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Case study · Chobani

How Chobani went from a closing Kraft plant to about $1 billion in sales

TL;DR

Hamdi Ulukaya was running a small feta cheese business when he got a mailer about a Kraft yogurt plant for sale. He bought it with an SBA-backed loan, hired five former Kraft workers and spent two years on a recipe. Chobani launched in 2007 and by 2012 had roughly $1 billion in annual sales. The lesson: buy an overlooked asset, then obsess over the product.

How it started

Hamdi Ulukaya came to the United States from Turkey and ran a small feta cheese company in upstate New York. In 2005, he received a mailer advertising the sale of a Kraft plant that was closing. He visited the plant, which had aging yogurt equipment, and decided to buy it. He later said the company could not have bought the plant without an SBA loan.

He hired five people who had been let go by Kraft and spent about two years developing a recipe for strained Greek-style yogurt. The brand name comes from the Turkish word for shepherd, çoban. Chobani launched in 2007 from the former Kraft plant in New Berlin, New York.

How they got the first customers

The first customers were grocery stores. According to Wikipedia, Stop & Shop and ShopRite began carrying Chobani in 2009, followed by BJ’s Wholesale Club and Costco. By mid-2009, Chobani was selling 200,000 cases a week, according to the same source.

Early flavors were plain, vanilla, strawberry, peach and blueberry. The product and the plant were the advantage: Chobani had experienced former Kraft workers and ready production equipment.

What drove growth

Demand outran supply. By 2012, Entrepreneur reported that Chobani had roughly $1 billion in annual sales, was shipping 1.5 to 1.7 million cases a week and was building a plant of nearly 1 million square feet in Twin Falls, Idaho. It had grown from five employees to more than 1,200 and was rated the top U.S. yogurt brand in Harris Interactive’s 2012 EquiTrend study.

The company filed to go public in July 2021 and withdrew the plans in September 2022, citing market conditions.

For small food founders, the practical lessons are to start from an existing facility when you can, hire people who already know the craft and win a few retailers before trying to be everywhere.

Lessons you can copy

  1. 1Look for distressed assetsA closing factory came with equipment and trained workers. Used equipment and available space can cut your startup cost.
  2. 2Hire experienced people for the first teamThe first five employees were former Kraft workers. Their experience compressed years of learning.
  3. 3Take time to get the product rightTwo years on the recipe before launch meant the product was strong when it reached shelves.
  4. 4Win a few retail partners firstRegional grocers carried Chobani before national chains. A handful of strong accounts can prove demand to larger buyers.
  5. 5Plan capacity before demand arrivesDemand outpaced supply in 2012. Know what happens if your product succeeds faster than you can make it.

Frequently asked questions

How did Hamdi Ulukaya start Chobani?

He bought a closing Kraft yogurt plant in upstate New York in 2005 with SBA-backed financing, hired five former Kraft employees and launched Chobani in 2007.

What does Chobani mean?

The name comes from the Turkish word çoban, which means shepherd.

Is Chobani publicly traded?

No. Chobani filed to go public in July 2021 and withdrew the plan in September 2022, according to Wikipedia.

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