Investors have understandably shied away from most things labelled “Greek,” as the debt-ridden Mediterranean country threatens to topple the eurozone and take the global economy down with it. But there’s one place where people seemingly can’t get enough: the yogourt section of their grocer’s dairy case. After years of focusing on making yogourt thinner, sweeter and laden with bacteria to improve digestive health, suddenly dairy companies are falling over themselves to produce so-called “Greek” variations that are thicker, creamier and tart tasting.
The sudden shift in direction is largely the result of one man. Several years ago, Hamdi Ulukaya, a Turkish-American businessman, spotted a market opportunity for a thicker, protein-rich strained yogourt like the yogourt he was familiar with back home (the straining removes excess liquid and sugar). Ulukaya’s first case of Chobani Greek yogourt rolled off the production line in 2007 and quickly tapped into an unfilled demand among Americans for a more substantial, but still good-for-you, snack. “Our goal was to reinvent the yogourt category,” says Kyle O’Brien, the vice-president of sales for Chobani’s parent company, Agro Farma, who has been involved since the beginning.
Reinvent it they did. Chobani is not only the dominant player in the fast-growing segment, which now accounts for 15 per cent of all yogourt sales in the United States, but it’s also the number one U.S. brand of yogourt altogether (it’s not yet officially sold in Canada, although some specialty retailers stock it in their stores). It’s the sort of disruptive innovation that one usually associates with technology, not foodstuffs. “It’s a success story that’s pretty amazing,” says Joel Gregoire, a Canadian food and beverage analyst for NPD Group, who notes that yogourt of all types is one of the fastest-growing food categories in North America, with consumption increasing by more than 100 per cent over the past decade in Canada alone.
Not surprisingly, Chobani’s unexpected success has spawned a host of imitators. General Mills now offers a Greek version of its Yoplait yogourt, while Danone has enlisted TV hunk John Stamos to shill for its new Oikos Greek yogourt brand. In Canada, meanwhile, Quebec’s Liberté and Loblaw’s President’s Choice brands both have Greek offerings.
So how did Ulukaya and O’Brien sneak in under the radar of some of the world’s biggest food conglomerates? O’Brien was working in sales for a big U.S. food company that made salad dressings and dips when a friend suggested he meet Ulukaya, who had already started a small feta cheese business that built on his family’s experience in the dairy business in Turkey. O’Brien flew to New York City and had dinner with Ulukaya at a Turkish restaurant where they discussed the state of the U.S. yogourt market. Despite not being much of a yogourt fan previously, O’Brien says he left the restaurant feeling energized. “From the second I left that dinner meeting, I was like, ‘How do we get this thing going?’ ”
A key piece of the puzzle was the purchase of a yogourt plant in upstate New York that Kraft vacated in 2005—a move that clearly signalled that Ulukaya envisioned big things for his new endeavour. Chobani started out with five employees and production of less than 1,000 cases of yogourt a week and successfully scaled up the operation as demand exploded. Today, the company employs 900 and produces over one million cases a week. “Hamedi’s vision was never a little one-off artisan yogourt company,” O’Brien says, adding that there are plans for further expansion of production in the U.S. and a move into foreign markets, starting with Australia. Canada is also on the radar, although O’Brien says the company’s efforts to sell north of the border have been stymied by bureaucratic red tape surrounding this country’s dairy industry.
The challenge, now, will be maintaining Chobani’s lead in a market that’s suddenly become very crowded. While you might expect Chobani to stick closely to what has worked so far, O’Brien says he won’t make the mistake of standing still. “We’re focused on innovation moving forward,” he says, pointing to a line of children’s Greek yogourt called Chobani Champions as one example. As long as they stay away from selling financial instruments.