Starbucks, Danone Team To Market New Yogurt Line

Starbucks and Paris-based dairy giant Danone, parent of Dannon, have formed a strategic partnership in which a new, exclusive line of yogurt products will be sold both in participating Starbucks stores and grocery channels.

The partnership, whose financial terms were not disclosed, is designed to advance Danone's goal of expanding yogurt consumption in the U.S., and Starbucks' strategy of expanding its health and wellness offerings under the Evolution Fresh brand, the bottled juice and natural foods business it acquired for $30 million in 2011.

Starbucks has since begun selling Evolution Fresh juice products in some U.S. grocery chains, in Starbucks stores, and in four (to date) Evolution Fresh-branded shops. 

The new yogurt line, called Evolution Fresh, Inspired by Dannon, is described as a portfolio of ready-to-eat parfait Greek yogurt products, to be co-created by the companies.

The products will begin to be offered in U.S. Starbucks stores (which currently number more than 10,000) next spring, and in grocery stores in 2015. 

The companies said that they will, in a second strategic phase, roll the products out to targeted markets around the world. Starbucks currently has more than 7,000 stores in international markets.

Despite the massive and continuing growth of yogurt sales in the U.S. (up 6.6% to $7.3 billion last year, primarily driven by Greek varieties, according to Packaged Facts), per-capita rates of yogurt consumption in the U.S. (about 24 cups per year) significantly lag those in European countries (144 cups in France, for example), Danone Group CEO Franck Riboud pointed out to The New York Times.

“With a fast-growing but still low penetration of the yogurt category, the U.S. remains a key growth opportunity for Danone,” Riboud said in the companies' agreement announcement. “The recent success of the Greek segment and our Oikos brand have confirmed the growing appeal of tasty and nutritious yogurts for U.S. consumers and established Dannon’s leadership in the market. We believe this attraction will be further enhanced by our new access to millions of consumers through distribution in Starbucks stores, as well as through the addition of an exciting new brand.”

Across its yogurt brands, Danone currently has the leading U.S. share (about 30%), although within Greek yogurts -- which now account for over 40% of the total yogurt category -- Yoplait and Chobani have larger shares, per Euromonitor International stats cited by Reuters

With some 70 million U.S. customers per week, and continued strong growth in its branded packaged goods in retail channels, Starbucks certainly represents a major new channel for Danone -- although Riboud told the Times that the major attractions in the agreement from his standpoint were the two companies' meshing focuses on a community approach to customers and employees, and on social programs.

Starbucks chairman, president and CEO Howard Schultz confirmed a significant acceleration of yogurt sales in the company's stores in recent months, and that healthier product introductions in general have seen strong uptake, making rethinking its long-offered yogurt parfait was a natural strategic move. 

Starbucks also acquired Le Boulange bakery this year, for $100 million, and will begin replacing its current cafe bakery offerings with Le Boulange products later this year, according to the Times.

“Starbucks is committed to evolving and enhancing our customer experience with innovative and wholesome food offerings," Schultz said in the Danone agreement release. "Today’s announcement underscores this commitment through the transformation of our existing yogurt offerings and our multi-year agreement with Danone. We are energized by the strong customer response to Evolution Fresh offerings, and believe a strategic agreement with Danone, the world leader in fresh dairy products, affords us the perfect opportunity to grow -- and elevate -- the Evolution Fresh brand both in our stores and in CPG channels.”

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