Danone watched in 2022 as consumer demand for portable, less sweet offerings surpassed even its own optimistic projections — forcing a quick pivot by the dairy and plant-based giant.
Executives were planning to launch a smoothie under its low-sugar, high-protein yogurt line Two Good in 2023 — the first extension of the fast-growing brand since its debut three years ago. But ongoing strength in better-for-you trends, coupled with a resurgence in consumers venturing outside the home, prompted the company to expedite the product’s presence on store shelves by several months.
“We needed to move on our innovation and ensure that we can be agile and meet those consumer needs that are growing at an accelerated pace post-COVID,” Surbhi Martin, a vice president of Greek yogurt and functional nutrition at Danone, said. “We’re really excited about the launch of the Two Good smoothies and how big of an opportunity it represents.”
Danone launched Two Good in 2019 amid consumer demand for lower-sugar, high-protein offerings. In just three years, it has become the fastest-growing Danone brand in North America with more than $200 million in annual sales. During the 52 weeks that ended Oct. 16, sales surged 11.6%, according to IRI data cited by Danone.
Two Good has grown into a very important brand for Danone’s yogurt portfolio, responsible for 80% of the company’s growth in the category since its launch. It’s also helped Danone boost its market share during the last year by 3% in the Greek yogurt space, the company said.
The smoothie — available in Mixed Berry, Strawberry Banana and Peach flavors — gives Danone another way to not only increase Two Good’s usage occasions among existing consumers but attract younger shoppers who are rapidly increasing their spending power.
Smoothies are more popular among Gen Z and millenials who also tend to vote with their pocketbook depending on the perceived sustainability or healthiness of a brand, Martin said. The Two Good smoothie will be incremental to the brand, meaning the majority of people will buy the product along with the yogurt. Danone said consumers will replace their yogurt cup with a smoothie only 30% of the time.
Two Good and its new smoothie product hits on several popular trends in the marketplace, catering to what Danone calls the “healthy conscious do-gooder” — a consumer who wants to eat better and help the planet.
The smoothie is high in protein with 10 grams, and low in sugar — each 7 fluid-ounce bottle has 3 grams of the sweetener compared to an average of 19 grams in other brands, Danone said. Two Good also has embraced doing good, giving one cent to rescue organizations dedicated to keeping food from going to waste and getting it to people in need. The smoothie further builds on that mission.
“Putting purpose at the center of this brand can help drive outsized performance in this market because there is a consumer out there that wants to vote with their dollar and is willing to pay a little bit more for it,” Martin said.
Danone has focused on having each of its yogurt brands define a specific subcategory, such as probiotics with Activia, Oikos for Greek yogurt, Light + Fit for the low-calorie, health-conscious consumer, and Danimals for kids. Each of those brands, with the exception of Oikos, has a yogurt drink.
In debuting the Two Good smoothies, Martin said, Danone borrowed insight from those product launches, as well as its work with its other ready-to-drink items, such as its ready-to-drink Stok coffee.
The Two Good smoothie “creates a product that really fits a need that our current portfolio wasn’t fulfilling and, frankly, that we weren’t seeing in the category at all” with a low-sugar, portable smoothie, Martin said. While low-sugar yogurts currently make up 24% of the yogurt category, according to Danone, low-sugar smoothies only make up less than 1%.
Danone is planning to bring Two Good into additional channels and consumption occasions, Martin said, though she declined to provide additional detail. “Two Good Smoothies are going to be a key driver of Two Good’s growth next year,” she said.
