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Greek Yogurt Sales Rise In U.S. Dairy Aisles

Greek Yogurt Sales Rise In U.S. Dairy Aisles

New dairy product is changing consumer tastes and yogurt industry.

Earlier this summer, Goldman Sachs and the Swiss bank UBS downgraded the stock rating for the food company General Mills from "buy" to "neutral."

One of the main reasons? Greek yogurt — the growing popularity of the thick and tangy dairy product is changing consumer tastes and the yogurt industry.

Hamdi Ulukaya comes from a long line of dairy farmers in Turkey, and he says the first time he tried yogurt in America, he did not approve.

"I was just surprised that, there was so much sugar in there. It was so much preservatives and colors," he says.

The yogurt Ulukaya grew up eating was made in the so-called Greek style that is popular in the Mediterranean and Middle East, where yogurt is often strained.

The process gives it a tangy taste and a thick texture, almost like sour cream.

Ulukaya says the soupy, sweet yogurt found in most American grocery stores threw him for a loop.

"And I started asking the questions, 'Why is this so sweet?' The answer was, well, Americans wouldn't eat unless it's absolutely, you know, very sweet, or they don't like the taste of yogurt. They wouldn't eat it," he says.

Leading The Pack

But Ulukaya didn't buy that argument.

So in 2005, he bought an old Kraft Foods plant in upstate New York and created Chobani, which is now the best-selling Greek yogurt brand in the U.S.

Hungry yogurt eaters are now voting with their spoons, as more consumers make the switch from conventional to Greek yogurt.

Five years ago, annual sales of the dairy product totaled just $60 million.

But this year, food industry analysts predict Greek yogurt will almost double last year's sales to $1.5 billion.

So far, Chobani and the Greek dairy company Fage are leading the pack of best-selling Greek yogurt brands, and conventional yogurt giants like Yoplait, owned by General Mills, and Dannon are now trying to play catch-up.

But not everyone who has tried it is making the switch. After all, a cup of Greek yogurt is usually double the price of the conventional kind.

However, the majority of those who have gone Greek represent a highly desirable consumer group, says David Palmer, a packaged food industry analyst with UBS.

Devoted Followers

"You know, sort of what I would envision to be the Starbucks crowd," he says. "It's a higher-educated, higher-income user that resides in the Northeast."

And, Palmer says, more often than not, the Greek yogurt consumer is female.

"Oh, I love Greek yogurt, I'm addicted to it. I buy it all the time," says Kathy Smith. Smith recently stopped by Yola, a fresh yogurt shop in Washington, D.C., and ordered a low-fat Greek yogurt parfait.

She says she made the switch to Greek a few years ago and hasn't gone back since.

Not all Greek-style yogurt is low in fat, says the yogurt shop's owner, David Smith. But that's the only kind available at his shop, and he says there's a devoted Greek yogurt following among his customers.

"It is the one type of yogurt that when we run out unexpectedly, they get very upset," he says.

Palmer of UBS says protein-rich Greek yogurt may have the staying power that outlasts other food fads.

"When you think about it, it is not easy to get protein in a convenient form," Palmer says. "And then if you raise the bar further and say, high-protein, low-fat, convenient, and tastes great — wow! That might make this a perfect food."

And it could be a potential threat at the breakfast table. Most consumers who try it say a large cup of Greek yogurt can be quite filling, and Palmer says that could eventually give other breakfast foods a run for their money.

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