Starbucks, Danone partner for Greek yogurt parfaits

Starbucks announced on Tuesday an agreement with Danone to produce a new line of Greek yogurt products under the Evolution Fresh brand.

Financial terms of the agreement were not disclosed.

To be developed as “Evolution Fresh, Inspired by Dannon,” the new line of yogurts will include ready-to-eat parfaits that will be distributed in Starbucks coffeehouse locations across the U.S., starting in the spring of 2014, and in grocery stores by 2015. The yogurt brand will also expand to targeted markets outside the U.S. in a later phase, the company said.

Howard Schultz, Starbucks’ chair, president and chief executive, said in a statement that the move is part of the Seattle-based coffeehouse chain’s ongoing commitment to bringing innovative and wholesome food offerings to the menu.

“We are energized by the strong customer response to Evolution Fresh offerings and believe a strategic agreement with Danone, the world leader in fresh dairy products, affords us the perfect opportunity to grow — and elevate — the Evolution Fresh brand both in our stores and in CPG [consumer packaged goods] channels,” he said.

Starbucks bought the premium juice company Evolution Fresh in 2011 for $30 million in cash, a move that brought the coffee company into the $50 billion health-and-wellness category. The company tapped into the growing fresh juice trend by opening four Evolution Fresh juice bars, which also serve a healthful menu of soups, sandwiches and salads.

Also gaining ground in the health-and-wellness category is Greek-style yogurt, which has become a $7.3-billion business, according to market research firm Packaged Facts.

Through its partnership with Danone, Starbucks is joining a growing number of brands offering Greek yogurt — a $7.3-billion business, according to market research firm Packaged Facts.

Frozen yogurt chain Pinkberry, based in Los Angeles, debuted a platform of non-frozen Greek yogurt with both sweet and savory toppings earlier this year. In June, the 225-unit chain also added Greek yogurt smoothies to the menu. Both use a proprietary yogurt made in partnership with Fair Oaks Farms, which Pinkberry officials described as a sustainable, family-owned operation based in the Midwest.

Frozen yogurt player TCBY has soft-serve frozen Greek yogurt, and the smoothie chain Robeks also offers Greek yogurt–based drinks.

Menu research firm Datassential said in December that yogurt in general was on 36-percent more restaurant breakfast menus than it was in 2008.

Still, Franck Riboud, chief executive of Paris-based Danone, said in a statement that yogurt’s market penetration in the U.S. remains low, which presents an opportunity to the yogurt maker.

“The recent success of the Greek segment and our Oikos brand have confirmed the growing appeal of tasty and nutritious yogurts for U.S. consumers and established Dannon’s leadership in the market,” he said. “We believe this attraction will be further enhanced by our new access to millions of consumers through distribution in Starbucks stores, as well as through the addition of an exciting new brand, Evolution Fresh, Inspired by Dannon.”

Wall Street analyst Matthew DiFrisco of Lazard Capital Markets wrote in a report Tuesday that the move will likely drive long-term growth of channel development and alleviate concern over the segment’s recent slowdown in growth.

Channel development is among Starbucks’ fastest-growing divisions, though growth has slowed in recent months as the mature whole-bean coffee business has moderated, DiFrisco wrote.

The new yogurt will join a line of Starbucks products on deck for development in grocery and other channels, including Teavana teas, more K-Cups, La Boulange bakery products and Refreshers energy drinks.

Starbucks operates or licenses 18,868 locations worldwide, including 12,995 in the Americas region that includes the U.S.

Contact Lisa Jennings at [email protected].
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