SN Whole Health: The Next Big Yogurt

Greek yogurt companies scored a smash hit when they brought an old-world formula into the modern age. Sales of the creamy, high-protein treat have increased from $60 million five years ago to $1.5 billion currently, according to investment firm UBS.

With success like that, companies are quickly making the dairy case a United Nations of yogurt. There's Siggi's skyr-style Icelandic yogurt, a thick, protein-rich blend that follows a time-honored recipe of infusing skim milk with live cultures and then filtering out the whey. Founder Siggi Hilmarsson started the company in 2005 and saw it gain momentum through specialty stores and word of mouth. Today, Siggi's has national distribution through Whole Foods Market and The Fresh Market.

Larger, more established manufacturers are hoping to crack the American market, as well. Ehrmann USA, the American branch of one of Europe's leading yogurt companies, began distributing a Bavarian-style yogurt this year to Shaw's, Price Chopper and other supermarkets in the Northeast. The company follows a strict formula handed down through three generations of its German founders. To preserve the traditional flavor without compromising freshness, Ehrmann carefully selected farms in Vermont and upstate New York to source its milk. The company then conducted taste tests with consumers, according to project manager Carolin Widmann, “to ensure that the slightly adjusted taste profile and texture of the yogurts match the expectations and palates of Americans.”

Like other companies, Ehrmann sees in the success of Greek yogurt a demand for unique flavors and a simplicity that hearkens back to past generations.

“We have found that U.S. consumers are highly interested in innovative yogurt concepts of old-world European origin,” said Widmann.

Shoppers are also drawn to the health benefits many of these rustic formulas offer. Emmi Roth USA, a gourmet dairy company with offices in Wisconsin and Switzerland, offers Swiss-style yogurt made from rBST-free milk and blended with fruit like green apples and grapefruit. Both Bavarian and Swiss-style yogurt, meanwhile, are marketed as being low in fat and calories. Siggi's, with its 14 grams of protein per cup, has become a favorite among weightlifters and other athletes.

In addition to competing against one another, these newcomers have to contend with red-hot Greek yogurts. Chobani, which accounts for 49% of the Greek yogurt market, announced it will open a second processing facility next year to ramp up supply. General Mills, which makes Yoplait Greek-style yogurt, was actually caught off guard by demand for the product in the last fiscal year. The company has increased its production and marketing efforts to ensure that doesn't happen again.

“At the end of last fiscal year we were not able to meet consumer demand for our Greek yogurts, but with additional capacity now online we expect our growth to accelerate,” said Ian Friendly, head of U.S. retail for General Mills, during a recent financial earnings call.