The Choice Of A New Generation At Pepsi: Yogurt

PepsiCo’s joint venture foray into the exploding yogurt category with German dairy company Theo Müller has been pretty much fermenting in plain site until Stephanie Strom asked yesterday in the New York Times if the legendary cola wars were about to be replaced by the yogurt wars as Pepsi “takes on the likes of Dannon and General Mills [Yoplait], not to mention Fage and Chobani.”

Newspapers in the Rochester, N.Y., area reported in the spring that Muller Quaker Dairy –- as the joint venture is known –- would be investing $206 million and creating 186 new manufacturing and support jobs to operate a state-of-the-art yogurt-making facility at the Genesee Valley Agri-Business Park in Batavia, N.Y.

PepsiCo issued a release yesterday indicating that the venture, which is trading on the company’s Quaker Oats heritage, will enter the U.S. market “in mid-July with innovative premium yogurt products that have never before been available to U.S. consumers … Muller Corner, Muller Greek Corner and Muller FrutUp.” 



The release also contains a helpful infographic, “Yoghurt Nation,” that projects sales in the segment growing to $9.0 billion in 2016 from half that amount in 2008. Over the past three years, the number of U.S. households buying yogurt has expanded from 94 million to 99 million, and the dollars spent per buyer has gone from $49 to $60. 

But we still consume far less of it than the average European. Or even Canadian. And that’s why Pepsi and Muller see an opportunity.  “The goal with Müller by Quaker is to add fun to yogurt, which Americans have regarded as a dutiful but not delicious snack,” writes Strom.

Omnicom Group's Juniper Park will handle creative for the brand, E.J. Schultz reports in Ad Age, which uses the tagline "The European for Yummy", and will involve TV, print, digital and street sampling. Media will be handled by Omnicom's OMD; Current Lifestyle Marketing is heading PR and social media.

“It’s been an ‘I gotta have it because it’s good for me’ kind of a product,” Dr. Mehmood Khan, who oversees PepsiCo’s global research and development, tells Strom. “The ‘wanna have it’ was missing.”  Stefan Müller, the great-grandson of Müller’s founder, is even blunter: “Here in America, yogurt is so boring.” 

The new “mainstream premium” brand will come in square packages in both conventional and Greek-style varieties with fruit that the consumer mixes into the yogurt on the side. Frut Up comes with the fruit on top of the yogurt.

Muller Corner varieties include Blueberry, Strawberry, Crispy Crunch, Choco Balls, Chocolate Flakes and Crunchy Granola; Muller Greek Corner flavors include Honeyed Apricot, Strawberry, Blackberry & Raspberry and Caramelized Almonds. Muller FrutUp varieties are Blueberry Bliss, Very Cherry, Luscious Lemon, Peach Passion Fruit, Radiant Raspberry and Splendid Strawberry. “The unique part is the fruit on top -- perfect for scooping, swirling or mixing,” according to the release.

The products will initially be available in New York, Boston, Philadelphia, Washington, D.C., Hartford/New Haven, Providence/New Bedford, Buffalo, Albany/Schenectady/Troy, Rochester, Portland, Baltimore, Harrisburg, Norfolk/Portsmouth, Greensboro, Wilkes Barre/Scranton, Richmond and Roanoke.

PepsiCo seems to be feeling its way into the category by launching regionally along with a partner, Schultz observes in Ad Age. It "indicates right off the bat that they are going to tip-toe into the water a little bit," Edward Jones & Co. analyst Jack Russo tells him. But with the segment growing so rapidly, “Pepsi probably thought they couldn't stay out of it much longer," according to Russo.

Pepsico is certainly no stranger to muscling its way into limited shelf space. But size is not a guarantee of success. As Schultz points out, Kraft Foods announced it would discontinue its Athenos Greek yogurt effort in April. The competition from startups such as Chobani proved too tough and the marketer exited the category earlier this year despite having put considerable marketing muscle behind it, including the humorous and well-received "Yiaayia" TV campaign, featuring a Greek grandmother who disapproved of almost everything but the brand.

We’ll see if Pepsi and Muller, with roots in Bavaria and headquarters in Luxembourg, can move the dial from “what’s not to like?” to “gotta have it!”

1 comment about "The Choice Of A New Generation At Pepsi: Yogurt".
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  1. Catherine Piercy from Dare, July 10, 2012 at 1 p.m.

    I'm curious about the "exploding yogurt" category. It sounds messy.

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