The Chobani brand has become synonymous with Greek yogurt, rising from its humble beginnings in 2007 to become America’s No. 1-selling Greek yogurt with a 40% share of the category today, according to Nielsen data, and the second largest manufacturer of yogurt in the U.S. with a 20% share.
Chobani’s leap from startup to leading Greek yogurt brand in a little over a decade is considered a major achievement in the dairy business, as well as in the overall food industry.
But founder Hamdi Ulukaya, the visionary Turkish immigrant who’s credited with popularizing Greek yogurt in the U.S., isn’t resting on his company’s laurels, nor is he satisfied with the Norwich, New York-based Chobani remaining simply a dairy-based company with annual revenue estimated at about $1.5 billion.
Instead, Chobani is embarking on the company’s biggest expansion ever by moving into the red-hot plant-based space with multiple oat-based food and drink products, including four varieties of oat drinks or milk; Chobani Oat Blend and Oat Blend Crunch, which are yogurt-like products made from oats; and a shelf-stable, barista-style oat drink blend formulated for increased frothing and foaming. This product is targeted primarily to baristas in the foodservice market. All the oat-based products are made at the company’s own plant in Idaho using organic, air-dried oats.
“I always knew our journey from yogurt to becoming a modern food company would be through nutritious, delicious, batch-made products like Chobani Oats, and they’re helping us further deliver on our founding mission of making better food for more people,” founder and CEO Hamdi Ulukaya said in a press statement announcing Chobani’s expansion from its dairy roots into the fast-growing plant-based space. And it’s the first step in Ulukaya’s long-term strategy to turn Chobani into a diversified food company.
Chobani was just a few months into its launch when the coronavirus pandemic hit. The company kept going, serving a grocery sector deemed an essential business, while at the same time taking numerous steps to safeguard both its sales force and the workers in its manufacturing plants, company spokesman John Kell told CO—.
Beginning in late March, Chobani, which is well-known for its philanthropic efforts in both good times and bad, also rapidly launched a serious of initiatives to assist people in need, Kell said. These include turning its New York City Chobani Café into a free food pantry; partnering with myriad non-profit organizations like Feeding America and Save the Children; and purchasing a refrigerated food truck for a food bank in Idaho, where it has a manufacturing plant. These efforts and others, particularly donating products to food banks, schools, hospitals and other organizations nationally, are ongoing and will continue until they are no longer needed, Kell said.
“Our main efforts and priorities as a company have been to ensure the safety of our workforce and to do all we can to provide assistance to those experiencing food insecurity in this difficult time,” Kell told CO-.
Unlike some other plant-based options, we believe in the craft, versatility, nutrition and environmental footprint behind oats, making it the perfect fit for the Chobani family.
Niel Sandfort, SVP, new product development and R&D, Chobani
A message from
You’re invited to join a private network of CEOs.
Discover how 45,000 CEOs are growing their businesses. Connect with verified companies on a secure private network to find new clients, raise money and find reliable solutions for any business priority.
The $53 million oat milk opportunity
Meanwhile, amid soaring sales in the U.S. grocery sector, oat milk, which is made by soaking oats in water, is hot. Consumers are flocking to it in large part because of its smooth flavor and texture that closely resembles cow’s milk.
Total annual sales of oat milk, which largely hit U.S. grocery store shelves in 2016, are still relatively small at $53 million, according to Nielsen data. In contrast, almond milk, which has been on the market for over two decades, rings up sales of $1.3 billion annually. But oat milk is the fastest-growing segment in the plant-based milk or beverage category, according to Michel Simon, CEO of the Plant Based Foods Association, and it’s where most of the excitement in the category is today. Oat milk sales grew a whopping 636% year-over-year from 2018 to 2019, according to Nielsen data and other estimates compiled by the association.
The popularity and growth of oat milk, along with its similarity in texture and taste to cow’s milk, makes it a natural choice for Chobani’s plan to morph the company into a diversified food company.
“Our vision for better food for more people has always spanned further than the yogurt aisle,” Niel Sandfort, Chobani’s senior vice president for new product development and R&D, told CO—. “Now we’re ready to take the first step beyond the Greek yogurt category where our story began. We view the plant-based category as ripe for our particular way of doing things, bringing in superior craft, quality, taste and, most importantly, to supply and service the large and multi-faceted market.”
Sandfort, whose team developed the new oat-based products and has overall responsibility for their positioning, said the demand for plant-based, non-dairy options, particularly oat-based, has grown significantly in recent years.
“We see oats as a superior base from both an agriculture and sensory basis,” he told CO— in explaining why Chobani chose oats rather than another plant-based ingredient like almonds or soy. “Unlike some other plant-based options, we believe in the craft, versatility, nutrition and environmental footprint behind oats, making it the perfect fit for the Chobani family,” he said.
Veteran Sacramento, California-based beverage industry executive and analyst Mark Gallo said Chobani’s expansion into plant-based beverages and yogurt, particularly oat-based, makes sense for the brand and its loyal customer base.
“Chobani is a passionate, better-for-you, better-for-the-environment brand,” Gallo said. “I have little doubt they will be successful in the plant-based categories — they have the vision, the culture and the talent to do it. They just need to stay true to the master brand while extending into the new oat-based platform.”
Staying true to the ‘master brand’ with ‘Almost Milk’
Chobani plans to do just what Gallo describes, stay true to the master brand and its origin recipe, according to Sandfort, who said the new oat products adhere to the similar old-world recipe behind its iconic dairy-based Greek yogurt. The company isn’t abandoning dairy but rather augmenting it with what it sees as a logical extension into oat-based food, according to Sandfort.
“Oats are an ancient grain with the versatility and nutrients perfectly suited to fuel modern lifestyles,” he told CO—. “We view the plant-based category as ripe for disruption [by offering products] superior craft, quality and taste, just like yogurt was 10 years ago.”
The plant-based milk and alternative dairy products market is booming, according to Simon of the Plant Based Food Association. Sales of plant-based milk grew by over 6% in 2019 over 2018, while at the same time dairy milk sales declined by 3%, she told CO—. Plant-based yogurt sales surged 39% over the same 2018 to 2019 period, she said, while dairy yogurt, like dairy milk, saw a 3% decline. The data is from research firm SPINS.
Instead of calling its oat-based products “milk” and “yogurt” like most of its plant-based category competitors do, Chobani instead uses the terms “Oat Drink” and “Oat Blend” for the respective food and drink products.
Playing on this point of differentiation, Chobani has launched a new marketing campaign for the oat-based products called “Almost Milk.” The key message of the campaign is that oats are the closest match or alternative to dairy in terms of attributes like taste and nutrition. Chobani hopes to leverage the strong brand equity it has built in dairy-based Greek yogurt into the plant-based dairy segment.
The multi-media marketing blitz, with a focus on digital marketing, social media and out-of-home advertising (billboards, bus wraps and the like), is launching initially in New York, San Francisco, Portland, Oregon and Washington D.C. — key markets where, according to Chobani, it has high brand equity and where consumer interest in plant-based foods is strong.
“We are thrilled to embark on our biggest expansion ever and take our fight for better food where it’s never gone before,” Sandfort said.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
Want to read more? Be sure to follow us on LinkedIn!
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
Published June 02, 2020