Chobani looks to greener pastures Company built on yogurt bets on oat drinks
Chobani CEO Hamdi Ulukaya is standing in his company's industrial-chic test kitchen in lower Manhattan, gleefully doing shots. He's not drinking alcohol, but something that is, at least for him, another kind of controlled substance: milk. Yes, the Greek yogurt titan — the man who once milked cows for a living and famously bootstrapped what became a $1.5-billion-in-annual-revenue company by getting America hooked on the creamy, tart and protein-rich yogurt of his Turkish youth — is sensitive to dairy.
Around the time his trademark mop of curly hair began turning salt-and-pepper, Ulukaya realized that he was lactose intolerant and stopped drinking milk. (Yogurt, because of the fermentation process, is easier to digest.) Then, about a year ago, he began stealthily developing his own plant-based alternative.
“Awesome, no?” he says, grabbing an to claim 19% of yogurt sales in this unmarked cardboard carton and pouring country and a full 43% of the Greek himself another small glass of his yogurt market. velvety off-white elixir. He downs the Chobani's new oat line is designed to glass and sets it on a large wooden table boost sales even further by moving the topped with rows of other top-secret company into an increasingly popular products. section of the grocery store. After decades
When I finally taste my sample, it's of jockeying, first by soy- and then creamy and smooth, coating my mouth almond-milk pioneers, alternative and finishing without the sort of chalkiness milks have secured shelf space beside or cloying sweetness that I've cow's milk in most stores. It turns out come to expect of plant-based milks. you can “milk” almost anything — Ulukaya praises it as “very earthy, very quinoa, hemp, cashews — although the comforting.” dairy industry has lobbied hard against
This month, after years of expanding producers using that term. its yogurt portfolio with innovations The retail milk market in the U.S. such as crunchy mix-ins and lower (both cow and nondairy) topped $15 sugar levels, Chobani is debuting a new billion in 2018. Alternative milks, on product category, called Chobani Oat. their own, pulled in $2.4 billion, a number The company is launching four oat that's projected to grow exponentially. drinks — plain, vanilla, chocolate, and Total sales of cow's milk in 2018 plain extra creamy — that approximate dropped by roughly $1.1 billion dollars milk (although Chobani has strategically compared to the previous year. chosen not to call them that). The alt-milk surge is driven both by There will also be a barista edition for Baby Boomers, who are discovering coffee shops, a line of fermented-oat that lactose intolerance increases with yogurts in flavors such as strawberryvanilla age, and younger generations wellversed and blueberry-pomegranate, in the carbon footprints and and mix-in varieties with names like cruelty of many animal-based products. Peach Coconut Crisp. But there have always been drawbacks
It's a bold departure for a company to plant-based milks: funky tastes, that made its name in dairy and is the watery consistencies, an inability to top seller of yogurt in America. Little mix well with other products. more than a decade after it launched, in Oat milk is an exception. Its main 2007, Chobani catapulted over Yoplait, ingredient is a sustainable cover crop Dannon and other established brands that can be sourced organically without massive amounts of water. Made by a simple enzymatic process and finished with a dash of oil (Chobani uses canola), it's creamy, slightly sweet (even when it's made with no added sucrose) and perfect for coffee and baking.
Ulukaya is now betting that he can leverage his company's resources, which include a million-square-foot manufacturing facility in Twin Falls, Idaho, and a new, 14,000-square-foot research and development lab attached to it, to do for oat-based products what he once did for Greek yogurt: Take them mainstream.
He's moving aggressively. Grocery stores typically reset their shelves twice a year, in January and July. Ulukaya has routinely capitalized on those moments to drop new products — and turn them into moneymakers.
Ulukaya, 47, went from sleeping in a run-down factory to being a billionaire in less than a decade. Born and raised in a Kurdish sheep- and goat-farming family, Ulukaya fled Turkey for the United States in the mid-'90s, fearing that his vocal support for Kurdish rights would be punished by the country's militaristic regime.
He learned English and started a small-scale feta cheese company in upstate New York. When he saw an aging Kraft yogurt plant for sale nearby in 2005, he took another risk, securing a Small Business Administration loan to build a Greek yogurt enterprise.
As Chobani has risen, its competitors have become increasingly nimble. They've cut the sugars in their yogurts to match Chobani and introduced low-fat Greek lines. So Ulukaya, who had long been fascinated with the versatility of oats, directed his team to something new.
Chobani could be the company that popularizes oat-milk products, but it certainly didn't invent them. It's playing catch-up to other players in the alt-milk space, including the sorts of inventive upstarts that Chobani once was. Sweden-based Oatly, most notably, arrived in the United States in late 2016 and began persuading high-end coffee shops to use its oat milks.