Lactalis expands in low sugar yogurt

French dairy company will acquire Siggi's, the New York-based maker of Icelandic-style yogurts which is a top-5 selling brand. The founder Siggi Hilmarsson will maintain his role as ceo
Lactalis expands in low sugar yogurt

French dairy firm Lactalis has agreed to buy Siggi‘s, the US based maker of Icelandic style skyr yogurts, for an undisclosed price. Siggi’s with the tagline “simple ingredients, not a lot of sugar”, has tapped into a shift by consumers toward healthier eating. Its yogurts are at least 25 percent less sugary than leading flavored yogurts, according to its website. Lactalis said the deal further expands our yogurt platform in the US with this unique and fast-growing yogurt brand.

From Iceland to Manhattan

After moving to New York from Iceland, Siggi’s founder Siggi Hilmarsson felt American yogurt was too sweet and artificial for his liking. He felt homesick for skyr, a sweet Icelandic yogurt/curd concoction. Based on a recipe sent by his mother, Siggi began making skyr and went on to establish his own company in 2005 to sell it in the United States. Siggi’s products are available at Whole Foods, Publix, Target, Wegmans and Starbucks stores. Siggi’s will continue to operate from its New York City office and remain a standalone company under the leadership of Hilmarsson, Lactalis said in a statement. Our core values of clean ingredient label and less sugar will remain 100 percent unchanged. Consumers everywhere are actively trying to reduce sugar in their diets so our offering has a global relevance, Hilmarsson said.

Growth opportunities

The purchase by Lactalis, the world’s largest dairy firm – reporting annual sales of around 17 billion euros – will bring the company industry knowledge, scalability and greater opportunities for R&D. Siggi’s has already achieved widespread popularity on its own, benefiting from the modern American consumer’s demand for authentic, “clean” yogurt offerings with reduced sugar. The company’s product, sold in eye-catching white packaging and made from milk from grass-fed cows, real fruit and zero artificial sugars and preservatives, ticks each of those boxes. The sale of Siggi’s comes six months after Lactalis purchased Stonyfield yogurt for $875 million, and may signal an effort by the company to gain market share in the category, one of the fastest growing food segments among US shoppers.

The US yogurt market

The North American yogurt market was valued at $11.18 billion in 2015 and is projected to reach $14.59 billion by 2024, according to Transparency Market Research. Skyr in particular has blossomed. Icelandic yogurt products have skyrocketed 73%. This year, Siggi’s is expecting 50% growth and roughly $200 million in sales, according to CNBC. Leadership in the US yogurt market is up for grabs, as sales of General Mills’ Yoplait have declined while Chobani and other upstarts surge in popularity. Consumers are increasingly choosing more innovative formulas with a high protein content, reduced sugar and a thicker consistency. Increased distribution of Siggi’s traditional, liquid and squeezable yogurt products could give General Mills another formidable competitor in the yogurt aisle as it works to reformulate its brands and align with customer tastes. For now, Siggi’s and Lactalis would be wise to invest in new product varieties and take advantage of consumer love for skyr — because there’s no telling when another yogurt brand will steal the spotlight.

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