Starbucks and Danone team up to take on growing U.S. yogurt market

Starbucks Corp and Danone SA said on Tuesday they will sell a co-branded yogurt through Starbucks cafes and in grocery stores as yogurt makers and food companies battle for market share in the $7 billion U.S. market.

The partnership comes as Starbucks pushes into the "health and wellness" category and as Danone, owner of the Dannon brand, and other yogurt makers seek to conquer the U.S. market, where yogurt consumption per capita lags Europe.

Financial terms were not disclosed.

Their first product will be ready-to-eat Greek yogurt parfaits, to be sold in U.S. Starbucks stores in spring 2014.

Distribution to food retailers is planned for 2015, with global expansion to follow, the companies said.

Yogurt is one of the hottest products in U.S. grocery stores and there appears to be plenty of room to grow, given that Americans eat far less yogurt than Europeans.

The U.S. retail market for yogurt has grown an average 8.5 percent per year over the last five years, according to Euromonitor International, a sales tracking firm.

Euromonitor forecasts the growth rate slowing to 5.9 percent per year for the next five years, double the expected growth of packaged food overall.

Greek-style yogurt now makes up more than 40 percent of the market, though the top-selling brand remains General Mills Inc's Yoplait, which has a nearly 24 percent share, according to Euromonitor. Privately held Chobani is second, though France's Danone has a greater overall share between its Dannon, Activia, Stonyfield Farm and Danimals brands, which together account for 30 percent of the market.

PepsiCo Inc has also jumped into the fray, selling Muller yogurt in the United States through a joint venture with German dairy company Theo Muller Group.

The Starbucks/Danone yogurt products will be sold under the Evolution Fresh name.

Starbucks bought Evolution Fresh, a bottled juice maker, for $30 million in November 2011. The coffee giant sells Evolution Fresh juice products through some U.S. grocery stores and Starbucks cafes and has opened four Evolution Fresh stand-alone juice shops.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Jeffrey Benkoe and Phil Berlowitz)