
The $700 Million Yogurt Startup - Gaussian
http://www.forbes.com/sites/christophersteiner/2011/09/08/the-700-million-yogurt-startup/
======
3am
I just want to add a small personal anecdote.

I eat yogurt regularly, and I've been a convert to Chobani lately. I started
eating greek-style yogurts with Fage, and have had several other brands but
Chobani flavors and texture are superior (IMO).

If you don't already know, it's the most expensive yogurt at most
supermarkets, and is even pretty expensive compared to other brands at
specialty retailers. So in the interest of saving some money, I recently
bought some Dannon greek yogurt with coupons for about 1/4 the price.

It was awful in comparison. To get a similar texture, they use gelatin. The
texture is still inferior. And the flavors are not in the same league either.
I think it's refreshing to see someone rewarded for not buying into the
conventional wisdom that the American public has no taste and can't
recognize/won't pay up for quality products.

~~~
fragsworth
Nonfat Chobani is also the highest protein yogurt I've seen, and beats all the
other yogurts in as far as nutrition is concerned.

~~~
lukeschlather
That's impressive. I've made a general habit of rejecting 'nonfat' foods
without even looking at the label because I've never seen a case where the
nonfat version had more than 2/3rds of the protein the fatty version has. A
nonfat alternative that has more protein is a nice achievement.

~~~
jsdalton
It appears that their nonfat version has 18g of protein:
<http://www.chobani.com/products/c/nonfat>

And their 2% version has 17g of protein:
<http://www.chobani.com/products/c/lowfat>

I imagine the difference is only because the fat displaces some of the protein
in the low fat version, not because there is some special "high protein"
quality to the nonfat.

I continue to be baffled by Americans' obsession with nonfat products, when
nearly all current nutritional research says there is nothing wrong with fat,
and that in many cases it's good for you.

~~~
ori_b
My entirely unscientific hypothesis is that serving sizes in the USA tend to
be larger, and non-fat foods allow Americans to maintain these larger serving
sizes while keeping the calorie density low enough that they don't become
obese.

I don't know if I'm right or wrong, but it would be interesting to see a
comparison of both caloric density and volume of average meals divided by
culture, region, etc.

~~~
hammock
_non-fat foods allow Americans to maintain these larger serving sizes while
keeping the calorie density low enough that they don't become obese._

It's not working...

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maukdaddy
_Ulukaya: We’ve said no to almost everybody you can think of. We’re having
fun. I’m going to be here a long, long time. I’m not somebody who is going to
build something for a few years, sell it and then go off and just have fun.
That’s not why I did this._

Wow, such a refreshing view. Especially considering the recent sellouts of
natural/organic brands to major CPG companies.

------
ilamont
_I had always thought the yogurt in America was, well, horrible. I thought if
I could make something better, people would immediately take to it._

I am kind of surprised that existing food heavyweights, as well as smaller
"organic" labels failed to see the opportunity for a premium yogurt that's not
loaded with sweeteners.

The interview really didn't get into distribution, but it is quite impressive.
A few weeks ago I even saw it in groceries in a very rural part of northern
NY. From what I have read about the grocery business, it's extremely
competitive and there is huge pressure from manufacturers and distributors to
dominate prime shelf space. For a startup to muscle in so quickly is a real
accomplishment.

EDIT: The rural NY distribution may relate to the dairy industry connection
described by kcurtin and Gaussian.

~~~
sliverstorm
Have you ever tasted unsweetened yogurt? Try it and you'll understand-
especially the Greek kind.

Really, I'm not kidding. It's a major acquired taste, that 99% of America has
not acquired.

~~~
saturn
You gotta remember that 1% of America is still 3 million people. If three
million people want a certain kind of high quality unsweetened yoghurt, and
you're the first vendor in line, then you may as well put your order in for
that G650 because if you can execute you have it made.

~~~
arethuza
I probably go through a 500g pot of natural yoghurt ever 3 days - say $2 worth
(its actually a bit less, but there's nothing "premium" about it).

So I spend about $240 a year on yoghurt (ignoring the others in our family) -
so your 3 million would give $720M a year revenue if 1% of the US population
liked natural yoghurt as much as I do.

Seems like a pretty good market to be in to me.

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bignoggins
If you're doing a yogurt startup, do you need a technical cofounder who is an
expert in yogurt?

This is not a joke, I'm genuinely curious whether "technical" cofounders are
specific to the tech domain or if they are necessary in every startup (another
example is chef / restaurants)

~~~
jonnathanson
"If you're doing a yogurt startup, do you need a technical cofounder who is an
expert in yogurt?"

It depends on the category, really.

In this case, it's not as if Chobani invented the concept of strained yogurt.
Rather, it practiced the time-honored art of geographical arbitrage: it found
a product that had a long history of use overseas (Greek-style yogurt), and
introduced it to the US in rather auspicious and on-trend times (the low-carb,
high-protein craze). That's more a feat of marketing and operations than one
of technical prowess or product development.

I'm sure that there were "yogurt experts" on hand to oversee production,
ensure the right consistency, flavor, etc. But it doesn't appear as if there
were a "yogurt expert" co-founder in this case. I might be wrong.

That's not to say that product wasn't crucial in this case, because it almost
certainly was. But I don't think a "yogurt expert" co-founder would have been
absolutely necessary, or that a "yogurt expert" presently occupies one of the
top executive spots at Chobani the way a product person would at a tech firm.

~~~
e2daipi
_"geographical arbitrage"_ \- Even with the "geographical" modifier, I don't
see how it is arbitrage; niche or segmented?

------
kcurtin
I grew up in upstate NY and everytime I make it home I hear about this story.
It's pretty amazing to read about growth like this from a non-tech company.
It's also interesting to think about how big of an impact they have had on the
dairy industry in NY(and I'm sure other places as well). Their success has
revitalized the industry and helped a TON of farmers get back on their feet.

~~~
Gaussian
They had originally pledged to only source their milk from New York state, but
they've grown so big so quickly that they've literally bought every last drop
of available NY milk. The farmers can't keep up. As a result, they're going to
have to cross state lines soon.

------
stephenhuey
Maybe I should do something like that instead of software! What about the
cheese market in the United States? Americans are branching out more and more
from the limited kinds made here, so it seems like a worthwhile business
venture might be to start making some of the European kinds we import.

~~~
rdtsc
Not a bad idea. But, I don't think there is great demand + a shortage of
cheeses. Many grocery stores already have "gourmet" sections of "fancier"
cheeses. If there was any increase in interest I would imagine they would be
the ones detecting that, and jumping to capitalize on it. Some branches in
metropolitan areas, do and have expanded those sections, for example.

For cultural reasons Americans simply don't seem to like cheeses that are not
bagged, shredded and kept in the refrigerator. (American HNers might be
surprised to find that a lot of cheeses are not meant to be kept in the
refrigerator). Good cheese is like a living organism, it not something dead
that needs to be kept cold. It has bacteria that lives on it and it alters and
changes its taste. I believe you won't even be able to sell that in US simply
because of local food safety laws -- cheeses have to be pasteurized to be sold
here.

~~~
DannoHung
Putting stuff in the fridge doesn't kill the bacteria, it just slows its rate
of reproduction down. Pasteurization doesn't kill all the bacteria either, it
just greatly reduces the presence of microorganisms in food.

I don't think marketing a high quality cheese is going to be impossible in
America, (well, maybe not Casu marzu, but I don't give a crap how good that
is, I'm not eating it) you'd need to educate your customers and take steps in
terms of packaging or co-products to help them use the product best.

~~~
SoftwareMaven
Generally, when you need to educate your customers, you are in for a long (and
likely unsuccessful) haul. If you are "educating", your customers aren't
really feeling a pain.

(Note: there are exceptions to every rule.)

------
sliverstorm
_the great American discovery of Greek yogurt._

Hah. I have friends who rave about Greek yogurt, but not a one of them doesn't
drown it in fruit, sugar and honey first.

~~~
stinkytaco
I put stuff in my (homemade) greek yogurt, but mostly it's real stuff. Not
corn syrup, food coloring and flavor that may have met a fruit at a party
once.

------
squeed
Chobani got an old factory that Kraft was letting go. Tesla got the GM NUMMI
factory for pennies on the dollar, too.

It would do these large companies well to hand old factories over to internal
skunk-works teams to tinker first.

~~~
SoftwareMaven
That would require cannibalizing your own products, the definition of the
innovator's dilema.

------
DrPhish
Just wondering if anyone knows what the difference between this and some of
the other simple, so called 'Balkan Style' yoghurts is. Something like
Olympic's or Astro's where the ingredients consist only of milk and bacterial
culture.

I live in western Canada and haven't had opportunity to try anything from
Chobani, so I'm genuinely curious.

------
nlh
I'm a huge fan of Chobani and it's become my breakfast of choice lately -- but
I did so for a very specific reason: It's a high-protein, low-carb food, and
the diet and fitness routine I'm on specifically requires that.

What I'm curious about: Is that the main reason they've become so popular and
done so well? I wonder if many others are following the same diet, or if
there's another reason they've become so popular vs. all the other yogurts out
there.

Anyone else on HN eat Chobani regularly and, if so, what are your reasons? Any
other insights as to why they've done so incredibly well?

~~~
Gaussian
The nutritional content of Greek yogurt is definitely behind some of the
craze. But those nutritional benefits aren't unique to Chobani; they're
something that all of the Greek yogurts share. Chobani has somehow managed to
grow faster than the rest of the sector. For instance, Chobani has crushed
Fage, the incumbent market leader. Fage grew 58% last year... which sounds
good. But in the Greek yogurt business if you're not growing 100%, you're not
even maintaining your market share. Chobani grew 258% last year.

~~~
_delirium
> The nutritional content of Greek yogurt

So, I'm Greek and like Greek yoghurt, but unless I am totally missing
something, it is _nutritionally_ pretty similar to plain (unsweetened)
American-style yogurt. It's just drained; the name is Greek is literally
"strained yoghurt", and you can get an effect that seems pretty darn similar
to my taste buds by buying a typical American plain yoghurt (note: vanilla-
flavored sweetened yoghurt is _not_ "plain"), and draining it overnight with a
cheesecloth. But then I mostly use my home-strained yoghurt to make tzatziki,
so I might be missing some of the nuances if you eat it plain.

~~~
nlh
If I recall when I was doing my research, one of the selling points of Chobani
is that it's got 2x the protein of traditional American-style yogurt (i.e.
Danon, YoPlait, etc.) Those all have 6-8g of protein / container, and Chobani
has 14-20g, which is awesome when you're on a high-protein diet.

------
mda
Interesting naming choice. The guy is Turkish, and "Coban" means shepherd in
Turkish, it seems they preferred adding an i to the end to make it sound
greek. "Yogurt" is also of Turkish origin.

~~~
reinhardt
Actually "chobani" has been maintained with minimal change in greek,
"τσοπάνης":
[http://www.wordreference.com/gren/%CF%84%CF%83%CE%BF%CF%80%C...](http://www.wordreference.com/gren/%CF%84%CF%83%CE%BF%CF%80%CE%AC%CE%BD%CE%B7%CF%82)

~~~
mda
I see, so it is borrowed from turkish, makes sense, 2 birds with 1 stone.

------
Jun8
I was just wondering about seeing the Chobani brand everywhere, it used to be
just in small chains. Strained yogurt used to be niche, now shelves are
stacked with it. This company singlehandedly changed the yogurt landscape but
the real test will be to hold up to competition from giants. Dannon has
followed the trend, too.

~~~
kcurtin
I think it will be interesting to watch. I also think there is value in being
so specific in what they offer: they only make Greek yogurt. As a result, they
don't have trouble branding themselves as "authentic".

Companies like Dannon who make all sorts of dairy products don't have this
advantage.

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nvarsj
This is pretty cool. I could never (under)stand how sugary most American
yogurts are (Stonyfield farms being the lone exception). My significant other,
a U.K expat, has long been a fan of plain greek yogurt. It is really good. The
chobani fruit mixes taste great as well - pineapple being a personal favorite.

~~~
reinhardt
Any similarly good brands in the UK?

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ipsin
I'm curious -- I still buy Chobani and I still prefer it, but I've had what I
consider to be a disappointing spoilage rate for unexpired yogurt (estimating
3-5%, for something I eat most days). Has anyone else had a similar
experience? I realize I'm fishing for anecdata here, but I'd really like to
know.

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mixmastamyk
Haven't tried this brand, but was introduced to Fage while in Greece and loved
it--until I realized it was 50% saturated fat.

I have a feeling what this guy means about American yogurt being "horrible" is
that it is typically low fat and healthy.

I've tried products all over the world and whenever I hear this type of
statement it tends to come from someone who has never looked farther than
Velveeta and cheeze wiz. You can buy just about whatever you want in America,
if you look a little harder. Heck, I can get my Brazilian Cachaça and Açaí at
Ralph's (local chain) for C-sakes. It's a world economy these days.

~~~
narkee
Low fat is not synonymous with healthy.

Someone else made the comment that often "Low-Fat" advertised products are
jammed with sweeteners or sodium to replace the lost flavor that fat provides.

I think it's funny that the American consumer has been indoctrinated into
thinking "Low [Insert Nutrient of the Month]" == Healthy.

~~~
mixmastamyk
It is healthy compared to the alternative--filled with saturated fat. The main
comment thread referred to non-fat not low-fat, where manufacturers take less
drastic measures.

------
iamjustlooking
Too bad I missed out on that Chobani yoghurt deal Aisle50 recently ran. I
wonder if writing an article like this was part of the deal to subsidize the
price seeing as the co-founder of Aisle50 wrote this article.

~~~
corin_
Or possibly it's just how he found out about this person/company. (That's not
an "or possibly" as in "or you're an idiot, here's the solution", it's a
genuine "or possibly".)

