As a bit of a foodie, I have had Greek and Bulgarian style yogurt, as well as the standard North American Style yogurts. Truth to tell, American Style yogurt does not taste like it did 30 years ago. Somehow the slightly sour taste and thickness has given way for a blended smoothie style that is easier for many to eat, but lacks some of the nutritious benefits of traditional style Yogurt. However, thanks to a confluence of conditions, things have taken off in a strong positive direction for Greek style Yogurt.
This article would be of interest to both Macro and Micro students.
Canada's Metro News Daily gives details of this in this article telling Why Greek Yogurt is flying off the shelves in Canada--similar to what it's doing here in the US, but at an even faster rate! Several of the non-price determinants of Demand and Supply are at work here, and are worth further investigation.
Per the article:
"Greek yogurt is flying off supermarket shelves in Canada after conquering the U.S. market. The high-protein content, natural ingredients and creamy taste have made it a hit with consumers in a health-conscious culture...
“I can’t remember the last time I’ve seen anything this strong. It’s been explosive in growth, unbelievable,” said Carlo Noce, category manager, dairy and grocery, at Longo’s. Sales have tripled and quadrupled in some locations, he said. Greek yogurt is low in sodium and can be used in cooking and instead of sour cream, said Noce.... Dieters like it because it is natural, nutritious, filling and convenient.
Chobani created the Greek yogurt market in the U.S. The company has gone from boot-strap start-up to $1-billion worth of business since launching out of an old Kraft plant in upstate New York in 2007. The number of employees has increased from five to 1,200. “It’s a real Cinderella story,” said Kyle O’Brien, executive vice-president of sales for Chobani. Chobani founder Hamdi Ulukaya got the idea when his parents visited from Turkey when he was a student in New York and complained the yogurt available in the U.S. wasn’t rich and creamy enough. “It’s not like we invented something. We just brought it to life in the U.S.,” said O’Brien. The timing was right, O’Brien said. Pitched as healthy, natural and nutritious, it hit a sweet spot in the American food market.
It didn’t hurt that Dr. Oz recommended eating Greek yogurt as part of a healthy diet.
A report by UBS Investment Research in the U.S. in 2011 said Greek yogurt brands captured market share more quickly than almost any segment ever in a major food category – at the time 13 points in three years. But it also concluded the growth in Greek yogurt could spell trouble for existing yogurt makers who fail to innovate and capture market share.
Chobani is now third in market share in the U.S., behind Yoplait and Dannon, sold as Danone in Canada. General Mills, which bought Yoplait in 2011 for $1.2-billion U.S., has seen sales decline in the category because it wasn’t ready for the Greek invasion, according to U.S. analysts.
Canadian consumers eat three times as much yogurt as American consumers, a fact O’Brien attributes in part to the popularity of yogurt among Quebecers, who take an artisanal approach to food and prefer natural products. According to Danone’s Canadian website, yogurt was introduced to Montrealers at the turn of the 20th Century.What we see at work here are several factors involving the non-price determinants of demand and supply shifting in the yogurt market. The most obvious one is changes in consumers tastes and preferences.
For Your Discussion:
1. What has happened to Demand for Greek Yogurt in North America? What factors other than tastes and preferences account for it?
2. What has happened to Supply of Greek Yogurt in North America? What factors have led to this?
3. What is the resulting effect on equilibrium price and quantity (P* & Q*)?
First 5 students to post correct, intelligent comments with correct answers will get a bonus point added to their unit 1 test.
Success to you all!
Prof. Hank Lewis
Martha Fogarty (Wed 2pm)
ReplyDelete1) Demand has risen since Greek Yogurt sales are on the rise throughout North America. b) Promotion of Greek Yogurt by Doctor Oz and the fact that it is a healthier alternative to many other foods.
2)The supply of Greek Yogurt in North America has skyrocketed b) due to changes in consumer preference as a healthier alternative to sour cream. Competition is scrambling to make their own versions in hopes of capturing a market share(perhaps, S&D for sour cream and other cold snacks have declined?)
3)D-up, change in consumers' tastes/preferences, P*-up, Q*-up.
Ms. Fogarty:
ReplyDeleteNot too bad.
1. D has risen due to change in consumers' tastes and preferences. A celebrity endorsement like Dr. Oz would influence this.
2. Supply has increased due to change in # of firms--more yogurt companies are making it.
3. Since both D and S increased, Q* is definitely rising. My educated guess is that D has increased more than S since Q* is clearly rising as well.
ALL OTHER STUDENTS: Opportunity Cost has kicked in since I've replied to feedback. Ms. Fogarty, you have another extra credit point.
Thanks,
Prof. Lewis