Frozen yogurt (fro-yo) wars heat up for summer season

Date AddedMay 27, 2009 02:18:07 PM

AuthorBy Bruce Horovitz

Customers at the Farmers Market Pinkberry in Los Angeles. Pinkberry plans to roll out Bing cherries as a summer topping, says CEO Ron Graves. It also has a yogurt fruit parfait in the works.

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By Bruce Horovitz, USA TODAY

Just how badly do the makers of chichi frozen yogurt want folks to buy their pricey, probiotic-stuffed stuff?

Over the past few weeks, Pinkberry, the leader of the better-for-you "fro-yo" pack, has begun to deliver frozen yogurt — via bicycle messenger — from six of its New York City stores to folks who buy at least $10 of it.

Meanwhile, rival Red Mango just introduced a flavor it dubbed Tangomonium, perhaps to give taste buds the feeling of performing a tasty tango with its tangerine-laced frozen yogurt.

The summer season is on tap, when frozen yogurt sales jump 20%. But with this one in the midst of the recession, not everything is perfect in Fro-Yo Land. The two fastest-growing chains, Pinkberry and Red Mango, were forced to close several stores each last year in the already overcrowded Southern California market. Compared with other food categories, they've both escaped mostly unscathed from the teeth of the economic downturn.

Maybe it's their New Age karma. The chains have a Far Eastern appeal with flavors such as green tea and pomegranate that come with mostly healthy toppings such as fresh strawberries and kiwi. The floors in Pinkberry stores are made of tiny pebbles, so customers feel like they're at the ocean.

Although upscale, better-for-you frozen yogurt is but a fraction of the overall $8.1 billion frozen yogurt market in the U.S., it's the fastest-growing segment, says Samuel Nahmias, chief operations officer at StudyLogic, a research firm. Between them, Pinkberry and Red Mango are projected to have more than 1,000 locations within five years.

"When it comes to food, people are always looking for the next thing," says Terry Eagan, a Los Angeles psychiatrist who specializes in food issues. Even in the midst of a recession, he says, "The fantasy of healthiness is a perfect setup for a business, particularly in California."

Now, the companies are starting to move East from their West Coast footholds. A third Southern California contender, Yogurtland, also is growing fast with a self-serve, lower-budget appeal. Never mind that the rest of retail ice cream's sales are generally flat or heading south.

"These groovy frozen yogurts are small luxuries at a time folks can't afford big luxuries," says Howard Waxman, publisher of the Ice Cream Reporter newsletter. "They're not selling frozen yogurt. They're selling the experience."

If that sounds eerily like Starbucks, it should be no surprise that Starbucks founder Howard Schultz is a Pinkberry board member and has invested millions of dollars in the company.

This new generation of frozen yogurt is a far cry from the 1980s rise and fall of such familiar franchises as TCBY and I Can't Believe It's Yogurt. The latest incarnation not only has a quasi-Zen-like feeling to the stores, but the yogurt's ingredients are superfriendly to a clientele — nearly 70% female — that's ultraconcerned about calories, fat and natural ingredients. (Malia and Sasha Obama have been spotted with Pinkberry.)

The chains boast about the live and active cultures in their yogurts, as certified by the National Yogurt Association. Such cultures are commonly linked to helping foster better digestion and healthier immune systems.

A typical 16-ounce cup of Pinkberry fetches $4.50. That's no small price to pay for a snack.

Here are some upcoming summer moves — and beyond — for key fro-yo players:

•Selling new flavors. To nudge summer sales, Pinkberry will roll out Bing cherries as a new summer topping, CEO Ron Graves says. It also has a yogurt fruit parfait in the works.

•Testing delivery. Pinkberry calls its New York delivery "Swirls on Wheels." Cambro coolers are used to keep the frozen yogurt cool. There are even yet-to-be announced plans to roll out limited delivery — and curbside pickup — in the chain's core Los Angeles market, Graves says.

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