General Mills' yogurt business has soured a bit of late. And you can blame it on the Greeks. Not the debt crisis, but Greek-style yogurt.
General Mills has been a bit player in that rapidly growing segment of the food business. But now, General Mills is introducing new products in an effort to catch up.
Greek yogurt is a thicker, richer-tasting, and higher-protein version of the yogurt most Americans have been accustomed to eating. It costs about twice as much as regular yogurt. But Americans have been developing a voracious appetite for the Greek variety.
Greek accounts for one-quarter of U.S. yogurt sales. That's eight-times its market share only three years ago.
Dolly Palacio of Maplewood ate Greek-style yogurt growing up in Columbia. That's what she buys at the Cub Foods store in west Maplewood. She likes the Fage brand, which is made by a company based in Greece.
"I always buy it,'' Palaceio said. "It tastes good. It's real yogurt, the real thing."
Sharon Karel of north St. Paul is recent convert to Greek yogurt.
"My feeling is if it's healthier I'm willing to pay for it, so I don't mind the price to be honest," Karel said. She tends to buy whichever brand is on sale.
General Mills' Yoplait yogurt division is a big business for the company with annual revenue of about $1.5 billion in the U.S. But the division posted two consecutive quarters of declining sales in the past year.
Analysts say that's in large part because General Mills did not see the Greek yogurt craze coming.
"They were left standing flat-footed," said Erin Lash, a food industry analyst with Morningstar.
"They didn't realize the popularity or acceptance that Greek yogurt would get from consumers. As a result, they weren't as quick to the market with their competitive offerings," Lash said.
General Mills is one of the two leading sellers of yogurt in the U.S., but it's a bit player in Greek yogurt sales with just a 5 percent share according to UBS Investment Research.
Chobani, a company formed in 2005, has about half of the market in this country.
Tonya Schoenfuss is an assistant professor in the Food Science and Nutrition Department at the University of Minnesota and a former Yoplait product developer. She says yogurt can be somewhat like wine and cheese
"They're very different, all the different manufacturers products," Schoenfuss said. "They have a different kind of culture flavor. They'll have different fruit and flavoring profiles and different amounts of sweetness, if you buy ones that are sweetened. But if you just taste their plain ones across the board, too, they're extremely different."
Greek yogurt can be good or bad from a health standpoint. Schoenfuss said.
"Greek yogurt is basically concentrated regular yogurt and you're just removing water and lactose and some minerals," she said. "You're also concentrating fat and cholesterol."
That's if the fat and cholesterol is there to begin with. Some varieties are free of fat and cholesterol. Others are loaded with it.
So far General Mills seems to be the clear loser with the rise of Greek yogurt, UBS food sector analyst David Palmer said.
The company's offerings have come up short in taste, packaging and image, failing to look authentic, he said.
During a General Mills conference call with analysts in March, Palmer urged company executives to turn around its performance in the Greek segment.
"Chobani continues to move across the country. They're expanding capacity," Palmer said. "They certainly remain a threat, looming. My hope for Yoplait is that you could bend the trend in market share."
And that's what General Mills vows it will do. Michael Harad, marketing director for Yoplait , said for starters, General Mills is introducing a 100-calorie per-serving Greek yogurt that may show up in stores next month.
And Harad said General Mills will heavily promote Greek and other yogurts from Liberté, a Canadian firm General Mills acquired.
"Liberté has been around for over 75 years," Harad said. "We're leveraging the brand's history and artisan past of how to make great tasting products and introducing that to the market. We're going to have national television advertising, social media, digital, coupons, sampling that will get consumer to be both aware of and try our new products."
The good news for General Mills is that there's time to catch up. Consumer demand for Greek yogurt is expected to keep growing. By some forecasts, it may account for half the country's yogurt sales within five years.