The momentum behind probiotic foods seems to be growing in direct proportion to the gray hairs appearing on Baby Boomer temples. That generation started the yogurt boom back in the ’60s, when the tart concoction became a staple of the hip and natural. Since then, they’ve passed it onto their kids and grandkids.
Today, the approximately $3 billion retail market for friendly bacteria is still dominated by yogurt, but signs of change and diversity among product offerings have piqued interest in the category once again. Aging Boomers like the effects of active cultures in their aging gastrointestinal systems more than the cachet.
Since this column last took a look at this market in the March 2001 issue, probiotics such Lactobacillus bulgaricus and Streptococcus thermophilus have received considerable press for their ability to boost the immune system, ward off cancer, and reduce the incidence of colds and flu.
This newfound popularity isn’t based solely on medical studies, either. Marketers have found that innovative packaging and product development concepts designed to bring probiotics more pizzazz and portability can spur sales. Kids like the fun factor of new cultured food packaging, like Yoplait’s Go-Gurt yogurt squeeze tubes, and new formulations, such as Kraft’s Creme Savers yogurt.
The impact goes well beyond yogurt. A torrent of products are featuring probiotic ingredients, ranging from culture-packed capsulated supplements to the latest innovation—ice cream laced with active cultures.
That’s the word from the food labs at Penn State University, where probiotic microbes similar to cultures found in yogurt have been incorporated into ice cream. Bob Roberts, Associate Professor of Food Science, led the effort. He’s also looking at ways of incorporating omega-3 fatty acids into ice cream, without ruining the flavor. Ice cream is an appealing way to work probiotics into the diet, as are carbonated, whipped, and isotonic dairy-based variants.
But some of the newest products aren’t so new. Chicago-based Lifeway Foods, Inc., has experienced a phenomenal five-year growth spurt based primarily on sales of a cultured dairy drink called kefir. Sales for 2002 hit $12.4 million, nearly double its total for 1998. Russian immigrant Michael Smolyansky founded Lifeway in 1986, and his daughter, Julie Smolyansky, has been running the company since his death last year.
She terms kefir the grandfather of natural probiotics, with roots that trace back more than 2,000 years to the Caucasus Mountains of Russia where people live well past 100 years. According to the company’s kefir-lore, the beverage was first discovered by nomadic shepherds who consumed the fresh milk that fermented in their leather sacks as they traveled. Actually, the name kefir relates to the kefir grains that are added to the fermented milk, allowing the yeast and bacteria to replicate and create a fizzy, distinctive flavor. Kefir is different from drinkable yogurt due to the grain component and its wider variety of active bacteria cultures. Although kefir and yogurt are similar in taste, kefir has seven strains of bacteria, whereas yogurt normally only has two or three. While kefir is little known in the U.S., it is well established in Europe and Russia. However, Danone Foods, Inc., the U.S. subsidiary of Groupe Danone of France, recently acquired a 20% interest in Lifeway, which indicates kefir may be on its way to a much higher profile.
Clearly the market for probiotic foods is dominated by global yogurt giants Groupe Danone, which claims a number two share in the U.S. yogurt market, and General Mills, Inc.’s Yoplait, which grabbed the top spot in 2000. General Mills also owns the Columbo brand. In an effort to regain dominance, Danone in 1998 bought a 40% stake in Stonyfield Farm, the fourth-ranked upstart New Hampshire yogurt producer. It expects to rank number three nationwide within a year or two.
The competitive battle has been good for innovation. Yoplait, recently introduced Yoplait Nouriche, a nonfat yogurt smoothie fortified with protein and 25% of 20 vitamins and minerals. This comes on the heels of its popular Go-Gurt, aimed at kids. For its part, Danone’s Dannon brand has added Danimals Drinkable for kids and la Crème, a higher-fat dessert yogurt. Frusion, a yogurt-smoothie combination aimed at twenty-somethings is just now being rolled into national markets.
“When you look at the food category in general, I would say there’s not one food category that has better nutrient density than the yogurt category. It’s really everything that consumers look for,” said Eric Leventhal, Dannon Marketing Vice President.
For its part, Kraft Foods has deftly applied its brands to Breyers, Jell-O, Light n’ Lively and the aforementioned Creme Savers yogurt varieties.
Clearly the probiotic movement, while centered in the yogurt aisle, is beginning to diversify into a highly competitive—and innovative—market trend.
by PIERCE HOLLINGSWORTH
President, The Hollingsworth Group, Inc.