As Dannon tries to further distinguish itself from competitors in the yogurt industry, maybe a little shelf obsession is a good thing.

Last September, Dannon, White Plains, New York, initiated a shelf-obsession team consisting of five members with market research and sales backgrounds. Dannon named senior marketing executive Laura Santella-Saccone to head the effort.

The initiative is reaching full stride this year. "Our ambition is to impact about 3,000 stores in 2008," said company rep Michael Neuwirth. "We need to be able to market this initiative to retailers" and, in doing so, use  "heavy leverage market research data about the yogurt category and the opportunity [in retail]."

With its wide variety of yogurt products, the new effort goes beyond the normal operations of Dannon's sales teams.

"Dannon's shelf-obsession team provides unique expertise and support to our existing sales teams, which are focused more on the day-to-day issues of customer relationships," said Neuwirth  "The shelf-obsession team works somewhat like a 'special operations team' to bring dedicated marketing and research support on an account-specific basis. The shelf-obsession team also brings design and merchandising concepts gleaned from our company's global expertise to the Dannon sales team and to our customers."

According to Neuwirth, dairy today occupies about 3% of total grocery store space, but comprises 9% of sales. "We want to close that gap," he said. "Just to put that in context, dry grocery is 43% [of space] but it comprises 30% of sales."

Yogurt is experiencing a 6.3% annual growth rate vs. 3.9% annual shelf space growth. Neuwirth attributes the sales growth to a demand for products with added functional benefits such as Activia and DanActive. "These proactive brands account for 83% of total category growth," he said.



Grocery chain Cub Foods has responded to the concept, expanding yogurt sections by four feet, according to Progressive Grocer. The sections are now organized by function—digestive health, immunity, weight management, etc.—rather than by brand, using different colors to differentiate products. Creative signage providing education about yogurt, sampling stations during peak times and kiosks are also incorporated in the aisles. "We have installed proactive help kiosks, specifically dedicated to proactive health products," said Neuwirth.

But force-feeding retailers could have a downside too. "Shelf space is real estate in the grocery store," said Jack Trout, president of Trout and Partners, Old Greenwich, Conn. By "tinkering with their real estate," Dannon is saying, "I want to come in and rearrange it . . . I think it is going to be tough. They're implying [that] retailers don't know what they are doing. You are telling them you are smarter than them."

With increasing variation in yogurt products and increasing consumption, Neuwirth forecast a new era for yogurt in grocery stores. "When a shopper walks into a store, it's easiest to find [products they want] if they are organized by benefits. Fresh dairy products sell very quickly. There are a lot of out-of-stocks and that winds up costing the retailers." The Dannon team is trying to portray the "opportunity for retailers to increase space allocation of yogurt to make it easier for consumers and also to eliminate [yogurt becoming] out of stock."

Neuwirth said the aisles also need to be more inviting and aesthetically pleasing. They need to be more updated, "like organic sections, to modernize and make them more contemporary with better lighting, labeling and shelf identification."

Dannon also points out that the U.S. lags behind European countries in yogurt consumption. According to the company, the average person consumes 60 pounds of yogurt annually in Switzerland, 40 pounds in France and only 11 pounds in the U.S. There have been several instances in which Dannon has brought U.S. customers/retailers to European retail locations to try and show the impact yogurt can have on the U.S.