fruit on the bottom of each container. This innovative product design appealed to Americans,

allowing Dannon to expand its customer area ultimately encompassing every state in the

United States. Dannon is now one of the largest yogurt producers in the U.S. (Dannon.com).

Yogurt has grown into a massive industry following Dannons original success in 1947.

Estimates show that U.S. yogurt sales are projected to reach $9.3 billion in 2017. Whole Foods

Market is one of many grocery retail stores that caters to the high demand for yogurt in America.

Whole Foods Market on the Alameda currently stocks over 18 brands of yogurt. The

brands carried include Siggis, FAGE, Brown Cow, Wallaby Organic, 365 Organic, Noosa,
Stonyfield Organic, Smari, Clover Organic, Straus, Traders Point, Whole Foods Organic,

Capretta, Blue Hill, Kite Hill, Redwood Hill Farm, Bellweather Farms, and Slingshot. The four

brands that generate the highest sales are Siggis, FAGE, Brown Cow, and Wallaby.

Siggis dairy produces an Icelandic style of yogurt, categorized as skyr. Skyr has the

consistency of strained yogurt, allowing for a thick, creamy, high-protein final product. Siggis

products are manufactured by Siggis dairy. FAGE, the first brand of Greek yogurt introduced to

the American market, is a leading producer of Greek yogurt. FAGE is involved in the production

and distribution of its products. FAGE takes part in large-scale production, manufacturing over

20 flavors using different types of milk. Brown Cow, another Whole Foods Market favorite,

places a large emphasis on supplying products that practice humane treatment of dairy cows. In

2003 Brown Cow Farms was bought by Stonyfield Farm, a company they credit for their long

history of environmental stewardship. Wallaby Organic is the last of the four high-demand

yogurt products, supplying the largest selection of yogurt at Whole Foods. Wallaby Organic

distributes 28 flavors at the Whole Foods Market on the Alameda. All Wallaby products are

produced by the Wallaby Yogurt Company.

However, despite the fact that Wallaby Organic provides the largest selection of flavors,

FAGE dominates the category for largest shelf space. FAGEs products take up a total of 11.08

linear feet of shelf space nearly twice the shelf space that Wallaby Organic, the second largest,

occupies. While FAGE yogurt is offered in 5.3 oz. containers, the company also supplies yogurt

in 17.6 oz., 21.2 oz., and 35.3 oz. bulk containers. FAGE products are the most space-intensive

because they have relatively large packages. Wallaby Organic has the second largest linear

footage devoted to their yogurt. Wallabys diverse selection measures 5.92 linear feet. Stonyfield
Farms Brown Cow, YoBaby, and YoKids line occupy 7.91 linear feet of space. Brown Cow

accounts for 5.83 linear feet of this space because the company predominantly sells smaller, 6 oz.

containers. Siggis, the last of the top four selling brands, takes up 2.5 linear feet of refrigerator

space. Siggis is able to compete with relatively smaller space because they have built a niche

market for their ancient Icelandic recipe. Their shoppers are dedicated to their pared-down,

no-frills recipe.

The top-selling brands are positioned at eye level, excluding Siggis. The eye-level

products are all either 5 oz. or 6 oz. containers. These products tend to have the highest

value-per-dollar of all available products. Yet, we recognized that there are no bulk items

positioned at eye level. There are no niche products placed in the forefront. At eye level the

products are placed by brand and on a continuum of available flavors. Niche products, such as

bulk containers and specialty styles, are separated from their main brand. The prime shelf space

is constructed so that it is easy and convenient for repeat purchasers and to appeal to passing

customers. Thus the wide-appeal high popularity items are in the most visible space to utilize

their existing brand value.

Smaller brands like Capretta, Redwood Hill Farm, Blue Hill, Kite Hill, and Bellweather

Farms, were positioned on the top two shelves. These brands produce goat milk, sheep milk, and

almond-milk based yogurt. This variety is not commonly sold in traditional grocery stores.

Whole Foods carries these brands because the company believes that their deepest purpose as an

organization is to help support the health of their customers. Their core values highlight the

importance of selling the highest quality of natural and organic products available. Carrying

brands that make their yogurt with naturally homogenized sheep milk, or goat milk, allows them
to stay in line with their overarching goals and values as a company. This being said, companies

like Capretta and Redwood Hill Farms usually dont have the funding to pay for premium shelf

space. Brands like Noosa, Straus, and Cover Organics are also not commonly found in grocery

stores like Safeway. However, because they were placed close to eye-level, we can conclude that

they have a slight edge over small brands like Capretta because they can afford to pay to be

placed in close proximity to the major brands.

An interesting aspect in respect to the location of yogurt brands was the fact that there

was only one brand, Stonyfields YoKids, that supplied a product aimed towards children.

YoKids Squeezers were positioned two shelves from the bottom at a height that would be

considered eye-level for the average five to seven year-old. YoBaby products were in a similar

location to synergize.

The chart below displays the average price per ounce of product for each brand. The

prices are adjusted after promotions are taken into account. Singles represent 1 serving units

while bulk represents multi-serving units. Store brands are in white labels. Top sellers are

bolded.
 |$/oz.| Singles Bulk Special Property

Siggi $0.19 - Icelandic Skyr

FAGE $0.27 $0.22 -

Brown Cow $0.10 $0.09 -

Wallaby $0.17 $0.21 Low Fat - Bulk only in Greek

365 $0.17 $0.11 -

Noosa $0.31 $0.35 -

Stonyfield - $0.24 -

Smari $0.40 - -

Clover $0.20 - -

Straus - $0.20 Mixed Line: Reg/Greek

Trader's Point $0.44 - -

Whole Foods $0.25 - -

Capretta $0.35 - Goat - Mixed Line: Reg/Greek

Blue Hill $0.41 - Grass Fed

Kite Hill $0.42 - Almond Milk

Redwood Farm $0.37 - Goat Milk

Bellweather $0.41 - Sheep Milk

Slingshot $0.41 - Protein Drink

 The yogurt price market is heavily price competitive. Competitors are continuously

promoting their products through limited-run discounts. Most yogurt brands tend to have a $0.30

floating value after promotions have been applied. The top four brands in terms of sales

popularity tended toward the lower end of the price spectrum. Three of the four have active

promotions at the time of writing: Siggis, Brown Cow, and Wallaby Organic. Thus, the market

is reasonably price sensitive. Pricing behavior demonstrates that the product market has already

matured. Niche offerings, in the vein of dairy alternatives and other offshoots, did not pursue

promotional activity.

Specific promotion strategies primarily center around pushing bulk purchases of yogurt

product. The three of the big four yogurt brands have discounts only when their singles are

purchased in bundles of five. The strategy encourages impulse binge-buying behavior. These

discounts usually run for about 2-4 weeks at a time and average around 70-90 cents in savings

per unit. Product differentiation is present, but largely indiscernible from an objective view. It is

likely that these companies have high sales because their per unit prices are the lowest of

available products. In this sense, price promotions possibly persuades people to put one product

in a more favorable position, in relation to their preference on the product position chart. They

attempt to build brand loyalty by associating their products with value.

In addition, a handful of producers use tags, such as gluten free, non-GMO verified or

local, to distinguish their respective offerings from other competitors. These tags are located on

the price/description label under the physical offering, and encourage consumers to think twice

about the healthier or locally produced items they offer. These labels are all bolded and

highlighted to catch the consumers eye and are restated next to the price. Wallaby and FAGE
had the most gluten free offerings, while Redwood Farm, Kite Hill, and Straus offered the most

locally produced yogurt selections. Straus and Brown Cow offered non-gmo verified yogurt

options. Employees say that FAGE and Wallaby with their selection of gluten free offerings an

attribute highly sought-after by Whole Food patrons make these two producers very popular

among customers.

Conclusion Candidate:

The yogurt market is dominated by products with low product differentiation, each is a

soft substitute for another. The market is price sensitive and the majority of major brands pursue

pricing promotions. Products are offered in different sizes and many different flavors - most

companies segregate their products into singles ranging in 5 oz. to 6 oz. packages and bulk

which were between 24 oz. and 32 oz. packages. The product price float point is relatively tight.

Most brands differ only in several cents per ounce. There are several niche lines outside of the

primary products. The most popular niche product is Greek style yogurt, followed by

non-dairy and goat-milk products. These products have a higher going rate and for the most part

do not pursue price promotion. The big four that dominate sales volume are: Siggis, Brown

Cow, FAGE, and Wallaby. Competitive prices and large numbers of producers indicate that the

product market is either growing or mature. Overall, entry into the market would require a very

competent value proposition. Ultimately, we suspect that companies will continue to pursue

research in order to expand the niche products at grocery stores -- specifically Whole Foods

Market.