Contents:

Scope and Themes What you need to know Definition Data sources Sales data Consumer survey data Abbreviations and terms Abbreviations Terms Executive Summary Market at a glance—slowing future growth Refrigerated yogurt continues to dominate the market and market growth Demographic influences Groupe Danone and General Mills top suppliers, but growth comes from small manufacturers Supermarkets increase private-label offerings in the total product mix Growth in the number of yogurt (not frozen) users Yogurt flavor is the top desired attribute Manufacturers need to educate consumers about probiotic and prebiotic to increase sales through these products Market Size and Forecast Key points Market growth contingent upon product innovations supporting consumers’ ongoing quest for healthy living Manufacturers need to explore new consumer segments other than women Market hurt by increasing prices Sales and forecast of yogurt and yogurt drinks Figure 3: Total U.S. sales and forecast of yogurt and yogurt drinks, at current prices, 2003-13 Figure 4: Total U.S. sales and forecast of yogurt and yogurt drinks, at inflation-adjusted prices, 2003-13 Wal-Mart sales Competitive Context Key points Increasing competition and confusion among growing family of line extensions Growth-driving innovative claims in yogurt increasingly available in other foods and beverages Segment Performance Key points Health and wellness trends influence most segments Segment sales and forecast of yogurt and yogurt drinks Figure 5: FDMx sales and forecast of yogurt and yogurt drinks, at current prices, by segment, 2003-13 Refrigerated yogurt continues to dominate the market Figure 6: FDMx sales of yogurt and yogurt drinks, by segment, 2006 and 2008 Segment Performance—Refrigerated Yogurt Key points Refrigerated yogurt benefits from pro-health innovation and positioning Light yogurt resonates with consumer lifestyle; regular yogurt likely to exhibit continued decline Increasing price and competition from other dairy products hurts kids’ yogurt Soy and Greek yogurt accelerates on consumer trend towards healthy eating Sales and forecast—refrigerated yogurt Figure 7: FDMx sales and forecast of refrigerated yogurt, 2003-13 Segment Performance—Refrigerated Yogurt Drinks Key points High prices deter repeat purchase; create value perception through health-boost claims Yogurt drinks face competition from smoothies and kefir milk Hispanics and blacks remain under-targeted; families with children provide growth potentials Sales and forecast—refrigerated yogurt drinks Figure 8: FDMx sales and forecast of refrigerated yogurt drinks, 2003-13 Segment Performance—Frozen Yogurt/Tofu Key points Frozen yogurts suffer from trend towards eating healthy; incorporate pro-health claims found in yogurt and yogurt drinks Sales and forecast—frozen yogurt/tofu Figure 9: FDMx sales and forecast of frozen yogurt/tofu, 2003-13 Retail Channels Key point Supermarkets lose market share to mass and drug channels Figure 10: New yogurt and yogurt drinks product launch at supermarkets, mass merchandise stores, and warehouse clubs, 2003 and 2007 Figure 11: U.S. sales of yogurt and yogurt drinks, by retail channel, 2006 and 2008* Retail Channels—Supermarkets Key points Supermarkets increasingly rely on private labels to drive traffic and volume sales Figure 12: New yogurt and yogurt drinks product launch at supermarkets, mass merchandise stores, and warehouse clubs, by private labels and national brands, 2003 and 2007 Institute educational programs to grow awareness of functional yogurt Figure 13: U.S. sales of yogurt and yogurt drinks at supermarkets, 2003-08 Retail Channels—Natural Key points Natural grocery stores post impressive sales growth, but remain a very small part of the total sales Figure 14: Natural product supermarket retail sales* of yogurt and yogurt drinks, at current prices, 2006-08** Figure 15: Natural product supermarket retail sales* of functional beverages, at inflation-adjusted prices, 2006-08** Natural channel sales by segment Figure 16: Natural product supermarket retail sales of yogurt, by segment, 2006 and 2008 Brand performance: Yogurt Natural Channel Figure 17: Manufacturer brand natural supermarket sales of yogurt, 2006 and 2008 Natural channel sales of yogurt by organic Figure 18: Natural product supermarket retail sales of yogurt, by organic/non-organic, 2006 and 2008 Market Drivers Health and wellness trends become growth drivers Obesity rate remains strong; position yogurt and yogurt drinks as a weight-loss tool Figure 19: Percentage of population who are overweight or obese, 20-74 years of age, 1988-2004 Demographic influences Women are the key consumer in the market Figure 20: Attitude towards health, by gender, February 2007-March 2008 Figure 21: U.S. population of women aged 18 and over, by age, 2003-13 Children and teens have the potential to drive growth in certain types of yogurts Figure 22: Population of children and teens aged 0-17, by age, 2003-13 Hispanics and Asians exhibit potential to stimulate market growth Figure 23: Population, by race and Hispanic origin, 2003-13 Companies and Brands Key points Top two manufacturers account for nearly 70% of the total market share “Other” manufacturers innovate on the health front; gain the biggest market share Manufacturer sales—all yogurt/yogurt drinks Figure 24: FDMx sales of leading yogurt/yogurt drink companies, 2007 and 2008 Brand Share—Refrigerated Yogurt Key points Light yogurt brands make connection with dieters Brands targeted at children fluctuate—flavor innovation, removing artificial ingredients, and value pricing will bring growth Brands with digestive aid and immune-boosting claims have long-term growth potential Soy yogurt brands expand on claims; Greek yogurt brands enjoy triple-digit growth Manufacturer and brand sales—refrigerated yogurt Figure 25: FDMx brand sales of refrigerated yogurt in the U.S., 2007 and 2008 Brand Share—Refrigerated Yogurt Drinks Key points Private-label brands exhibit growth amid lack of differentiation from national brands Yogurt drink brands with pro-health claims—for both kids and adults—thrive Hispanic-targeted brands display growth; mainstream brands absent in targeting this group Manufacturer and brand sales—refrigerated yogurt drinks Figure 26: FDMx brand sales of refrigerated yogurt drinks in the U.S., 2007 and 2008 Brand Share—Frozen Yogurt/Tofu Key points Brands from major ice cream manufacturers exhibit growth Tofu-based frozen yogurt brands largely remain flat Private labels thrive due to value pricing Manufacturer and brand sales—frozen yogurt/tofu Figure 27: FDMx brand sales of frozen yogurt/tofu in the U.S., 2007 and 2008 Brand Qualities Brands with pro-health perception thrive, but differentiation is essential Line extension name game Innovation and Innovators New product introduction remains strong in refrigerated yogurt Figure 28: Trends in numbers of new product introductions in the yogurt and yogurt drinks market, 2003-08* Top 10 claims for yogurt and yogurt drinks in the U.S. during 2005- 07 Figure 29: Top 10 claims in new yogurt and yogurt drink products, 2005-07 New products broaden functional health claims beyond digestive benefit Figure 30: Trends in new product introductions in the yogurt and yogurt drinks market, 2006-08* Helping the immune system Supporting the brain and nervous system Increasing fiber claims Digestive benefits Yogurts targeting children—probiotic claims, new flavors, and new characters attract both parents and children Flavors Emerging flavors in yogurt and yogurt drinks targeted at children Emerging flavors in yogurt and yogurt drinks targeted at adults Indulgent flavors in low-, no-calorie yogurt Innovative packaging—emphasis on convenience Frozen yogurt Global vs. North America—a comparison of new yogurt and yogurt drinks products Figure 31: Comparison of top 10 U.S. and global new yogurt and yogurt drinks product claims, 2006-08 Probiotic vs. Prebiotic—Europe ahead of North America Figure 32: Global trends in mention of “probiotic” in new yogurt product launches, 2006-08 Figure 33: Global trends in mention of “prebiotic” in new yogurt product launches, 2006-08 Global new products with innovative attributes Advertising and Promotion Yogurt and yogurt drink makers “exclusively” target women “3-A-Day” dairy initiative benefits yogurt market; marketers need to include the initiative in their marketing campaigns “Feel good” messages from “light” yogurts Yoplait—rich and creamy Figure 34: Yoplait rich and creamy, TV ad, 2008 Yoplait Light—indulgent flavors with the connection to weight loss Figure 35: Yoplait Light, TV ad, 2008 Dannon Light and Fit 0%+ Figure 36: Dannon Light and Fit 0%+, TV ad, 2008 Yogurt for kids and teens Yoplait Fizzix—fun with soda yogurt Figure 37: Yoplait Fizzix, TV ad, 2008 Trix—brand promotion Figure 38: Trix brand promotion, TV ad, 2008 Yogurt/yogurt drinks targeting immunity boost Dannon DanActive—strengthen your family’s body defenses Figure 39: DanActive immunity-enhancing yogurt drink, TV ad, 2008 Figure 40: DanActive immunity-enhancing yogurt drink, TV ad, 2008 Yogurts targeting digestive health Yoplait Yo-Plus—emphasis on creating positive balance Figure 41: Yoplait Yo-Plus, TV ad, 2008 Yakult Figure 42: Yakult probiotic yogurt, TV ad, 2008 Dannon Activia—take the challenge Figure 43: Activia 14-day challenge, TV ad, 2008 Yogurt Usage, Frequency, and Brand Penetration Growth in the number of yogurt (not frozen) users; frozen yogurt consumption on decline Figure 44: Trends in personal consumption of yogurt and frozen yogurt, 2003-08 Women, Asians, and Hispanics are prime growth-driving demographics in the market Figure 45: Personal consumption of yogurt and frozen yogurt, by gender, age, race/Hispanic origin, presence of children and region, February 2007-March 2008 All age groups exhibit decline in using regular yogurt Figure 46: Personal consumption of yogurt and frozen yogurt, by type, by age, February 2007-March 2008 Hispanics prime consumers for drinkable yogurt Figure 47: Personal consumption of yogurt and frozen yogurt, by type, by race/Hispanic origin, February 2007-March 2008 Incidence of using yogurt, yogurt drinks, shelf-stable smoothies and made-to-order smoothies by self and family members Households with children—ideal target for yogurt, yogurt drinks, shelf-stable smoothies, and made-to-order smoothies Figure 48: Incidence of using yogurt, yogurt drinks and smoothies by self and other family members, by presence of children, August 2008 Frequency of yogurt consumption Figure 49: Frequency of using yogurt and yogurt drinks, August 2008 Yogurt (not frozen) usage by types of mix-ins Figure 50: Personal consumption of yogurt, by type of mix-ins, by age, February 2007-March 2008 Figure 51: Personal consumption of yogurt, by type of mix-ins, by race/Hispanic origin, February 2007-March 2008 Yogurt (not frozen) consumption among teens and children Figure 52: Trends in yogurt consumption (not frozen) among teens, by type and types of mix-ins, 2003-07 Figure 53: Trends in yogurt (not frozen) consumption among children aged 6-11, 2003-07 Frozen yogurt consumption rising among teens Figure 54: Trends in frozen yogurt consumption among teens, by type, 2003-07 Yogurt consumption by brand Dannon and Yoplait continue to be the top brands Figure 55: Top 10 brands of yogurt (not frozen) used, 2003 and 2008 Most frozen brands exhibit decline in usage Figure 56: Top 10 brands of frozen yogurt used, 2003 and 2008 Desirable Attributes in Yogurt and Yogurt Drinks Desired attributes in yogurt Figure 57: Desired attributes in spoonable yogurt, by gender, August 2008 Desired attributes in yogurt drinks Figure 58: Desired attributes in sippable yogurt drinks, by gender, August 2008 Attitude and behavior regarding yogurt/yogurt drinks Attitude towards yogurt and yogurt drinks price, value-priced packaging, and health attributes Figure 59: Attitude towards yogurt drinks price, value-priced packaging, and health attributes, by age, August 2008 Figure 60: Attitude towards yogurt drinks price, value-priced packaging, and health attributes, by presence of children, August 2008 Attitude towards yogurt drinks purchased from grocery stores and organic yogurt Figure 61: Attitude towards yogurt drinks purchased from grocery stores and organic yogurt, by gender, August 2008 Figure 62: Attitude towards organic yogurt and grocery store-purchased yogurt/yogurt drinks, by race/Hispanic origin, August 2008 Incidence of using more or less yogurt/yogurt drinks compared to a year ago Figure 63: Incidence of using more or less yogurt/yogurt drinks compared to a year ago, by race/Hispanic origin, August 2008 Reasons for consuming more yogurt/yogurt drinks compared to last year Figure 64: Reasons for using more yogurt/yogurt drinks compared to a year ago, by race/Hispanic origin, August 2008 Reasons for consuming less yogurt/yogurt drinks compared to last year Figure 65: Reasons for using less yogurt/yogurt drinks compared to a year ago, by race/Hispanic origin, August 2008 Attitude and opinion towards probiotic and prebiotic yogurt Figure 66: Attitude towards probiotic and prebiotic yogurt, by race/Hispanic origin, August 2008 Appendix: Other Useful Consumer Tables Usage Personal usage of yogurt, yogurt drinks, frozen yogurt Figure 89: Personal consumption of yogurt and frozen yogurt, by type, by presence of children, February 2007-March 2008 Incidence of using yogurt, yogurt drinks, shelf-stable smoothies and made-to-order smoothies by self and family members Young adults lean towards drinking yogurt and smoothies Figure 90: Incidence of using yogurt, yogurt drinks and smoothies by self and other family members, by age, August 2008 Yogurt (not frozen) usage by types of mix-ins Figure 91: Personal consumption of yogurt (not frozen), by type of mix-ins, by region, February 2007-March 2008 Desired attributes in yogurt Figure 92: Desired attributes in spoonable yogurt, by age, August 2008 Attitude towards yogurt and yogurt drinks price, value-priced packaging, and health attributes Figure 93: Attitude towards yogurt drinks price, value-priced packaging, and health attributes, by race/Hispanic origin, August 2008 Reasons for consuming more yogurt/yogurt drinks compared to last year Figure 94: Reasons for using more yogurt/yogurt drinks compared to a year ago, by gender, August 2008 Reasons for consuming less yogurt/yogurt drinks compared to last year Figure 95: Reasons for using less yogurt/yogurt drinks compared to a year ago, by race/Hispanic origin, August 2008 Appendix: Trade Associations

Companies Mentioned

- General Mills Inc - Dannon Co - Stonyfield Farm - Turkey Hill Dairy - Häagen-Dazs - National Yogurt Association (NYA) - Nestlé USA - U.S. Department of Agriculture - Unilever USA - Wal-Mart Stores (USA) - National Dairy Council (NDC) - Weight Watchers International Inc. - American Heart Association, Inc. - Co-operative Group - Dean Foods Company - Food Marketing Institute - Greenfield Online - Odwalla Inc. - American Dairy Products Institute (ADPI) - American Dairy Science Association (ADSA) - Blue Bell Creameries L.P. - International Dairy·Deli·Bakery Association - Midwest Dairy Foods Association - National Cheese Institute - Safeway Inc - The Hain Celestial Group, Inc. - U.S. Bureau of Labor Statistics - U.S. Dairy Export Council (USDEC)