Chobani: A Journey to Success in the Yogurt Industry
Cover Art by Eman Azrak
What is now popularly called Greek yogurt (also known as strained yogurt) is famous for its thick, creamy, and tangy texture compared to its watery regular counterpart. Today, Greek yogurt is a highly sought-after healthy snack, light meal, or even a condiment/ingredient to enhance other flavors. Before the 2000’s, however, yogurt options in American supermarkets were very limited—and Greek yogurt was practically nowhere to be found in the U.S. Fast-forward to today, Greek-style yogurt constitutes 50% of the entire $8 billion yogurt market in the U.S., meaning at least $4 billion of Greek yogurt is sold each year in America alone. One brand in particular is behind this rapid rise in Greek yogurt: Chobani.
Figure 1: Chobani products
(Photo via https://www.chobanifoodservice.com/products/)
Chobani was founded in New York in 2005 by Hamdi Ulukaya, who believed that he could bring the right kind of disruption in the American yogurt industry. Ulukaya grew up in the mountains of Turkey, where strained yogurt and feta cheese were a part of his staples. In 1994, at the age of 22, Ulukaya immigrated to the U.S. alone to study English. Little did he know that he would become the CEO of the largest Greek yogurt company—he not only faced a huge language barrier, but also had just enough money to survive and no business knowledge.
Ulukaya’s business journey started with feta cheese in 1996, when his father came to visit from Turkey. After being greatly disappointed by the cheese available in the U.S., his father suggested to Ulukaya to import feta cheese from Turkey and start selling it in New York. By 2004, Ulukaya was a small business owner, making his own feta cheese and selling it to distributors. He was making $2 million in sales, just enough to pay his 40 employees and have room to barely breathe.
Figure 2: Hamdi Ulukaya, owner, founder, chairman, and CEO of Chobani
(Photo via https://www.linkedin.com/in/hamdiulukaya)
The year 2004 was a pivotal point for Ulukaya, as he coincidentally came across an ad of an abandoned yogurt factory for sale for $700,000. Despite everyone’s objections—based on the facts that 1) Ulukaya did not have the money, 2) Kraft Foods abandoned the factory to give up on the unprofitable yogurt business—Ulukaya convinced the Small Business Administration (SBA) to back his business. Ulukaya trusted his vision. Whenever he met an American who had been to Turkey, he noticed that the first thing they would bring up regarding their visit was yogurt. Greek yogurt had been a part of his breakfast, lunch, and dinner in the place he grew up. Naturally, there was no one more suited to bringing strained yogurt to the U.S. market than himself. So, after acquiring the factory and four employees, Ulukaya finally launched Chobani in the summer of 2005.
Chobani, a variation of the Turkish word çoban or the Greek word chopani, means shepherd. It has a pure and simple meaning, representing someone who helps or someone who leads. For Ulukaya, it was important that the cup and sleeve designs were made to be eye-catching. If he could get consumers to try his product once, he was confident that the yogurt would finish the work. “I had no luxury of ‘Oh, I wish I had done this, I wish I had done that.’ This is one shot. If it’s not successful, I’m out,” Ulukaya had repeatedly said to himself.
Soon after its launch, Chobani was met with rapid growth. By 2007, Chobani found its first retail location at a kosher grocery store in Great Neck, New York, where the brand was met with some repeat customers. Soon after, Chobani expanded into ShopRite (a supermarket chain in the east coast), where the brand had to pay a high listing fee to even be displayed on the shelves. Ulukaya needed to sell 20,000 cases to break even, and in just one week, he received an order of 25,000 cases. That week, with an alarming number of orders, Ulukaya recalls how he and his workers slept in the factory because they didn’t have enough facilities and people to keep up.
By 2010, Chobani was making $260 million in revenue. The company could finance its growth entirely through the sales of yogurt. And until it hit $600 million in revenue, Ulukaya put every penny back into the company, with no outside investors.
Soon after, however, Ulukaya started getting calls from large yogurt franchises like Dannon and Yoplait and from private equities that seemed somewhat threatening, asking if he had any intentions of selling Chobani. These franchises were capable of making the same products with mass distributors and huge marketing budgets. He was offered billions of dollars to sell Chobani, but he declined all offers.
To Ulukaya, his journey with Chobani was more valuable than the profit being generated by the business. For the first time in his life, he saw what he was capable of doing. He felt alive, and he had no desire to stop. By 2011, Chobani became one of the top three yogurt brands in the U.S. and maintains its high status to this day—Ulukaya describes it as a result of hard work, luck, and love.
Figure 3: Yogurt Bowls Sold at Chobani Café in SoHo, New York City
(Photo via https://oukosher.org/companies/chobani/)
As one of the most popular yogurt brands in the U.S. and with more than 95,000 retail locations that carry its products, Chobani is a perfect example of successful disruption in the yogurt industry. So does Chobani have more potential for growth? As an avid consumer of its products myself, my honest answer is yes. Let me explain. In addition to its numerous retail locations, Chobani has its one and only cafe location in SoHo, New York City. Ever since its opening in 2012, the cafe has been selling sweet and savory yogurt bowls, sandwiches, soups, salads, smoothies, and more. No matter what day of the week, Chobani Café is always bustling with New Yorkers as well as tourists from around the world. This has made Chobani not only a well-known Greek yogurt brand, but also the epitome of a delicious and healthy lifestyle. Hence, why not expand? I would like to take this platform to humbly suggest Chobani expand its cafe locations to the rest of New York City as well as other parts of the U.S. and Australia—another market it has seen great success in. The company has also already expanded to parts of Asia and Latin America, so slowly branching out its business internationally would definitely benefit the business. In marketing, we often look to a framework called the “brand pyramid,” which consists of high awareness, perceived quality, leadership reputation, trust/confidence, relevance/association, and ideology. Chobani’s brand strength is top-tier, as it satisfies all steps of the brand pyramid. Chobani’s ideologies in good food, belief, authenticity, a healthy lifestyle, and love for life are all rooted in the brand. Thus, expansion would undoubtedly lead to more growth for the company and positive feedback from consumers who love and identify with the brand.
