For decades Ultima Foods produced Yoplait yogurt under a licence agreement. But last year, the Quebec-based company decided to launch its own brand of yogurt, and this August the new Iogo brand hit store shelves, supported with a multimillion dollar marketing campaign. Ultima CEO Gerry Doutre has stickhandled the launch, a big gamble for his company which is owned by two dairy co-operatives.
Why did Ultima create an entirely new yogurt product line? General Mills took control of the Yoplait brand worldwide a little over a year ago. [We thought] General Mills might build its own factory, in which case we would be left with a very large factory with the capacity to produce about one-third of all of the yogurt consumed in the country, but no product going through it.
Around the beginning of May of this year we negotiated an agreement where we will continue to pack Yoplait products, but the marketing, sales, and everything that goes along with that was transferred to General Mills. So we decided to launch our own brand, and the product went on to store shelves in August.
How much are you spending on the launch? The marketing campaign, over the course of the first year, is in the neighbourhood of $50-million. That excludes some things such as the development of the recipes, the R&D, and the packaging research. In addition we put in place a $10-million investment to increase the capacity of our plant, since now we have both Iogo and Yoplait to make. And we are investing a further $22-million in the plant.
How do you persuade consumers to try a new product? There has to be something different. We set out to make our product distinctly different from the other major players. If all we were going to do was to make exactly the same types of products, or just put two per cent more strawberry in a strawberry-flavoured yogurt, we would have wasted our time and our shareholders' money.
What did you do to make it different? We did a lot of work on the recipes and flavours. We have the classics, but then we have a bunch of new flavours such as key-lime pie, lychee-raspberry, fig-date, apple-raisin. Our products are all free of gelatine. They have no artificial colours, no artificial flavours, and for every product except one there is no preservative.
We also touched on functional aspects. We have a drinkable yogurt [and] our bottle has a screw cap on it, whereas the other ones out there don't.
How did you choose the name? We started with a clean page, and invented the name. It is totally contrived. We wanted something that was short, and didn't translate badly into any language. Canada is a very cosmopolitan country, and history is full of examples of brand names that might work great in English or French, but could be insulting in some other language.
Is the market for yogurt still growing? It has been a little less vibrant over the last 12 months. Certain segments have been flat, or even declining a bit. But Greek yogurt has been growing quite aggressively.
Why is Greek yogurt so popular all of a sudden? I think it's the newness factor, the novelty factor. It has more protein in a serving than regular yogurt, and it is a firmer-bodied product. In Canada, it is still a fairly small segment, but it is growing quite quickly. It is about 6 per cent of the yogurt category overall.
Is it hard to predict food trends? Yes. You can think of a number of different brands that had days in the sun. When I was a kid there was Metrecal [diet drinks]. Then there was the Atkins diet. Then there were anti-oxidants, then probiotics. Somebody in the industry said yogurt is the food of the decade. Well, I hope that yogurt doesn't fall into that category of being a fad-type product, and that it will actually be the food of the next decade as well.
What is your ownership structure? Our shareholders are two dairy co-operatives: Agropur, which has about 3,600 members and is based in Quebec, and Agrifoods, a dairy co-op in western Canada, with about 1,500 active members.
Does being owned by co-ops change the way the company is run? In terms of day-to-day operations, no. We run the place pretty much like any other company. The difference is the long-term vision. We are not talking about a group of people who are interested necessarily in next quarter's results. They are prepared to be patient. Obviously they are looking to make a return over the long term, but they are in it for the long haul. But they are concerned about having a presence in stores, with products made with milk that comes from their farms.