The joint venture, called Muller Quaker Dairy, marks PepsiCo’s entry into the fast-growing and ultra-competitive domestic yogurt market and comes as food sales consume more attention at the traditional cola giant. The partnership takes its name from PepsiCo’s Quaker Oats Co. division and German yogurt brand Müller, which is owned by Luxembourg-based Theo Müller group.
Muller Quaker will begin selling three yogurt varieties later this month in 17 markets in the Northeast and mid-Atlantic, including New York, Boston, Philadelphia and Washington, D.C., PepsiCo announced Monday. On packaging, the logos for Müller and Quaker appear separately, with the bright red Muller label shown a little bit more prominently.
The campaign will include TV, print, digital and street sampling and use the tagline “The European for Yummy,” with the products positioned for “delicious taste,” a PepsiCo spokeswoman told Ad Age. Omnicom’s OMD will handle media buying, while Current Lifestyle Marketing is leading PR and social media.
Juniper Park’s selection comes just four months after the Omnicom-owned shop lost creative duties on Quaker’s portfolio of foods and snacks to BBDO sibling Energy BBDO, Chicago. The yogurt win does not represent a return to the Quaker roster, however, because the business is technically handled by the joint venture. Still, it gives a needed boost to Juniper, which had earlier lost PepsiCo’s Frito-Lay Sun Chips and Lay’s brands to Energy BBDO. (Juniper still does work for PepsiCo’s Tropicana brand.) The agency did not return a call for comment.
Muller Quaker’s products will include a variety called Müller Corner that comes in traditional yogurt and Greek-yogurt styles. It comes in a box-shaped pack with a separate container for fillings in the corner, including flavors such as blueberry, crispy crunch and caramelized almonds. Also planned is a variety called Müller FrütUp, in which the fruit is positioned at the top of the circular shaped packs.
While the launch moves PepsiCo into yogurt, the company seems to be starting with small steps by launching regionally along with a partner. It “indicates right off the bat that they are going to tip-toe into the water a little bit,” said Jack Russo, an analyst with Edward Jones & Co. But the venture still gets PepsiCo into one of the hottest consumer packaged-goods segments. Yogurt sales grew 8% in the year ending April 15, spurred by fast-rising Greek varieties, according to SymphonyIRI, which does not include Walmart. “There aren’t many consumer-goods categories growing at that rate, so Pepsi probably thought they couldn’t stay out of it much longer,” Mr. Russo said.
Food is becoming increasingly crucial for PepsiCo, whose beverage business has struggled in recent years. Led by Frito-Lay, snacks are forecast to overtake beverages by 2016, growing to 52% of overall revenue from 48%. The company is already in the global dairy business with its 2011 acquisition of Wimm-Bill-Dann, Russia’s largest dairy company. PepsiCo also is in a joint venture with a dairy company in Saudi Arabia that was formed in 2009.
In the U.S., Muller Quaker Dairy is building a plant in Batavia, N.Y. that is expected to open next year. In the meantime, the company will import the yogurt from Europe.
“As we’ve seen through the success of our dairy business in other parts of the world, this is a category with strong growth prospects,” Mehmood Khan, PepsiCo’s chief scientific officer, global research and development, said in a statement. “Müller makes some of Europe’s most delicious and unique dairy products, and there is no better partner PepsiCo could have in order to meet historic U.S. consumer demand for premium yogurt.”
Of course, yogurt success is far from guaranteed, even for big marketers with distribution muscle. For instance, Kraft Foods entered yogurt last year with a Greek variety under its Athenos banner. But the competition from startups such as Chobani proved too tough and the marketer exited the category earlier this year.
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