Brand study case : Siggis

It is interesting to analyze the brand strategy of Siggis , one of the trendiest yogurt brand in USA and more recently in Europe.

Skyr is a dairy specialty between yogurt and fresh cheese. It has a denser texture than classic yogurts.

« The Icelandic Milk and Skyr Corporation » was founded by Siggi Hilmarsson in New York in 2004. The Icelandic student found the yoghurts far too sweet, and he missed the taste of Skyr from his childhood. He created the Siggi’s brand, and began selling his yogurts at a Manhattan farmer’s market.

In 2015, Siggi’s was sold in large retail chains such as Wholefood, and is the fastest growing yogurt brand in the United States. Siggi’s was acquired by the French group Lactalis, the world’s leading player in dairy products and the leading French agri-food group in 2018.

I) Market study

On the yogurt market, competition is frontal, which means that all players share the same distribution channels. The most common distribution methods are hypermarkets, the Internet or convenience stores.

There is not really any seasonality in this market, the French consume yogurts all year round, but it is possible to create more or less seasonal flavors (lighter and fresher in summer, more comforting in winter for example).

Looking specifically at the Skyr market, it has been growing in recent years as demand increases for healthier alternatives with lower sugar content and fewer additives. Consumers are looking for reassuring words and commitments.

II) External analysis – PESTEL

We note that the pandemic has had a strong impact on consumer habits and trends, whether in terms of distribution and purchasing methods (development of e-commerce) or in terms of purchasing power. In addition, the trend is towards products that are healthier, with fewer ingredients or that have a positive impact on health. Consumers pay more attention to product prices, but also to labels and brand promises, particularly in terms of ecological commitment.

Laws concerning the food industry are obviously prerequisites for entering the market. Finally, technological innovations allow more refined textures and tastes, as well as an improvement in the production process.

II) External analysis – Porter 5 Forces

Threat of new entries (⅗) : Not a lot of investment are needed to start a yogurt company, therefore making it easy for new players to enter the market. However, existing players already have a large base of experience (competitive disadvantage), and a long time is needed until first benefits can be seen or achieved (brand loyalty…).

Competitive rivalry (5/5) : The yogurt market is an oligopolistic market : Danone, Nestlé , Yoplait represent 77% of sales in France. The competition is based on consumer loyalty, price war and product differentiation. The only positive point is that the market is in demand for innovation and that demand is increasing, leaving potential places for new products from other competitors.

Threat of substitute products (⅘) : All products that can serve as a substitute for a desert, a dairy product or a snack can be considered as a substitute product : pastries, fruits, cheese, creams, homemade desert, etc.

Bargaining power of suppliers (⅖) : There is a large number of small milk suppliers, which means that is it easy for a company to change supplier, and that there is a high rivalry between suppliers.
Bargaining power of buyers (⅘) : The most important buyers are hyper and supermarkets : there is an intense lobbying and very hard negotiations between suppliers and these actors. It is generally the large distribution companies or central purchasing bodies that have the upper hand in the negotiations, being able to impose their conditions and prices on producers who do not have enough weight with them.

II) External analysis – SWOT

Strengths : The strength of Siggi’s is mainly their good brand image : they have a solid storytelling and consistent brand endorser in the person of the founder and leader Siggi Hilmarsson. They have an effective ad slogan (“Not too sweet is sweet enough”). They are still in a niche market, but one that is growing. Yet they already have a strong community of followers around their core values for natural goodness, health, and mindfulness, in accordance with their concept of « slow selling ».

Furthermore, they are owned by the Lactalis group, which means that they have the technical and technological means (factories, R&D, etc.) of a large industrial group.

Weaknesses : The same advantage that is put forward in their slogan could also do them a disservice : some people might find that their products are not sweet enough, especially when the majority of industrial products contain sugar (or even too much sugar) and we are used to this taste. This could reduce consumer « addiction » to their products.

Their full range not available in France, which reduce the amount of choice for the French consumers. Some may find the prices of Skyr product still too expensive. The texture can also disturb, as some people find it too thick, too heavy after the end of the meal.

Finally, apart from their already loyal customers and consumers in Skyr’s niche market, the awareness toward the brand is still pretty low in France.

Opportunities : They have the opportunity to expand their range with the tastes that are not yet sold in France. They could acquire other actors on the market and build partnerships for viable and profitable expansion. Finally, they could take advantage of Lactalis’ R&D skills and resources to develop new products for product differentiation.

Threats : The yogurt industry is a highly competitive one, and the Skyr is a trendy product. As a consequence, more and more large groups and companies in general are developing and marketing their version, which means that the niche market is becoming more and more competitive.

Aside from that, some current trends may not fit with the brand message and product (dairy free/vegan yogurt,…)

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