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The $700 Million Yogurt Startup (forbes.com)
221 points by Gaussian on Sept 8, 2011 | hide | past | web | favorite | 89 comments



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.


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


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.


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.


I contend that the lack of fat just makes the product less filling so we eat more. On top of that it tastes terrible so we add a bunch of sugar.

I love plain full-fat yogurt (ex: Fage total or brown cow cream top). Unfortunately non-fat yogurt tastes terrible once you've had the good stuff and is all you can find outside of specialty stores. (I have only ever seen/tried Chobani 0% so I can't rate their 2% fat yogurt)

Anyway, after years of never finding the good stuff I gave up on the system and dropped $30 on a yogurt maker on Amazon. Now Yogurt is $1/half gallon (price of milk) - 2-3 times that price for strained/Greek yogurt since you throw out the whey, it's super-easy to make (pasteurize milk, add culture, let it incubate for 6-12 hrs), and it's always just the way I like it.


My sister makes yogurt herself in a crock pot (?). Haven't tried it myself, but she says it's super simple, all she does is puts in a few ounces of fresh yogurt along with a bunch of milk and lets it sit there while the cultures do their thing.


I'm sure I'm missing something but how can she make yogurt if one of the starting ingredients is already yogurt?


It's used as a starter. You start with a tablespoon or two of plain yogurt (containing live culture) and 1 liter of milk, then you get 1 liter of yogurt.

By the way you don't even need a crockpot, just heat the milk, put in the yogurt then keep it warm for 7+ hours (google it for a more detailed recipe).


ok, thanks. That makes sense.


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.


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...


Actually in my experience low/nonfat foods have just as much, and usually more calories than their original versions. They need to load in more sugar to get a similar taste as the original. Sugar being worse on your metabolism than fat, you end up fatter as a result. Low/nonfat is purely a marketing strategy to convince people they're eating healthy while stuffing their gullet.


I don't think Americans have anything against fat. If anything now they are anti-carb more than anti-fat. Walk down the aisles of a grocery store and you see way more "low carb" than "low fat".

Fat happens to be the most calorie dense of the required macronutrients, however. At 9 calories a gram versus 4 calories for carbs and protien it's the easy culprit for people trying to cut weight (by reducing calories). For a while it became the diet fad because of its supposed links to heart disease as well. People want a silver bullet to get thin, once it was fat, then carbs and now, probably more sensibly, it's processed foods like HFCS.

In the end it's not that hard: Eat less.


At my local supermarket they sell 32oz cups of Chobani (in vanilla and plain). Because of the bulk, price per oz is only slightly more expensive than the cheapest stuff they have. And it's really nutritious: 16grams of protein and only 13 grams of sugar per 6 oz serving! Significantly more protein than sugar. The lack of fat doesn't bother me. There was an article in the Times (http://www.nytimes.com/2011/07/19/health/19brody.html?_r=1) about strong new research that found that yogurt was the food "most strongly linked to weight loss". It also found that the fat content of yogurt (or other dairy) consumed didn't affect weight change.

Based on this article and the research suggesting a weight-loss effect of yogurt I'm thinking about getting into the yogurt business.


hmmm makes me wanna try some, love my yogurt, im in OZ, wonder if they have any here or if i can get it from some specialty greek deli's ?!


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.


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.


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.


Even before Chobani, "plain yogurt" took up plenty of refrigerated shelf space in every supermarket I've ever been in. I doubt that was for 1% of America.


That plain yogurt is still sweetened in most American brands, just without the extra flavors like strawberry or key lime added.


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.


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.


I'm in that one percent, but I gave up and started making my own yogurt. I don't know if that cuts into market share, but I would be curious how much niche "artisan" grocery store food sales are affected by people who just make their own. Microbrews might be a good place to start looking as well.


I've spent weeks looking for a regular yogurth not loaded with sweeteners (doable) and thickeners (almost not findable).


Dannon Plain Yogurt only has two ingredients: Milk and Yogurt Cultures


As someone who is also from a part of the world which has "real" yogurt, I've also always thought American yogurt is horrible. But it never occurred to me there was a market for more expensive but good yogurt in the US! Ironically, I myself would be one of the buyers!

I guess the lesson here is trust hard data, not your assumptions.


FWIW, I host a team of Germans every couple weeks in our offices. They complain and gossip when we don't provide a large bowl of yogurt and it is the sweetest, most candy like product I've ever had. So it seems "fake" yogurt has its fans as well!


Germany is not among the places with natively great yogurt. That's more of a south east Europe and Asia minor thing.


There's also another New York yoghurt maker. Siggi's who makes Icelandic skyr. http://skyr.com/our_story.html

I'm a skyr convert --tho you have to get used to its texture.

It's about $2 per 5.3oz.


I've always wanted to try skyr, what is the texture like compared to yogurt?


Mildly sandy and sticky. After a week or so you get used to the new texture and then it's more about liking a flavor. Vanilla and Orange Ginger are the ones I prefer.


Next stop: coffee in USA.


It's easy to get good coffee in the U.S., at least in the more metropolitan cities. Just don't go into Starbucks.

I had a much harder time finding good coffee in Europe, actually.


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)


"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.


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


It sounds like Ulukaya is the technical founder:

"I came from a family of farmers who made cheese and yogurt..."

His dad was urging him to make cheese as early as 1998, and he did in fact start doing that a few years later.


Almost absolutely. We say technical co-founder, but it just means somebody who can build the main stuff. In this case it's creating the right yogurt formula. Somebody making a yogurt will probably go through more iterations than someone creating a web apps.


I think the idea of technical and non-technical cofounders applies less to yogurt or restaurants than it does to most of the web startups discussed here. People can be passionate social networking, offering web analytics, and sharing photos without knowing anything about programming or having the skills needed to build these businesses.

I don't think many people decide to start selling yogurt because of a business opportunity. People that start yogurt companies are (hopefully) passionate about yogurt, and I would think they would have some experience in making their own yogurt. Starting a restaurant would be similar.

In summary, I think the main distinction is that the barrier of entry to programming (and engineering in general) is greater than that of making yogurt or cooking. There are many people passionate about computers and their applications that don't know anything about programming, but I would think there are far less people passionate about yogurt (and unhappy with the current offerings) that don't know anything about making yogurt.


Perhaps the analog/digital distinction is relevant here. If you are making yogurt, and you slightly deviate from the ideal recipe (leave the culture growing for too long?), you will probably get yogurt that tastes a little off. If you are writing code, and you deviate slightly from the ideal program, you will probably get junk: compiler errors, massive performance hits, blatantly wrong GUIs....


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.


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.


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.


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.


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.


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.)


For those of you wondering what Casu marzu is: https://secure.wikimedia.org/wikipedia/en/wiki/Casu_marzu


Around here (Small college town area, middle of farmland), all the grocery stores have a gourmet cheese section. A "made in America" gourmet cheese is not going to be an instant-win unless it offers additional value. Possibly the "localvore" approach might add some warm fuzzies to the value, but I am dubious.

(Of course, if it can be sold cheaper by being made in America, that's a great selling point!)

I see that market as pretty occupied right now.


From the small cheese manufactures I've seen it requires a long term love of the process and a resource, something like a family farm without a significant mortgage. The markup on artisan cheese seems pretty incredible.


This seems like a very poor idea if you are trying to pull off something on the order of Chobani.

The United States already produces over twice the amount of cheese of any other country. It seems to me that you are not from Wisconsin and I would guess not from any of the states where cheese is big. Try going to a supermarket in Vermont or New York...the market for imported cheeses would be quite small.


True, I'm in Texas. Here in the middle of Houston I see fairly large sections of imported cheeses in some grocery stores.


Looking at what I can get in supermarkets here in Italy, and seeing what's available when I visit back home in the states, I think there are huge opportunities in this space. I intend to investigate if we ever move back to the US.


Another issue may be related to the FDA. It is my understanding that raw milk (unpasteurized) imparts a different flavor/texture to the cheese. I guess we have laws against cheese made with raw milk.

I am not a cheese maker, I've merely read this on food blogs.


Raw milk has a lot the bacteria needed to make the cheese already in it. Cheesemaking is basically farming bacteria... You get more variability and a generally better product with unpasterized cheese.

I mainly eat cheese from unpasteurized milk...


American Roquefort caves.


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.


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.


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.


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


Companies that large already have dedicated tinker factories. In GM's case, they have tinker ... reservations.

http://en.wikipedia.org/wiki/General_Motors_Proving_Grounds


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.


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?


Yogurt has been my primary weekday breakfast for at least a decade, probably more. I recently switched to Chobani for one reason: Flavor. It tastes rich and creamy like it should be bad for you, but it's not (true of most Greek yogurt). With Chobani, the actual flavors are not just the typical yogurt ones (blueberry, strawberry, etc...) but also include things like pineapple and mango. Plus the packaging is familiar if you've been eating fruit on the bottom yogurt. there's not a little container off to the side to mix in. That sounds minor, but I don't want to rearrange my fridge because my yogurt needs more realestate.

Most American yogurt is pretty dreadful. When I did an exchange program in Germany in the 1990's, my host family fed me some Swiss yogurt. I'm sure it wasn't "Greek style" or "low-fat", but man it was some of the best yogurt I have ever had in my life. I have been trying various custard varieties ever since in an attempt to get that European style flavor, but all of them are poor imitations.


Last time I checked Chobani had enough sugar in them, they come with mixed-in fruit. I much prefer Fage total, I call it "real" as in full-fat yougurt, lowest carb/sugar of any other competing products, very high in protein too.


Chobani has plain yogurt, as well.


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.


> 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.


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.


I like Fage, but its packaging is probably a bit cryptic/dull if you don't already know about Greek yogurt and want it. Chobani looks more inviting and stylish, with more flavored versions and livelier images.


I prefer Fage. I like the ones where you mix one side with the other. Ace.


High-protein, low carb and delicious (creamy texture and flavor) at the same time. I alternate between Chobani, Fage and a couple other brands, but the nutritional profile is about the same for all of them.

I prefer to take my yogurt plain and mix in my own jams, rather than the fruit on the bottom variants. That gives me more variety than the default flavors provided and lets me control the amount that goes in.


I think it's been featured on alot of cooking shows. They launched at the right time as demand was on the upswing and Greek yogurt was getting popular.


Possibly because it tastes good?

That is my reason for eating it.


I eat it regularly because I like yogurt and it tastes better than any other yogurts I know of. And it's healthy.


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.


In fact, this is very common in Greek. The Turkish word "dolma" means "something stuffed" and it is what they call stuffed grape leaves. Greeks have a very similar dish they call "dolmados". The Turkish word for shoe is "pabuç" whereas the Greek word is "papoútsi".

Also, it's true that yoğurt is of Turkic origin. If you go to Turkey, you will find it in almost all of their dishes. It's odd, though, that Americans don't seem to know anything about any of this. I'm nearly certain that if this Turk would have sold Chobani as "Turkish Yogurt", we wouldn't even know who he was...


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...


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


For full reference, Çoban and Yoğurt, actually.


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.


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.


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.


Any similarly good brands in the UK?


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.


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.


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.


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.


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.


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".)




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