Starbucks, Danone team up to take on growing US yoghurt market

The logo of a Starbucks coffee shop is seen in New York on June 25, 2013. Starbucks Corp and Danone SA said on Tuesday they will sell a co-branded yoghurt through Starbucks cafes and in grocery stores as yoghurt makers and food companies battle
The logo of a Starbucks coffee shop is seen in New York on June 25, 2013. Starbucks Corp and Danone SA said on Tuesday they will sell a co-branded yoghurt through Starbucks cafes and in grocery stores as yoghurt makers and food companies battle for market share in the US$7 billion (S$8.84 billion) United States (US)  market. -- FILE PHOTO: REUTERS

(REUTERS) - Starbucks Corp and Danone SA said on Tuesday they will sell a co-branded yoghurt through Starbucks cafes and in grocery stores as yoghurt makers and food companies battle for market share in the US$7 billion (S$8.84 billion) United States (US)  market.

The partnership comes as Starbucks pushes into the "health and wellness" category and as Danone, owner of the Dannon brand, and other yoghurt makers seek to conquer the US market, where yoghurt consumption per capita lags Europe.

Financial terms were not disclosed.

Their first product will be ready-to-eat Greek yoghurt parfaits, to be sold in US Starbucks stores in spring 2014.

Distribution to food retailers is planned for 2015, with global expansion to follow, the companies said.

Yoghurt is one of the hottest products in US grocery stores and there appears to be plenty of room to grow, given that Americans eat far less yoghurt than Europeans.

The US retail market for yoghurt has grown an average 8.5 per cent per year over the last five years, according to Euromonitor International, a sales tracking firm.

Euromonitor forecasts the growth rate slowing to 5.9 per cent per year for the next five years, double the expected growth of packaged food overall.

Greek-style yoghurt now makes up more than 40 per cent of the market, though the top-selling brand remains General Mills Inc's Yoplait, which has a nearly 24 per cent share, according to Euromonitor.

Privately held Chobani is second, though France's Danone has a greater overall share between its Dannon, Activia, Stonyfield Farm and Danimals brands, which together account for 30 per cent of the market.

PepsiCo Inc has also jumped into the fray, selling Muller yoghurt in the US through a joint venture with German dairy company Theo Muller Group. The Starbucks/Danone yoghurt products will be sold under the Evolution Fresh name.

Starbucks bought Evolution Fresh, a bottled juice maker, for US$30 million in November 2011.

The coffee giant sells Evolution Fresh juice products through some US grocery stores and Starbucks cafes and has opened four Evolution Fresh stand-alone juice shops.