Chobani's way means making better food for more people
The Greek yogurt company stays true to its values: making quality and accessible food, and being committed to its people and the community.
Chobani’s mission has been clear from the start: make better food for more people. It emphasizes that just as much today as when the company was founded by chairman and CEO Hamdi Ulukaya in 2007.
In less than 10 years, the Norwich, N.Y.-based company has become the No.1-selling Greek yogurt brand in the United States and this year surpassed Yoplait as the top U.S. yogurt brand in sales and market share, according to Nielsen data.
The company does not consider itself a typical large food company. It sees itself as a smaller craft company (based on its values, care and work that goes into its products), just on a larger scale. The product is important, but equally as important are the people making it and consuming it, according to Chobani.
The company produces 107 SKUs over 8 product lines:
- Core (fruit-on-the-bottom, blended and plain yogurts, including nonfat and whole-milk);
- Flip (with a sidecar for inclusions);
- Tots Pouches (designed for children six months and older);
- Kids Pouches and Tubes; and
- Drink (drinkable yogurt).
The company phased out its Meze Dips (introduced last year) in April and will do the same with the Simply 100 product in July.
It manufactures products in a 414,000-square-foot facility in South Edmeston, N.Y. (its first plant), and in a 1,000,000-square-foot plant in Twin Falls, Idaho (expanded last year and said to be the largest yogurt manufacturing plant in the world. See related article.) The company also has a plant in Dandenong, Australia that supplies yogurt to that country and select markets throughout Asia.
Chobani is available nationally in supermarkets, convenience stores, drug and club stores. Foodservice is also an important channel. Chobani yogurt is served on Delta, Jet Blue, American and United Airlines, and in several hotel chains, including Marriott. There is a partnership with McDonald’s in Southern California.
Last year the company refreshed all its packaging and launched a new product line — Chobani Drink (a 10-ounce drinkable yogurt). It also continues to build upon its seasonal offerings, with new and returning limited-batch flavors each season. Some of the new flavors for summer include Flip Blueberry B-Fast (blueberry yogurt with pastry pieces, cinnamon crunch, spiced walnuts and crunchy sugar bits); and Flip mint chocolate chip (mint yogurt with dark chocolate, chocolate cookie pieces and coated rice crisps). In the Drink line, new flavors will include coffee and orange-cream.
In January it added flavors to several of its lines, including fruit-on-the-bottom banana in Core; a s’more-inspired and a carrot cake-inspired flavor in Flip; and a pineapple-coconut and vanilla in Drink.
In July the company will launch another big product release and announce a new platform.
Its food philosophy
Chobani believes that every food maker has a responsibility to provide people with better food options.
“Whether we’re making a Flip that’s for an afternoon snack, a Drink that’s protein on the go, or our Core products, we’re applying a philosophy to the food. That is: delicious, nutritious, natural and accessible [or DNNA],” said Michael Gonda, vice president of corporate communications and public affairs. “[This philosophy] is ultimately what we feel has led to Chobani’s success. This is our unique differentiator in the marketplace.”
This DNNA is the company’s food philosophy and was repeated often by members of Chobani’s management team who spoke with Dairy Foods.
The company makes an authentically strained Greek yogurt using only natural and simple ingredients. All of its products are non-GMO and are made without artificial sweeteners. The products are sweetened with the naturally occurring sugar from milk (lactose), fruit (fructose), honey and evaporated cane sugar. There are no thickeners, gelatins, additives or protein powders in its products.
Just as important as the ingredients going into the products, so is the end result — the flavor, taste and consumer experience.
“Food development at Chobani is a team sport because we’re foodies. We love food and we’re food-obsessed,” said Peter McGuinness, chief marketing and brand officer.
McGuinness said the development process sets the company apart in a big way. “[Ulukaya] still tastes everything and has final approval on everything. He’s got great taste, a great palate and great instincts.”
“But essentially it’s a team sport between marketing, R&D, quality, ops and our founder,” McGuinness said. “We have an incredible R&D department.”
He called it second-to-none with talented people from around the world who bring different perspectives to food.
“We continue to push the envelope in terms of food and flavor. We make decisions very quickly. We’re very agile and I think that is a huge competitive advantage,” McGuinness said.
Ulukaya said in an email statement, “Being fast is incredibly important. We go from concept to creation faster than anyone out there, and that’s an advantage for us.”
Gonda noted Ulukaya often says what they are doing is not just about innovating.
“It’s about building on traditions, food traditions, flavor traditions, eating occasion traditions and using that to influence what products we come out with,” Gonda said.
This year, Chobani hired President and COO Tim Brown, who previously worked for Nestle. He talked about applying what he learned at Nestle to his new role.
“Nestle, at its core, is a science company that’s dedicated to R&D. It will be fun to have that same passion and apply it to [Chobani’s] rapid pace,” said Brown.
“Coming from Nestle, you’re drawing from best practices that range from total quality management to long-term planning to e-commerce and a robust sales force,” he said. “Nestle was an early adopter of using technology and embedding it in everything from e-commerce to digital marketing. It’s a good benchmark to quickly move to future ways of doing business.”
The company’s 2016 sales were $1.5 billion. This year the company has seen record production, with more cases produced and shipped than any time in the company’s history.
In 2016, it had double-digit top line and profit growth and record EBITDA. Last year the company doubled capital and marketing investment, increased distribution (“dramatically,” it said); and increased its hiring, particularly in supply chain and leadership.
As snacking and protein remain top-of-mind trends, the company is putting most of its focus on its three primary platforms — Core, Flip and Drink. Last year it launched an Olympic campaign featuring its Core products that focused on the relationship between the athletes and good food.
“We’ve had extremely strong, double-digit growth across our Core products,” said Gonda.
McGuinness said there’s still room for more distribution and consumption, and a lot of room to grow with Core, its fruit-on-the-bottom cups.
The Flip product (which was introduced three years ago) “is a massive growth engine for us,” growing 50% each year, said McGuinness. “It’s still not widely known and has a low household penetration, but an extremely high repeat” [purchase].
Flip packages have a sidecar compartment that can be bent and “flipped” into the main yogurt compartment. The sidecar includes fruit or crunchy mix-ins, including nuts, graham crackers, pastry crumbles and cookie pieces.
McGuinness continued, “We see massive growth [with Flip] for many years to come just based on where it is in the product lifecycle. It’s on-trend.”
By July, the company will have a total of 23 SKUs just in Flip, with new flavors coming.
Nothing is more on-trend than Drink (which is less than a year old), a portable solution to consuming protein. The company is looking to capitalize on that using a variety of tactics to get the word out. It’s going heavy on digital and social media, including an ad campaign that ran from February to May. And it’s doing a lot of sampling at tradeshows (like Expo West), in its company stores (called Cafés), in supermarkets and elsewhere. It’s paying off, as Drink sales have doubled in volume in the last six months, according to McGuinness.
“We want to do to Drinks what we did to Greek yogurt nine years ago,” he said.
Reaching its customers
Chobani has a broad customer base. It has 33 different sales customers (national retail, drugstores, club, convenience stores, etc.) that distribute its products across the United States and Internationally.
Chobani’s yogurt has broad consumer appeal but “if you peel the onion back, 48% of our consumer base is millennials,” McGuinness said. He attributes that to their passion for good food and clean ingredients.
McGuinness said Chobani works hard to understand and know the people consuming its products.
“We talk to people, consumers at retail [stores] every day. We interact with consumers every day at our Cafés, [and with] our CHOmobiles (food trucks),” he said. “[And] we interact with people every day on our social feeds.”
The company has an impressive social presence, but then so does its competitors. On Facebook, Chobani (1,411,679 likes as of May) trails Fage (2,089,393) and Yoplait (2,002,891). On Twitter and Instagram, Chobani leads its competitors with 106,000 and 145,000 followers, respectively. It also has over 121,000 Pinterest followers and 8,817 YouTube subscribers.
CHOmobiles are the company’s fleet of three food trucks that tour the country and offer samples in local communities.
With the first store opening in 2012, the Cafés are Chobani’s Mediterranean yogurt bars. There are two in New York (SoHo and Tribeca) and one opened recently in The Woodlands, Texas. The menu consists of a variety of sweet and savory creations made with Greek yogurt. The Café serves breakfast bowls (homemade whole grain cereal with poured whole-milk yogurt), sandwiches, soups, salads and desserts.
McGuinness calls the Cafés “incubation centers” and “a physical manifestation of the brand and the brand promise.” The stores serve as “test kitchens” for what is coming in the future. He continued, “What [the Cafés are] meant to do is open people’s minds, eyes and hearts to consuming yogurt in new and different and exciting ways. Our SoHo café is one of the most Instagrammed cafés in all of New York City because it’s a special experience.”
Commitment to the people, product
From the start, Chobani has done things differently.
“Our packaging was different. Our food was different. We ran the business differently, putting our people in the center,” said Ulukaya. “And one of the things that makes me the proudest is the impact this has had on our communities.”
“If you go out and ask people [in Twin Falls] right now, a random sampling, ‘What do you think of Chobani?’ you would feel the pride that people have even without working here,” said Gonda. “And that means a lot to us and we think that’s our duty.”
As part of its commitment to its workers, last year the company announced Chobani Shares (every full-time employee will receive awards that provide an opportunity to share in the growth of the company over time). It provided paid parental leave for employees and became a certified Great Place to Work.
McGuinness believes the most unique aspect of Chobani’s products “is the goodness that goes into the cup.” But he’s not just talking about ingredients. He includes employee benefits, its values, its workers, community outreach and its food incubator.
“All that love, passion and goodness goes into the making of the yogurt, which makes its way into the cup.”
“We’ve always done the right thing. And I think it becomes a pretty amazing value equation, from how we source our ingredients, to how we make the food, to how we treat our employees, to how we interact with the communities that we operate and live in, and then to how we actually make the final product,” he said.
This is why transparency and good sustainable practices are built into how the company operates. It believes people should know exactly what they’re eating and supports efforts to increase transparency in food labeling.
“We feel a deep sense of commitment about the areas in which we make our products, a deep sense of commitment to the people for whom we are making them. And that has remained true and will remain true for this company,” said Gonda.
Doing right is “baked into the DNA of this company,” added Gonda. “We call it the Chobani way.”
Hamdi Ulukaya, a Kurdish Turk raised in a dairy-farming family in a small village in eastern Turkey, launched Chobani in Upstate New York in 2007 with the mission of making better food more accessible.
In 2005, with the help of a small group of people, Ulukaya worked for nearly 18 months to perfect the recipe for Chobani Greek yogurt. In 2007, the very first cup of Chobani hit shelves at a small grocery store in Long Island, N.Y.
In less than five years, Chobani became the No. 1–selling Greek yogurt brand in the United States with more than a billion dollars in annual sales — making Chobani one of the fastest growing companies of its time. In 2012, Dairy Foods named Chobani the Processor of the Year.
Today, the company employs over 2,000 people in its facilities in New York and Idaho. A vast majority of these employees grew up in communities near its plants, but at the same time, the company has hired people from all over the world. Chobani’s hiring of refugees has drawn criticism from some anti-immigrant factions.
Founded with the belief that success would also be measured by the improvement of its local communities, the company has donated a portion of its profits to charitable causes, many of them in Idaho and New York.
When talking about who makes up the dynamic management team for Chobani today, McGuinness noted their many different backgrounds. He, for example, was previously CEO of Chobani’s first ad agency. But they all have a few key things in common — a passion for people, food and challenging the status quo.
Staying the course
The future appears to be bright for Chobani. Looking ahead, McGuinness said first and foremost, the company will stay true to its values, vision and food philosophy and “stay the course on our social and sustainability philosophy.”
He said, “As the category leader, we’re going to continue to invest in our brand and our business to drive category growth and increase consumption of dairy and yogurt in America.”
Brown added, “It’s clear there’s room for far more consumption of total yogurt and Greek yogurt in the U.S. — particularly when you compare us to more developed markets like Canada and Europe. Products like Flip and Drink make yogurt more approachable, and they’re important parts of the equation to drive consumption.”
McGuinness said the company’s ultimate goal is to be a food-focused wellness company that does good [things] in the world.
Chobani is more than on its way to achieving this goal.