After peaking at a lofty 59 percent market share in January 2012, a number of forces whittled away at Chobani's sales in the Greek yogurt category that now stand at 44 percent. In response to those market issues, Chobani founder Hamdi Ulukaya has sought some outside resources to refocus the company he founded just 10 short years ago in 2005. Most in dairy circles know the story of Ulukaya's founding of Chobani in 2005, as reported in our March 22, 2012, blog. It is a rags-to-riches story in which Northeast dairy farmers benefited after Ulukaya bought an 85-year-old processing plant and then proceeded to grow his yogurt business at a steady pace.
While Ulukaya certainly should be credited with recreating the category, as over half of all U.S. yogurt sales are now Greek varieties, business-related issues began to arise after the opening of Chobani's Idaho facility. That new facility is twice the size of the next largest yogurt plant owned by Danone, which happens to be the world's largest yogurt maker, reported The Wall Street Journal. While that new Idaho plant gave Ulukaya and his company access to the nation's third largest milk pool, it created some management and product line issues for the rapidly growing Greek yogurt maker.
At the same time, competition stiffened, with Dannon (a Danone brand) and Yoplait (a General Mills product) taking aim at the growing Greek yogurt category. Yoplait reformulated its Greek yogurt recipe while Dannon launched a new product line.
With a need for capital and additional talent to run the company with sales now in excess of $1 billion annually, Chobani founder Ulukaya recently agreed to give up 30 percent of his sole ownership to the TPG investment group. That organization, in turn, has worked with Chobani to reinvent its sales and marketing staff. Also, Ulukaya and TPG will name a new CEO with the founder remaining as chairman.
Even with all the competitive issues in the yogurt category, sales still have a great upside in the U.S.
"In the Netherlands, consumers eat a cup of yogurt each day. In the U.S., that number hovers between a cup each week to one cup each month," said Libby Costin with Tetra Pak. "As commute times to work go up, more people are eating on the go," she said, noting yogurt helps to fill that market space.
