Andreas Ostermayr, Dannon

Most of us would not think of yogurt as a life-altering product. Which is exactly why Dannon deserves so much credit for having the foresight to bring Activia, a familiar brand overseas, to the U.S. market in early 2006.

Dannon knew it had a hit on its hands last May when it heard about an emotional call to its consumer affairs hotline. The message came from a woman with crippling digestive problems who, after hearing about the relief offered by the probiotic cultures in Activia, decided to give the product a try. Choking back tears, she told a Dannon rep, “I know you’re going to think I’m crazy, but Activia has changed my life.”

Pretty big stuff for a little green container of yogurt.

“We were overwhelmed with the success we created,” said Andreas Ostermayr, 37, Dannon’s chief marketing officer and a Brandweek Marketer of the Year. “It’s one of the few stories where we created more demand than we could fulfill.”

By capitalizing on the functional foods craze that’s been sweeping across supermarket aisles in the U.S., Ostermayr and his cohorts at Dannon gave consumers an entirely new reason to eat yogurt-a proposition they wholeheartedly swallowed, judging by Activia’s impressive first-year sales, which continue to climb.

Activia generated $132 million at food, drug and mass outlets (excluding Wal-Mart) in 2006, per Information Resources Inc. Through Sept. 9, Activia sales jumped 44.25% to $124.9 million. The brand is currently No. 5 in the $3.3 billion yogurt category led by Yoplait. Sales of Activia Light, which launched in early 2007, have reached $38.9 million through Sept. 9, per IRI.

That success hasn’t gone unnoticed by competitors. In the wake of the Activia launch, several new probiotic products have been introduced in the U.S. market, including Yoplait’s Yo Plus yogurt with probiotics and prebiotics, and Breyers Light! Probiotics Plus Yogurt.

Clearly, Activia is stirring up a segment that, despite its recent growth, has not seen this kind of individual product success since the days of Yoplait Go-Gurt in a tube (an MOY back in 2000).

So how did Activia get there?

At its core, the brand had to persuade U.S. consumers, namely women, to think of yogurt in a new way. While Americans may view yogurt as a “healthy” food item, they are more prone to popping a tablet to soothe an upset stomach rather than grabbing a spoon. Plus,
Dannon had to overcome a stigma in talking about digestive health, an issue raised by focus group participants who initially assumed the product was a laxative (ouch).

Activia tackled the sensitivity issue head-on in taking its message to both doctors and consumers. For the former, the brand sponsored symposia and conventions on gastrointestinal health issues, and ran ads in various medical journals. Meanwhile, Dannon has shelled out considerable sums of money on Activia’s consumer ads (about $100 million from January 2006 through July ’07, per Nielsen Monitor-Plus). Its no-nonsense campaign, featuring college students and mature women having candid discussions about the product, spoke to consumers in a way that no other yogurt maker has dared to try.

“Dannon’s advertising for Activia was well-executed and highly effective,” said branding expert Eli Portnoy, who is based in Orlando, Fla. “This is a product that most Americans were not aware of, but Dannon is a brand consumers’ trust and their advertising was informative yet low-key. They didn’t hit consumers over the head with it.”

Much of the credit for that goes to Ostermayr, who CEO Juan Carlos Dalto said was the right man for the job. “He is one of a kind in terms of personality. He’s German, but from the South- almost like a Latin, and I’m Latin,” laughed Dalto, who is Argentinian. “He also has conviction, ambition and hunger.”

Ostermayr took over marketing of all fresh dairy brands at the White Plains, N.Y., U.S. headquarters of Danone International in December 2004, after working his way up the chain at Unilever Bestfoods Europe on brands including Lipton Ice Tea and I Can’t Believe It’s Not Butter. Ostermayr immediately began to assemble a marketing team of people (including Jeff Rothman, director of marketing) who either knew the Activia brand internationally or who had intimate knowledge of the U.S. food industry.

“These types of internal changes need to be embraced by the whole organization and Andreas did it successfully,” said Dalto.

Filipe Vasconcellos, regional account manager at Young & Rubicam, New York, which handles Activia’s advertising, offers a peek inside the Ostermayr psyche: “Andreas has a trick called ‘AO’ time. He blocks off 30 to 60 minutes every day to think things through. No use calling, sending e-mails or trying to schedule meetings. This not only shows how disciplined he is, but it is great insight into how he [operates].”

Activia had stuck with a proven formula ever since it first launched in France in
1987. But U.S. consumers approach food- especially yogurt-differently. “Globally, yogurt is full of fat. In the U.S., it has to be lower fat,” explained Ostermayr. “We had numerous internal discussions about this because we were talking about changing the formula of our most successful global product. In the end, we realized it was the right thing to do.”

So, after giving the product a liposuction, Dannon made a bold move in pricing the product for the U.S. market. When it was launched in early 2006, Activia was half the serving size (4 oz.) that consumers were accustomed to, yet the product was being sold at a 50% price premium over other yogurts. “Everyone overeats. You don’t need eight ounces; four is sufficient,” Ostermayr said. “To justify this type of price increase, you have to have a relevant offer and the marketing has to tell the story.”

To create a compelling story, the Dannon marketers conducted in-home tests and focus groups with women ages 25- 64. The participants all had one touchy issue in common: irregularity. The consumers ate Activia for two weeks and were interviewed before and after the tests for feedback.

Among the findings: The consumers liked Activia’screamy texture and overall taste. But they were skeptical when they heard about probiotics and ingredients like “bifidus regularis” (see box, page 27).

That insight informed a key part of the marketing strategy. “This skepticism about probiotics encouraged us to follow our instincts to emphasize the benefits rather than [the word itself]” in the advertising, explained Ostermayr.

By his own admission, Ostermayr knew Dannon was not going to win any creative prizes for Activia’s advertising. That wasn’t the goal.

“The ads had to communicate the benefits . . . they could not just be fun or entertaining. It’s all about the credibility,” he said.

The first round of TV ads broke in February 2006 on broadcast networks and female-skewing cable channels including Lifetime and Food Network. In one spot, college students are discussing digestive problems caused by the stresses of school and unhealthy eating habits. One girl is sitting on a sofa, trying to study, when her roommate walks in and asks her if she feels like going out.

“I can’t. I feel bloated, irregular.”

“It’s probably the stress from exams. Look how it makes us eat.”

“So how come you’re OK?”

“I eat Activia. Every day.”

The voiceover chimes in: “Dannon Activia . . . clinically proven to naturally regulate digestive systems in two weeks.”

If such dialogue seems startlingly frank, particularly for a food ad, that’s exactly the point Ostermayr wanted Activia to make.

“Andreas was key in getting the team to focus on the functional component of Activia instead of following the general trend of communicating taste,” said Vasconcellos.

Last fall, a second flight of ads featured women of various ages engaged in more conversations about digestive health. This time, Dannon upped the ante with ads touting a money-back guarantee offer known as the Activia Challenge, and promising, “Eat it everyday for two weeks . . . It works or it’s free.”

That offer reflects a confidence in a product that has been, since its introduction in the U.S., a huge hit. Activia launched nationally in grocery and mass retailers in mid January 2006. It rolled out to warehouse clubs a few months later. Activia was initially available in fourounce four- and eight-packs in strawberry, vanilla, blueberry, peach, prune and mixed berry. The suggested retail price s were $2.49 and $4.49, respectively.

When Activia launched, Dannon conducted in-store sampling in thousands of stores nationwide. “We recruited staffers who were able to understand and clearly communicate the clinically proven benefits of Activia and could answer questions about probiotics,” Ostermayr said. The sampling began during the launch and continued throughout the first half of 2006.

The consumer and retailer response to Activia exceeded Dannon’s expectations. Within three months Activia had almost 90% distribution in the mass grocery channel. Within six months, Activia had achieved between 70-80% aided awareness among consumers, according to Millward Brown, a New York research firm. In fact, because sales exceeded expectations, Dannon was forced to reduce the originally planned sampling investment.

“We were running into a limited supply situation, so we reduced the sampling investment to help control the issue,” said Ostermayr.

Looking ahead to 2008, Ostermayr is mum about plans for Activia, though he hinted at a round of new flavors and ads. He was more effusive in summing up the success of Activia so far.

“We offered innovation and value to consumers by means of functionality,” he said. “And they embraced it.”

Photo by Frank Veronsky