Food Bites Yoghurt

1. Food Bites Yoghurt • Annual Market Quantification • September 2011

2. Setting the scene • Yoghurt is made through fermenting milk with bacteria strains under controlled temperatures and environmental conditions. It has a variety of meal applications and is commonly enjoyed as a snack, as a dessert or as part of breakfast. • Yoghurt is naturally a good source of high quality protein and calcium. It can be fortified with extra vitamins and minerals and other functional ingredients such as pre- and probiotics, collagens, Q10, Omega-3 and soy extracts. This makes yoghurt a good choice for consumers geared towards eating healthy. Yoghurt comes in a variety of formats including: • Plain or flavoured • Smooth, fruity and/or fibre enriched • Fat free, low fat or full cream • Sucrose free or sucrose reduced • The South African yoghurt market is made up of a mixture of a large, medium and small scale players, located nationwide. Yoghurt distribution is evenly spread nationwide with a substantial percentage of the locally manufactured yoghurt sold on the export market. Global player, Danone entered the local market in 1996 in partnership with Clover resulting in the growth of the yoghurt market and establishing Danone Clover as the market leader. In the last year, Danone acquired 100% of the Danone Clover joint-venture and Danone Southern Africa now operates. The market continues to show volume growth as the market leaders enhance the category through continued product innovation. 2

3. 2010 Category Distribution • The yoghurt market is dominated by demand from retail with more than four fifths of the volume channelled into this sector. Retail therefore strongly influences the overall pricing and packaging decisions for this category. 3

4. Annual Growth Rates 4

5. Yoghurt growth slows • The overall demand for cultured dairy products continues to increase and the yoghurt market plays an integral part within this. The category has seen consistent growth since BMI tracking started in 1998. However, the overall annual growth rate has slowed down in the last five years, with the market in 2009 in particular showing a very small volume increase. The base year saw a volume growth of 3.8% as the overall economy improved, and the yoghurt market is expected to grow by 4.2% and 5.0% in 2011 and 2012 respectively. Per capita consumption of yoghurt also increased in 2010. • Possible reasons for the continued upward trend include the following; • There has been a move to smaller pack sizes with the convenience of the multipack, and this trend is ongoing with half of the product volume now in packaging of 100g or less, most of these available as multipacks. • The positioning of yoghurt as natural prebiotics and probiotics that are beneficial for the maintenance of natural flora while on antibiotics has proved beneficial and is aided by the continued trend towards healthier eating choices. Yoghurt becomes a better choice as it provides products with reduced fat, fat free, reduced sucrose and sucrose free formats and contains little, if any, trans-fats. 5

6. Yoghurt growth slows (Cont.) • The market has continued to remain innovative, introducing new flavours and brands, especially among the kiddies yoghurt section which often include brand characters that are used in the advertising and sponsorship campaigns. DairyBelle has introduced the rainbow range for children. Yoghurt continues to remain a healthy option amongst other snack foods. 6

7. Food Bites Yoghurt For more information, contact: Jan Wegelin Research Manager Tel: (011) 615 7000 Mobile: 082 938 0744 www.bmi.co.za