Dive Brief:
- The owner of Siggi’s Icelandic yogurt is exploring a sale, according to CNBC. The Icelandic Milk and Skyr, which owns the brand, expects sales of roughly $200 million next year.
- Siggi’s was one of the first yogurt brands to focus exclusively on low-sugar varieties. It has on the front of the label how many grams of sugar, protein and calories are in the item. While some yogurt companies are seeing sales slip, Siggi’s expects a growth rate of 50% next year, the cable channel said.
- Potential buyers could include Dean Foods, General Mills or PepsiCo. It is unknown at this time if any of these companies will put a bid in for Siggi’s.
Dive Insight:
Siggi’s was an innovator in the yogurt market by introducing a new Icelandic-style recipe that focuses on simple ingredients and minimal sugar. While some competing brands pack up to 25 grams of sugar, Siggi’s flavored varieties have just 8 to 11 grams. In addition, its yogurts use fruit and natural sweeteners such as agave or cane sugar, as opposed to hard-to-prounouce artificial ingredients. They were able to anticipate the simple ingredient and low-sugar trend, and are now reaping the rewards.
According to Nielsen, yogurt sales have dropped 2.5% during the last year with Greek yogurt sales down 4.8%. Despite this, Icelandic varieties grew 73%. Siggi’s is expecting 50% growth next year and roughly $200 million in sales, according to CNBC.
Considering the profits Siggi’s will likely bring in for 2018, it would be an attractive purchase for a larger company looking to add another clean label, fast-growing brand. It’s a known product with a strong customer base, and as consumers scour more ingredients lists, it will likely attract new shoppers, too.
This could be an ideal time for Siggi’s to consider a deal, as well. A strong parent company would offer distribution and expansion possibilities to help grow the brand even further. Plus, there’s no telling when the public’s love affair with Icelandic yogurt will come to an end. Better to get a good deal while the yogurt maker is a hot commodity.
Food giant General Mills would be a logical company to make an offer to acquire Siggi’s. This past quarter, the company posted a double-digit drop in yogurt sales as interest in its Yoplait brand continued to wane. Purchasing Siggi’s would be a safer bet than sinking investment dollars into R&D to attempt to reformulate Yoplait into a Siggi’s-esc product. General Mills has succeeded with the introduction of Oui by Yoplait, a French-style yogurt product which it debuted in June. But another yogurt variety would help boost the slumping franchise.
The market also seems to be ripe for another big yogurt deal. Earlier this year, Danone sold it’s organic Stonyfield yogurt to family-owned French dairy company Lactalis for $875 million. Chinese dairy company Yili, Grupo Lala and Dean Foods also expressed interest in that sale, so they could put a bid in for Siggi’s, too.