Can vegetable-flavoured yogurt break out of its niche market in the US, Julian Mellentin asks.

As it looked to find a way into the snack yogurt market, US-based Blue Hill chose to differentiate itself with a totally new product, rather than simply follow the current fad of going Greek. Blue Hill is also adopting a “Dairy 2.0” strategy (a strategy first described by European dairy innovators Emmi and Valio), which is the most reliable direction for innovation at present. David Barber, a New York City restaurateur with roots in dairy farming, is betting that he can generate interest in vegetable-based yogurts among American consumers. He plans a nationwide rollout next year of his line of six Blue Hill veggie yogurts, which began as intriguing side dishes at his restaurants and now are already available at more than 100 Whole Foods Markets in the US Northeast. Blue Hill is available in six flavours: sweet potato, beet, carrot, butternut squash, tomato and parsnip,  at a suggested retail price of $2.99 (€2.17) for a 6oz cup. The company is marketing the product as an alternative to regular yogurts for afternoon snacking and as a recipe ingredient, and Blue Hill has the additional virtue of being produced only with milk from grass-fed cows.

The question that seems to be asked constantly of dairy innovations is, “Will they be the next Greek?” This is of course the wrong question. No one, no one at all, predicted the massive success of Greek yogurt in the US back
in 2007. The owners of Greek yogurt pioneer Chobani were probably as surprised as anyone. Blue Hill’s vegetable yogurts, which contain 30% vegetable puree, will not be “the next Greek.” They are selling at a 75% premium to Greek yogurt – itself a premium priced product – and they are not yet ready to race into the mass market.

Vegetable yogurts do have the potential to be a significant segment of yogurt market, but that is strictly dependent on achieving good taste with wide appeal.

Fruit additions

The lesson from the juice market is that you can really only make vegetables work well as an ingredient when either people can’t taste them or they taste like fruit. Campbell’s V8 vegetable juice brand, for example, enjoyed a major growth driven by a brand extension called Fusion, which used fruit and vegetables but tasted only of fruit.

Similarly, Japan’s huge fruit and vegetable juice market was made possible by the fact that the products on offer taste of fruit, not vegetables. Big dairy groups will be watching vegetable yogurts, which is an idea that many have evaluated and dismissed as ‘too innovative’ or ‘too risky’ because it involves educating consumers rather than connecting to an existing consumer need. They will wait until they have seen pioneer brands such as Blue Hill demonstrate that the concept has legs.

In common with many other smart start-ups and even a few major corporates, Blue Hill understands that getting the right distribution in the launch phase of an innovative new product is key to success. The right distribution more often than not means alternative and specialist channels. Attempts to jump straight into mass supermarket distribution, which is the traditionalist approach to a product launch, are in fact much riskier. Hence, Blue Hill is debuting in 100 stores Whole Food Markets (the US’s premium natural foods supermarket chain) and in a variety of independent stores and small regional chains. It has also gained distribution with United Natural Foods, the largest purveyor of natural, organic and speciality foods in the US.

Barber would like to gear up for national expansion in 2015, but big obstacles loom before Blue Hill could become a presence across America. First, he says, his planned overall business model will be challenging to execute. “We are not looking to be Chobani,” he says. “But the prospects of going nationwide seem daunting. We have to be realistic that we’re in a competitive business. And we must offer an affordable product.” Second, Barber notes, Blue Hill must be positioned primarily as a snack, like other yogurts, with cooking and other applications remaining secondary. Only that way will it reach a big enough scale for the company to be financially viable.

For that positioning to work, Blue Hill has to get more Americans accustomed to the idea of veggie-based yogurts when the vast majority have only ever experienced yogurts based on fruit, or perhaps with some grains and other minor add-ins. A heavily vegetable-based yogurt will be an entirely new proposition.

Taste testing and sampling will be crucial in this endeavour as Blue Hill rolls out beyond its New York base. Sales increases have resulted from demonstrations at Whole Foods, Barber says. “Some people are adventurous and buy it, and most important, they come back after they’ve bought Blue Hill once,” he says.

As the customer base appreciates Blue Hill and grows, he says, “It’s important to get that buzz going and word of mouth – getting people to give it a shot, where we either live up to their expectations or we don’t.”