(Bloomberg) -- Chobani LLC ignited a frenzy in the late 2000s when it introduced the masses to Greek yogurt. Now it’s trying to start another trend to reinvigorate the category: yogurt without sugar.

The closely held company says its new product, called Chobani Zero Sugar, is the first to eliminate the substance through a process that strips out the natural sugars in milk. The line, which will be broadly available in August, will use monk fruit and allulose as natural sweeteners. The brand already has low-sugar offerings with as little as 9 grams of sugar, but now it’s going even further to cater to health-conscious consumers.

“One thing Covid has done is create healthier habits, particularly in snacking,” President and Chief Operating Officer Peter McGuinness said in an interview. “There’s no signs of slowing down.”

This product launch comes as speculation rises about a potential initial public offering that could value Chobani at $10 billion. The company, which declined to comment on its plans, had its initial breakthrough when its Greek yogurt took off. That kind of yogurt, which has grown to about half of the market from almost nothing, offered a heartier snack with more protein and less sugar.

Competition pounced on the trend. To maintain its momentum, Chobani, which generates about $1.5 billion in annual revenue, has expanded into other categories, including probiotics, plant milks and coffee creamers.

Yogurt sales slumped in the years leading up to the pandemic. But like many food industries, it got a bump during Covid-19 with Americans doing more eating at home and grocery shopping. The category rose almost 12% in the U.S. in 2020, according to Euromonitor International. As the pandemic wanes, yogurt makers need to figure out how to hold onto some of those gains.

Maintaining growth will be tough with Euromonitor forecasting the overall yogurt market to decline nearly 8% this year. Chobani is betting that an option without sugar will lure customers with strict diets. It’s also already posting growth that out paces the broader market, according to McGuinness.

‘Artificially Large Boost’

“There’s no doubt that the pandemic gave it an artificially large boost,” said Bloomberg Intelligence analyst Jennifer Bartashus on yogurt’s performance. “It’s not a high-growth category, but there are pieces within it that are going to be high growth,” she said, predicting that consumers will start migrating toward low-sugar and plant-based offerings.

Chobani’s new yogurt, which uses what it calls natural fermentation and probiotics to eliminate sugar, is priced the same as its other cups. It costs the same to produce as its other varieties. And it will also face competition from other low-sugar varieties, including a high-protein option from General Mills with 3 grams of sugar and Danone’s Greek yogurt from with 2 grams.

But the difference of a few grams of sugar is a big one, according to McGuinness.

“You hear some barriers to dairy -- there’s too much sugar, there’s too many calories,” McGuinness said. People who want to limit their sugar intake are “not happy with the current options.”

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