The Chobani Story

wealthymatters Chobani is a brand of Greek yogurt.Five years ago,the brand had next to no revenue.This year the revenue will be more than $1 billion.The brand grew more than 2662% in the last three years and has made its sole owner,Hamdi Ulukya,a billionaire.

Hamdi grew up milking sheep at his family’s dairy in Eastern Turkey. He ate the thick, tangy yogurt of his homeland day and night. He claims that his mother made the most amazing yogurt and that he and his five brothers fought over who would get the scrim of cream on the surface.

After studying political science in Ankara University,he came to New York City in 1994 to learn English. Uncomfortable in the city, Hamdi moved upstate, where he found farm work while attending classes at State University of New York at Albany.

After a visit from his father, who complained about American feta cheese, Hamdi started a company in Johnstown to make feta for restaurants and food distributors. He named it Euphrates and still owns it.

One day in 2004, as he was tidying up his office, he came across a postcard advertising a yogurt plant Kraft Foods was closing. He dropped the ad in the garbage, thought for a while, and fished it back out. The next day, Hamdi drove to South Edmeston and visited the plant, an 84-year-old facility squatting in a valley between a hilltop graveyard and a biker bar. The walls were splotchy gray, and the equipment was old. Hamdi wanted it anyway, and in August 2005, with the help of a US Small Business Administration loan, he bought it. His first employees were four ex-Kraft workers and Mustafa Dogan, a yogurt maker from Turkey Hamdi knew by reputation. The first thing they did was paint the walls.

In 2006, Chobani hired its first salesman: Kyle O’Brien, then 33, a veteran of packaged food startups. He and Hamdi set a goal of selling 20,000 cases of Chobani a week, which they thought would make the company profitable.They decided that if they couldn’t do this in 36 months, they would go their separate ways.

Chobani couldn’t afford to advertise, so the packaging became almost as important as the yogurt itself. If you’re going to be buried in the lower left corner of the shelves, it had to pop. Garbage bags full of sample cups piled up in Hamdi’s office. He decided he wanted a European-style cup with a circular opening 95 millimeters across. It made for a squatter, fatter tub that looked bigger than others. The packaging manufacturers Hammdi contacted in the US wanted $250,000 just to create a mold. He found a Colombian supplier that was able to make his cups at a much lower price, but wound up spending $250,000 anyway — half his working capital — on cup design. Instead of painted-on labels, Hamdi wanted shrunken-on sleeves offering sharper colours.

To keep control of their product, Hamdi and Kyle approached retailers directly rather than going through distributors. Whenever a grocer offered to put Chobani in the organic section instead of the regular dairy case, Kyle declined. Prices were set high enough to recover Chobani’s costs but not so high, in Hamdi’s opinion, that rivals could easily undercut. Today, prices remain at about $1.30 for a 6-oz cup.wealthymatters

One night in October 2007, Hamdi and his staff finished packing the first order of Chobani: 300 cases of peach, strawberry, and blueberry for a supermarket on Long Island. At the time, Dannon and Yoplait claimed 71% of the US yogurt market. Greek yogurt had 2%, nearly all of which was Fage. Hamdi waited an anxious week before calling the Long Island supermarket to see how sales were going. The news couldn’t have been better: Not only had customers returned for more Chobani, but they also were also telling friends. The grocer ordered 300 more cases. By the middle of 2009, Chobani was selling 200,000 cases a week.

It’s rare that an upstart can bust into a business as entrenched as packaged food in the US, command a premium, then withstand the counterattacks of large, established players. Chobani has managed to do this as it has delivered against consumer expectations.Eating Chobani, like shopping at Whole Foods, isn’t about any one thing but many — from the label to the cup to the stuff inside.


About Keerthika Singaravel

2 Responses to The Chobani Story

  1. Alex Jones says:

    Another great case history I enjoyed reading.

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