Total yogurt sales increased 3.2% L4W, but remain up only 1.4% during L12W (Greek +5.4%, core cup – 2.5%). On a company level, GIS has sustained positive share trends for the last 4 months (+113 bps L12W), aided by below-average pricing, while Chobani and Danone continue to cede share.
Moderating Greek sales contributing to slower overall category trends: While Greek improved sequentially L4W (+8%), growth of 5.4% L12W (volumes -2.5%) marks a sharp deceleration from 16.7% L52W, resulting in Greek’s share of the category declining since mid-year. In contrast, core cup sales declined -2.5% L12W but have improved materially from DD declines a year ago. In aggregate, we believe the combination of increased industry capacity and higher distribution levels (now in line w/ core cup) suggest that the yogurt category – while still benefiting from exposure to broader secular trends – is unlikely to be the significant growth driver seen during the past several yrs.
GIS – Broader share recovery a positive, but pricing tactics may weigh on margins: Despite the deceleration in Greek yogurt overall, Mills’ sales increased 48% during L12W, with market share of 10.7% up ~310 bps YoY. With normalizing sales declines in core cup (-1.4% L12W), Mills overall market share has recovered modestly to ~27% (below Chobani at ~32%). While encouraging, we believe this topline momentum may have come at the expense of margins, given Mills’ price/mix (L12W) of – 4.0% in Greek (vs. category +2.8%) and -1.0% in core cup (vs. category +3.2%) despite significant dairy inflation.
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