How PL is changing the yogurt market and threatening FAGE's dominance

Operating factories in the United States and Greece, operations in more than 30 countries around the world, and exports in Europe, America, Asia, and Africa, FAGE seems to have fulfilled its vision of internationalization.

And yet, after 97 years, the company, which still maintains its family character today, as it is headed by the third generation of the Philippou family, is facing the challenges of the international economic environment and insists on the new unit that is expected in the Netherlands to fulfill the needs of the European market. While at the same time facing the new reality of emerging PLs within and outside Greece.

The “best ever tasted” story of Total

The history of FAGE began in 1926 when Athanasios Philippou created its first dairy store in Athens. In 1950, FAGE's strained yogurt took off, at a time when the company had just established the first wholesale distribution chain in Greece. 1975 was a pivotal year, as Total yogurt was first standardized in the new facilities that the company had created in Metamorfosi, Attica, where its main factory remains to this day.

A reference point in the company's evolution was its entry into the production of cheese products, which dates back to 1991, while in 1993 it entered the fresh milk category, from which it deinvested in 2016, selling its plant in Amyndeon.

In 1980 FAGE began expanding to the UK and Italy, and in 1990 it made the step across the Atlantic with Total strained yogurt. The company's success in the American market was such that in 2004 it announced its decision to set up its own factory there, seeing the potential of the famous Greek yogurt. Of course, the global yogurt market changed radically in the years that followed, while in America, the new major player of 'Greek style yogurt' and FAGE's main competitor, Hamdi Ulukaya's Chobani, appeared, which essentially created a range of products based on 'Greek style yogurt'.

The exports

In 2022, sales increased by 17% in the U.S., where FAGE became the fourth largest producer of branded yogurt and the No.1 producer of branded strained yogurt, with a market share of approximately 29% in this category.

Its market share in Italy was 8.2% in 2022 with the company ranking 7th in the overall market. Private labels in terms of share ranked first with 20% and second in terms of turnover with a share of 16.6%, in a market worth €1.5 billion.

In the UK in the category "Greek yogurt - Greek-style yogurt" FAGE has a market share of 11.6%, ranking fourth, above strong players such as Arla, Nestlé, and Müller. The leader in the UK market in this category is private label products with more than double the share of FAGE in value terms (27.4%) and a market share of 40.2%. The total UK market stands at ￡1.4 billion and is the only market in which FAGE is active that has recorded a decrease in value (7.7%) despite price increases.

The Greek market

Based on Circana's (former IRI) consumption data for supermarket sales of yogurt products, last year Greeks consumed 52,302 tonnes of yogurt products. Over the last three years, the sales volume has decreased by 5,000 tonnes and the cumulative percentage decrease in consumption has reached 10%. Last year alone, sales in volume terms decreased by 6.2% compared to 2021. However, sales in value terms increased by 4.2% to €227.877 million, due to revaluations, from €218.726 million in 2021 and €226.158 million in 2020.

FAGE still occupies the first place, despite the fact that its sales in Greece fell by 10.9% in value and 20.3% in volume. Thus, FAGE's share fell last year to 20.2% in value and 22.2% in volume from 24.3% and 23.8% in value and volume respectively in 2021.

In second place with a 17.8% share in value, up from 13.5% in 2021, were private label products, the big winners in the category, which ranked fourth in terms of sales volume and share of 10.1% from 7.7% in 2021.

Kri Kri fell to third place despite its share strengthening to 15.7% by value from 15.1% in 2021 and 15.8% by volume from 15% in 2021.

Vivartia (Delta) ranked fourth with an 11% value share and third with a 15% share by sales volume. In 2021, its share was 11.4% and 16.1% by value and volume respectively. Dodoni followed with a share of 7% in value and 5.9% in volume, up from 7.1% and 5.8% in value and volume respectively in 2021.

Olympus fell to sixth place with a 7% share in value from 7.6% in 2021 and 8.8% in volume from 9.1% in 2021. One place below with a 4.8% and 4.5% share in value and volume respectively is Friesland Campina, which had a 3.3% share in volume and value in 2021.

Mevgal was in eighth place with a share of 4.2% in value and 4.7% in volume, while in 2021 it controlled 5.4% and 5.6% in value and volume respectively. Danone maintained ninth position with a 3% share in value and 4.1% in volume from 3% and 4.4% it controlled in value and volume in 2021. Finally, in tenth place, in 2021, Koukakis Farm was in tenth place with a 2.5% share in both value and volume, slightly higher than in 2021, where it controlled 2.3% and 2.4% in value and volume respectively.

Despite a small increase in sales of 3.1%, significant price increases that averaged 20%, combined with cost containment gave FAGE the opportunity to double the profit last year compared to 2021. Turnover stood at €552.27 million, with pre-tax profits soaring to €35.9 million, up 119.5% from 2021, and net profit at €29.3 million (+85.31%).