Frozen yogurt makes a comeback

NEW YORK — Leonardo DiCaprio has a Red Mango yogurt machine in his office. Paris Hilton and Lindsay Lohan have been photographed clutching Pinkberry yogurt cups while ducking the paparazzi.

Frozen yogurt, trendy during the 1980s and early '90s, has made a comeback — but this time with an edge. Companies selling the soft stuff are opening stores with hip décor and pulsating music that draw a young crowd.

Celebrity bloggers like Perez Hilton have posted pictures of young Hollywood stars spooning yogurt into their mouths.

Veterans of the last yogurt boom, including TCBY, Penguins, and Tasti D-Lite, are still operating, but their newer rivals have a different business model, going after a younger market that wants not just a frozen dessert, but an experience.

The question for Pinkberry, Red Mango and the rest of this new generation of yogurt purveyors is whether they'll be able to grow into national brands — especially since their target market is known for having fickle tastes and a short attention span.

Moreover, the industry is already getting crowded, raising the possibility of a shakeout.

In Los Angeles, where the industry's latest incarnation began about two years ago, consumers can now choose from chains like Snowberry, Roseberry, Berri Good, Kiwiberri, Yogurtland, Yogurberry and IceBerry.

The concept behind Red Mango and Pinkberry is to keep customers in the store, rather than have them buy their yogurt and just leave as in more traditional yogurt and ice-cream places. And so the décor at a Pinkberry includes $350 Philippe Starck chairs and $391 Le Lint lights.

"We're trying to create the coffeehouse environment," said Dan Kim, chief executive of Red Mango. "We're creating an ambience, a point of relaxation, a meeting place."

Unlike the older shops with their variety of flavors, Pinkberry and Red Mango generally offer just two flavors — plain and green tea — and they are more tart than the previous generation's products.

The average purchase price is about $5, but can double with added toppings like fresh berries, granola and Fruity Pebbles.

Both Pinkberry and Red Mango rely on slick marketing campaigns and celebrity connections. The trend toward healthful eating might be a key to the longevity of the new frozen-yogurt chains.

"They started in Los Angeles and flourished there for a reason," said Tom Coggia, a Seattle resident who tried Pinkberry after hearing about it. "Because L.A. is all about image and hype and being seen — being seen doing things that are cool. People see a photo of Paris eating Pinkberry and they want it."

The big chains have their roots in South Korea. Shelly Hwang and Young Lee, two South Korean immigrants, launched Pinkberry in West Hollywood, Calif., in 2005.

While there are claims that they were inspired by Red Mango, which operates more than 140 locations in South Korea, the Pinkberry owners maintain they got their inspiration from Italian gelatarias.

Pinkberry now operates 59 locations in California and New York, and plans to have 75 open by the end of 2008.

Red Mango operates 30 shops in seven states, with plans to open dozens more in the coming year. A new store in Seattle's University Village opened Monday.

"The question is, are you going to just be a niche player or will you be a national chain," said Harry Balzer, vice president of NPD Group, a consumer marketing-research firm that tracks how Americans eat.

"They clearly are getting a nice buzz within the population. But we often mistake our willingness to try new things as a trend."

Pinkberry has grown, in part, with cash from Mavern Capital, a venture-capital firm cofounded by Starbucks Chairman and CEO Howard Schultz. It invested $27.5 million in Pinkberry last October.

Red Mango last week announced that former Blockbuster CEO John Antioco invested $12 million in the concept, and will serve as chairman of the company's board of directors. Other advisers include movie producer John Davis, the son of billionaire Marvin Davis, movie producer Roy Lee, and Stone Canyon Venture Partners.

Pinkberry CEO Ron Graves said the company has certainly benefited from its pop-culture fame — and doesn't plan to run from that image. However, he feels Pinkberry has the product to back up all the hype.

"We're not out there trying to get people to endorse Pinkberry," he said. "It has been a natural phenomenon. We're focused on building the right infrastructure, growing in other regions, and building a fantastic company."

Information from Seattle Times reporter Melissa Allison is included in this report.