Yoghurt and Sour Milk Products in New Zealand

2021 DEVELOPMENTS

Following notable home consumption trend of 2020, demand for yoghurt starts to stagnate with more dynamic growth rates predicted for foodservice

In the absence of sour milk products, drinking yoghurt had witnessed a particularly strong performance in 2020 due to the presence of probiotic variants such as Yakult, in line with demand amongst local consumers for immune-boosting products as a result of heightened health awareness driven by the pandemic. Plain yoghurt on the other hand, continues to benefit from its naturally healthy positioning and higher protein content whilst offering the most affordable unit price compared to more processed options such as flavoured yoghurt.

Local players continue to address increasing demand for plant-based yoghurt

Plant-based yoghurt has been a rather niche product in New Zealand, despite growing demand for vegan yoghurt choices as local consumers increasingly embrace the flexitarian lifestyle. Nevertheless, despite challenges posed by the pandemic including supply and logistics issues, leading drinking yoghurt brand The Collective has managed to expand its capacity to produce non-dairy products for distribution across both New Zealand and Australia with the commissioning of a new factory in West Auckland.

Fairly consolidated competitive landscape amongst leading three players

Fonterra Brands is set to retain its overall leadership of yoghurt in 2021 due to the popularity of its Fresh 'n' Fruity brand, followed by Goodman Fielder with its Meadow Fresh range, and Lion Pty Ltd with Yoplait. Fonterra continues to have a pronounced presence on supermarket shelves, which has been key in driving consistent brand loyalty, as consumers flocked to major retailers during the pandemic.

PROSPECTS AND OPPORTUNITIES

Mature yoghurt to experience stable demand while return to smaller on-the-go pack sizes likely over forecast period

Yoghurt retail volume sales are predicted to see fairly stable rates of growth over the forecast period, with plain yoghurt, which benefits from a natural healthy perception, versatility and a lower than average unit price, set to experience the strongest performance overall. The pandemic has changed how yoghurt is being consumed in New Zealand; with greater time spent at home, consumers have been switching to larger pack formats to suit household consumption that also offer greater cost savings, resulting in a decline in multipacks as well as smaller on-the-go formats purchased through convenience stores or forecourt retailers.

Provenance and changing lifestyles to support local plant-based producers

As noted in a number of dairy categories, demand for alternative plant-based yoghurt is also likely to gain further momentum over the forecast period in line with changing lifestyles, dietary requirements or concerns over the sustainability of the dairy industry amongst some consumers. This is likely to support local players which are expanding in this space; in addition to becoming New Zealand’s largest dairy-free yoghurt manufacturer, Raglan Food Co, is also the country’s first carbon-zero certified yoghurt company after expanding its production capacity.

Flavoured yoghurt to remain dominant

Flavoured yoghurt is likely to remain the dominant category over the forecast period, to enjoy stable demand, rather than dynamic growth rates due to maturity. One increasing concern amongst local consumers is the high sugar content relating to flavoured yoghurt, with many New Zealanders also unwilling to pay a premium for yoghurt with specific less added sugar claims while they are increasingly switching to more natural forms of yoghurt.