A market in ferment

Is it dessert masquerading as a healthy indulgence or is it health packed into a sweet treat? Yogurt may seem like homely old curds given a makeover but its makers and marketers would like you to believe it’s a superfood that packs a mighty punch. And to people such as Mamta Nahar of Mumbai, it’s an easy way to supplement her son’s calcium intake. The mango-flavoured yogurt came in handy as the five-year-old would refuse to have anything to do with curds. What’s more, it’s seen as a better alternative to ice-creams.

One can take their pick of plain, flavoured or frozen yogurts. The packaged yogurts are priced Rs 30-50 for a 50 gm pack, while the fresh and frozen ones are sold at Rs 100 per serving.

Spanish brand Pascual was the first to hit modern retail with its four-pack. Nestle too offered strawberry and mango flavours in single-serve cups. French company Danone launched yogurts a year-and-a-half ago. Britannia got into the act last year.

Milk and ice-cream producers Amul and Mother Dairy have their brands as do smaller players. Karnataka Cooperative Milk Producers Federation, Parag Milk & Milk Products and Himalya International have all launched their variations of yogurt over the last couple of years.

Plain and fruited spoonable yogurt from Tirumala Milk Products, Nilgiris Buttermilk from The Nilgiri Dairy Farm and Paras Lite from VRS Foods were amongst notable launches from regional players in 2010 and 2011.

“As the fastest-growing category within dairy products in India, yogurt and sour milk drinks are expected to account for a 10 per cent share of total dairy sales by 2016 from 6 per cent in 2011. While plain yogurt is expected to continue to dominate retail sales, smaller categories such as drinking yogurt and flavoured and fruited yogurt are likely to challenge specific packaged food and soft drink segments. Drinking yogurt is likely competition for flavoured milk drinks and fruit/vegetable juice, while fruited yogurt may emerge as competition to ice-cream,” says Euromonitor Interntional in a 2012 report.

According to market research and advisory firm Technopak, yogurt is classified under the health &wellness (H&W) food segment in India. The sector was estimated at Rs 1,000 crore and is expected to touch Rs 2,500 crore by 2015, growing at 25 per cent annually.

The packaged yogurt market constitutes a marginal share of 7-8 per cent. The freshly made frozen yogurt chains such as home-grown Cocoberry, the US-based Red Mango and Smoothie Factory, Canada’s Kiwi Kiss, South Korea’s Yogurberry and Yoplait from France account for the rest. Pinkberry, from California, which is known as the birth place of frozen yogurts, is entering the market with a joint venture with JSM Group.

So what is driving the growth? Taste or health?

“Indians have a sweet tooth and no meal ends without a dessert. Yogurts can be good substitutes for not only the fatty and high-in-calories ice-creams but also for ghee-laden sweets. Yogurt is not only low in fat but also helps in digestion,” says Rahul Kumar, who holds the master franchise of Red Mango, which is present across 24 countries globally. The company plans around 13-15 outlets in India by end 2013. At present it has six stores in the Delhi-NCR region.

“While this is a niche product and often misjudged as an expensive one, people are finding it as a complete meal in itself rather than just as a meal accompaniment in India. Several health-conscious mothers and youngsters are switching their loyalty to yogurt from sweetened lassi or ice cream,” Kumar said.

The concept is new to the Indian consumer but it is picking up really fast and the food-processing giants are keen to capture the market. Consumption still stands at a nascent 0.3 kg per capita every year as compared to 17.8 kg in France, said Ankur Bisen, Vice-President (Retail), Technopak Advisory.

“The demand is growing and we witness around 80-100 transactions a day per store. The average ticket size is Rs 100 per person,” said Rahul Deans, President, Cocoberry.

Cocoberry, founded by young entrepreneur G. S. Bhalla in 2009, enjoys the first-mover advantage of retailing frozen yogurt in different flavours. The brand charges a premium over other brands and the consumer acceptance is supporting the wide expansion of the brand across cities.

The company has about 32 outlets in India and plans to expand operations to West Asia and Pakistan. It is quite optimistic about the growing demand and expects to break even this year.

Other factors responsible for the growth of the yogurt market in India are the wide availability of raw material (milk), a growing willingness among consumers to experiment and increasing disposable income.

Existing distribution network for brands such as Amul, Nestle and Cocoberry are driving consumption even in small towns. Organised retail formats are also fuelling the growth.

Euromonitor International says product innovation has led to an increased appreciation of the yogurt category. Besides, the players are investing in highly visible marketing campaigns and brand extensions while paying attention to the texture, taste and shelf-life of the products. However, these brands rue the poor supply chain, quality of ingredients and logistics available in India. Many have taken to sourcing some ingredients from across the globe.

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