Carbonated yogurt: Sizzle or fizzle?

Brace yourself: Yoplait is selling carbonated yogurt in a bid to bolster U.S. sales. Will the tongue-tingling strategy work? Fortune's Matthew Boyle reports.

By Matthew Boyle, Fortune writer

(Fortune Magazine) -- Ready or not, here it is: Looking to make yogurt more palatable to tweens, Yoplait has come out with carbonated yogurt in a tube.

Called Fizzix, this bubbly concoction is the latest entry in the fast-growing U.S. yogurt market.

General Mills is hoping its new carbonated yogurt will boost sales in the 8- to 12-year-olds age group.

As strange as fizzling yogurt sounds, General Mil (Charts, Fortune 500)ls may be onto something. U.S. yogurt sales more than doubled, to $5 billion, from 1998 to 2006, according to data tracker Euromonitor. Some 200 new yogurt products were launched last year, a 61 percent increase from 2002, says market research firm Mintel.

Virginia Lee, a senior research analyst at Euromonitor, says health and convenience are two big factors behind yogurt's growth.

Even so, per capita consumption of yogurt in America is only a third of that in France. Not only that, but American kids between the ages of eight and 12 -- a prized demographic given parental worries over rising childhood obesity rates and yogurt's nutritious properties -- consume the least amount of yogurt of any age group, according to General Mills, which owns Yoplait.

"We call [the tween demographic] the abyss," says Yoplait president Bob Waldron.

Looking to boost sales to young kids, yogurt companies are getting creative. Both Dannon and Yoplait, the country's largest makers of yogurt, sell varieties of drinkable yogurt. Yoplait's Go-Gurt, now a $140 million brand, moved yogurt out of cups and into kid-friendly tubes.

But until General Mills came out with Fizzix in July, nobody thought to try bubbles.

Actually, Lynn Ogden had the idea nearly a quarter-century ago.

Ogden, a food scientist who teaches at Brigham Young University, tried adding dry ice - which is actually frozen carbon dioxide - to a tub of yogurt in 1983. When the dry ice broke down, it infused the yogurt with CO2 gas.

Though he liked the tingly taste, "it was just a lark," Odgen now recalls. "The idea that it might be a consumer product didn't occur to me then."

Over the years, Ogden and his students kept tinkering with yogurt and carbonation - and more than once Ogden left the lab covered head to toe in cultured dairy. "Soda pop is fairly easy to carbonate," he explains. Yogurt, with its thicker consistency, had a tendency to explode.

Ogden eventually received a patent on his recipe and began selling 8-ounce cups of Sparking Yogurt at an on-campus store. Students loved the product, but the costs of mass producing it were prohibitive. And the BYU department in charge of licensing school inventions couldn't find any takers.

Even General Mills took a pass at first, stubbornly sticking to a long-held strategy of developing products internally, even as rivals found riches by using outside ideas. That's how Procter & Gamble (Charts, Fortune 500), for instance, discovered top sellers like Swiffer Dusters and Mr. Clean Magic Eraser.

General Mills' insularity came to an abrupt end five years ago. That's when Peter Erickson, who had just taken over as head of research and development, put together the "X-squad," a five-member team charged with reevaluating a slew of outside ideas that had been rejected.

Erickson, who had worked at General Mills for 14 years, had long thought the company should be more willing to license promising products.

"The next big innovation that will change the game for food has already happened, outside of General Mills," he explains. "We want the X-squad to find those inventors ahead of our competition."

Ogden's carbonated yogurt was among the first pulled from the trash bin. In 2006, General Mills signed an exclusive licensing deal to use Ogden's creation. But that was only the beginning: Figuring out how to mass produce the product without introducing too much carbonation was challenging.

"[The carbonation] had to be enough to excite kids but not so much that it exploded in their mouths," explains Erickson.

What's more, the carbonation process that General Mills used - called "aeration" technology, it whips a gas into a solid food product - ruined the yogurt's taste. So the company went back to the drawing board, eventually coming up with flavors like Blue Raspberry Rage and Wild Cherry Zing.

Fizzix didn't win over any grown-ups in Yoplait's marketing department - nor did it score big points in Fortune's highly unscientific in-house taste panel (one Fortune tester called it "Yuck-plait").

But tweens seemed to love it, says General Mills, citing focus group results. And some analysts see the appeal for kids.

"I've never heard 'carbonation' and 'yogurt' in the same sentence before, so it was an off-putting concept," admits Euromonitor's Lee. "But it tasted refreshing. Since children like new textures in food, I think it should do well." (A box of eight 2.25-ounce tubes sells for $2.79, and each tube has 80 calories.)

Waldron, Yoplait's president, won't disclose sales to date, but says he's pleased with the early results. He's so confident in the product's future that he skipped regional pilot testing this summer and went straight to a national rollout in thousands of stores.

Even if Fizzix fizzles, Erickson says General Mills is committed to integrating outside ideas into its product development. About 20 percent of the company's pipeline consists of external products, and he hopes to double that percentage over time.

There's one more certainty: General Mills - and BYU's Ogden - have just taken yogurt where it's never gone before.  Top of page