(Bloomberg) -- General Mills Inc. is betting that less sugar will help spark growth in the company’s slumping yogurt unit.
Called “YQ by Yoplait,” the new variety is made with so-called ultra-filtered milk and is less sweet than many popular products in the category. That includes the company’s own traditional Yoplait brand, which has seen its sales and market share plummet in recent years as U.S. consumers embraced Greek-style yogurt.
But as Greek sales slow, the search is on for the next trend that will drive growth in the yogurt case. A year ago, General Mills released Oui, a yogurt with French heritage, and the product is on track to reach $100 million in annual sales, making it one top-performing new product launches in the past few years, according to the company.
Even so, that hasn’t been enough to turn the tide for General Mills’ yogurt unit, which saw U.S. sales slide 8 percent in the most recent quarter. While that was the third consecutive quarter of improving performance for the unit, the Minneapolis-based food giant is hoping YQ can help stabilize and turn the division around.
“There are a lot of people who are dissatisfied with the taste of Greek yogurt,” said Doug Martin, who leads yogurt innovation at the company. “Greek is not the endpoint for healthiness or tastiness.”
U.S. consumers essentially didn’t eat Greek yogurt before Chobani burst onto the scene in 2007, rocketing to $1 billion in sales in its first five years. Much of that success came at the expense of General Mills.
For years, Yoplait was the top-selling brand in the U.S., and as recently as 2012, it accounted for about 24 percent of the U.S market. In 2016 Chobani took over the top spot in the U.S., and Yoplait’s market share has dropped to about 14 percent, according to Euromonitor. Dannon is the top seller of yogurt in the U.S. with 37 percent of the market when accounting for all the company’s brands, including Oikos and Activia.
The hemorrhaging sales prompted General Mills to review its yogurt business about two years ago. And while Oui -- sold in small glass jars -- has helped, the company is facing an uphill battle as the overall yogurt market wanes. U.S. yogurt sales have dropped in each of the past two years, and Euromonitor estimates they will decline 2.6 percent this year.
Yogurt with less sugar is nothing new. Light varieties have been around for decades, but those products are typically sweetened artificially. YQ uses cane sugar, and ultra-filtered milk has less lactose. The plain variety has 1 gram of sugar per serving, with 9 grams in the flavored versions. Yoplait’s original fruit yogurts can contain about twice that amount.
“Everyday, more and more people are focused on reducing sugar,” Martin said. “The question is how you do that without doing the things people don’t want you to do.”
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