Yogurt and Milk: A Case Study in Change
CPG retail is rapidly changing across all channels due to changes in shopper preferences and the influence of new ways to shop. There is perhaps no better case study for these changes than the dairy case at your local grocery store—specifically in the Yogurt and Milk categories.
The Rise of Greek Yogurt
Yogurt is a particularly notable case study for changes in shopper preferences due to the explosion of popularity of Greek Yogurt over the past decade. Greek Yogurt grew from 0.7% total market share in Yogurt in 2006, to 19% in 2011, to over 50% today, a meteoric rise. There are countless think pieces and news stories that have attempted to explain how Greek Yogurt became so popular so fast, but it tracks with many prominent trends such as the growth of snacking occasions, better-for-you snacking, high-protein claims and exotic flavors.
The result of Greek Yogurt’s rise is an increased number of SKUs and space for the Yogurt section in many stores. There has also been an increase in the prominence of other niche yogurt varieties looking to capitalize on a similar wave of popularity, such as Icelandic yogurt, French yogurt, non-dairy yogurt, kefir and other yogurt drinks. New packaging innovations intended to cash in on the functional benefits of yogurt as a better-for-you indulgent option for snacking or meal replacement also have emerged as manufacturers compete for a larger share of the now-competitive Greek yogurt market. This all leads to a Yogurt category that is more complex to shop and potentially intimidating for infrequent consumers with all the available choices, varieties and health claims to parse.
A Powerhouse Reinvented
Milk has faced similar winds of change as a category, although the impact of these changes has not been quite as sudden as Yogurt. Whole milk dominated through the Eighties, with lowfat milk taking over in the late Eighties as the preferred variety. Recently, new products such as lactose-free milks and more prominently plant-based milks have begun to rapidly grow in market share and number of SKUs at the supermarket—to the detriment of the traditional powerhouse, cow’s milk.
The rise in acceptance of plant-based milks (and the corresponding decline in sales of cow’s milk) has led to a flood of new products becoming mainstream in the Milk category, including almond milk, cashew milk, soy milk, banana milk, coconut milk, rice milk, oat milk, flax milk and more. Most of these varieties come with different options for flavor, sweetening and functional additions. Like Yogurt, Milk follows some broader storewide trends such as the proliferation of plant-based diets, the broadening of acceptable flavors and the general growth of better-for-you options.
Unlike Yogurt, though, many of the newer, non-traditional milks actually have fewer functional benefits than cow’s milk. For example, almond milk, one of the most popular varieties of plant-based milk, has very little protein, one of the key nutrients supplied by cow’s milk. However, manufacturers have introduced almond milk products fortified with additional protein in order to close the gap, showing how there is still room to grow in this rapidly changing category.
These trends have grown and complicated the Milk category with many new SKUs and a potentially confusing experience for shoppers who do not regularly consume these products. With the wide variety of options, ingredients and health claims, shoppers may have difficulty deciding between different products. As a further complication, many stores have refrigerator doors in front of their Dairy products, making it physically more inconvenient to browse the many products, read labels and make an informed decision.
Growing Complexity, Growing Uncertainty
This explosion in new flavors and varieties has made both Yogurt and Milk more complex to shop and potentially intimidating for infrequent consumers, but the problem with any category simplification initiative is that it creates the risk of losing shoppers who are attracted to a particular niche. For example, Icelandic yogurt may not be a top-selling product, but heavy consumers of Icelandic yogurts may choose a different store entirely if they cannot find their preferred variety. In that case, simplifying the category by removing the Icelandic yogurt SKUs would lose that traffic from the shoppers who will take their business elsewhere. But the overall gain in the Yogurt category from an improved shopping experience may outweigh that negative.
At the same time, if a shopper wants to try new things but finds the shopping experience overwhelming, they may walk away and go back to their regular purchase. This reduces trial behavior and ultimately will get newer products in front of fewer engaged shoppers. On the other hand, if shoppers are able to navigate the category and find products that meet nutritional, flavor and price expectations, then the shopper will be more willing to try new products and potentially become a repeat buyer.
As with any category management decision, there is no one-size-fits-all answer for every retailer or every manufacturer on how to optimize the category. It requires research on shopper attitudes, shopper behaviors and buyer behaviors to understand the particulars of each retailer’s unique set of shoppers and the benefits and consequences of any changes to the category.
Unfortunately, as these new varieties of milks and yogurts have exploded in popularity and complexity in such a short period of time, many decisions regarding placement and assortment have been made hastily. And therefore, while manufacturers and retailers may have some idea of the preferences of shoppers in regards to these new SKUs, they have not measured shoppers’ behavior at the shelf, which is where decisions on factors such as trial, flavors, functional benefits and price most frequently occur.
That’s where VideoMining, the leading provider of in-store behavior analytics for CPG retail, steps in. The VideoMining ShopperImpact platform combines proprietary video and mobile sensing technologies with AI and machine learning to quantify the behavior of real shoppers in real stores. By directly measuring shopper behavior at the shelf rather than inferring behavior from sales numbers or online surveys, VideoMining enables CPG retailers and manufacturers to learn more about what their shoppers do where it counts the most.
For categories like Yogurt and Milk, the ShopperImpact platform can be used to determine the level of brand-loyal decision making and to understand what at-shelf influences have the ability to interest a shopper in a different flavor or variety. Additionally, VideoMining’s technology can help test at-shelf marketing initiatives and signage to see what is most effective at generating trial behavior for some of the more niche products could be the next breakthrough.
As the retail industry as a whole undergoes the rapid change exemplified by the Yogurt and Milk categories in Grocery, it will become more and more important to completely understand shopper behavior. Without a proactive understanding of shopper behavior at the shelf, companies will not be able to adapt quickly enough to succeed in this new retail reality.