Following two years of fierce competition involving leading players such as Greece?s FAGE, Agro Farma and Dannon, Kraft Foods is pulling out of the US market for Greek-style yogurt. While the multinational food company offered no official explanation regarding the decision to withdraw its Greek-style yogurt sold under the Athenos brand name, market analysts point out that the sector currently features a number of well-established players which are particularly tough to compete against.
Kraft Foods introduced Athenos to the US market in the fall of 2010, a move which had signaled the company?s comeback in the yogurt category. The company had withdrawn from the market in 2004, following the sale of its Breyers Fruit unit, among other brands.
Meanwhile, FAGE, which is credited with introducing Greek-style yogurt to US consumers, effectively turning it into one of the American food market?s fastest-growing products, is continuing its overseas expansion.
According to a 2011 company report, in terms of volume, FAGE?s US sales grew by 69.3 percent compared to the previous year. Between 2008 — when the firm?s dairy production unit was established in Johnstown, New York — and 2011, the firm?s investment in the US reached 149.8 million dollars. While FAGE?s initial 25-million-euro investment resulted in an annual production of 6,000 tons in 2008, production had risen to 85,000 tons in 2011.
According to US food sector analysts, the success of the market?s established players is due to their sharply defined branding.
US-based Agro Farma, whose Chobani label boasts the market?s largest share, is known for promoting its products as the healthy eating option, whereas FAGE markets its yogurt as the gourmet choice. What lies behind Kraft Foods? failure in this particular market is its rather fuzzily defined marketing strategy combined with competition from companies that have strong distribution networks, as well as the existence of an authentic Greek player, namely FAGE.
Kraft Foods? exit from the sector reinforces expectations with regard to PepsiCo?s plans.
In February, PepsiCo and German dairy producer Muller announced the creation of a joint venture for the development of a yogurt factory unit in New York, with an investment of 206 million euros. While many presumed that the company would also enter the Greek-style yogurt market, some argue that the joint venture might reconsider its strategy following recent developments in the field.
It is estimated that the US yogurt market is worth 6.4 billion euros, with Greek-style yogurt making up 25 percent in terms of value and 15 percent in volume in 2011.
FAGE, which also enjoys a strong market presence in Italy and Britain, is planning on expanding into new markets in the near future by investing both in terms of production and distribution networks.
In the meantime, the company?s German subsidiary, FAGE Deutschland GmbH, is expected to start operating in May.