W16686

VALUE INNOVATION BY CHOBANI1

Arpita Agnihotri and Saurabh Bhattacharya wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.

Copyright © 2016, Richard Ivey School of Business Foundation Version: 2016-10-26

In 2011, Chobani was the number one yogourt brand in the United States. It was founded in 2005 by Hamdi

Ulukaya, a Turkish entrepreneur. At the time of Chobani’s launch, Greek yogourt occupied only 1 per cent

of the total yogourt market in the United States and was perceived to be a diet-based niche product. Ulukaya

was able to change this perception through value innovation. By 2011, he made Greek yogourt a mass brand

occupying more than 50 per cent of the U.S. yogourt market.2 Furthermore, because of its customer-centric

innovation philosophy, Chobani became the market leader in the overall yogourt category. In 2012, Ulukaya

was granted the U.S. Small Business Administration’s National Entrepreneurial Success of the Year Award.3

However, in 2011, competitors such as Danone and Yoplait began to respond by launching their own Greek

yogourt varieties. In addition, in a short span, consumers became bored with Greek yogourt, and from 2013

onward, demand fell in the United States. Chobani faced some quality issues with one of its batches, which

was recalled in 2013. It also faced problems of excess capacity due to large plant size and other

procurement-related issues. These factors led to a quick downfall for the company starting at the end of

2012.

After suffering interim losses, Chobani reacted with several measures, such as obtaining financial

investment from private equity firm TPG Capital. Leveraging on value innovation, in August 2016, Ulukaya

and TPG Capital were still trying to bring Chobani back to profitability. How did Chobani initially manage

to implement value innovation in the Greek yogourt market? Would it be able to retain its leadership and

profitable position going forward? If so, how would it fuel its growth?

COMPANY BACKGROUND

Chobani’s founder and chief executive officer, Ulukaya, migrated to the United States from Turkey in 1994

to study business. While in the United States, he noticed a gap in the market for authentic dairy products,

especially Greek yogourt, at affordable prices. In 2005, as he was glancing over classified advertisements

(ads) in newspapers, he became intrigued by an advertised sale of a manufacturing plant in central New

York, built by Kraft in 1885. Following his intuition, Ulukaya decided to purchase the plant with the help

of a loan from the Small Business Administration. His goal was to provide high-quality, reasonably priced

Greek yogourt for the mass market.4

This document is authorized for use only by John Jastremski in 2017.

GLOBAL BUSINESS

CHALLENGE

Page 2

Between 2005 and 2007, Ulukaya worked with four former Kraft employees to perfect the recipe for

authentic Greek yogourt, branding the product as Chobani. In 2006, Ulukaya hired Kyle O’Brien, Chobani’s

first salesperson, who was experienced in packaged food start-ups. Together, they set a goal of initially

selling 20,000 cases of Chobani in a week. Unlike traditional Greek yogourt, which in the United States

was available only at specialty stores or in the gourmet sections of supermarkets, Chobani yogourt was to

be sold in the dairy aisles of supermarkets, easily accessible to all. Instead of bargaining with distributors,

Ulukaya and O’Brien approached retailers directly. In October 2007, the first lot of Chobani yogourt—300

cases—was shipped to a supermarket in Long Island. Within a week, not only were all the cases sold, but

also consumers were returning to the supermarket for more and telling their friends. The supermarket

immediately ordered 300 more cases, and by the middle of 2009, Chobani was selling 200,000 cases per

week. By 2011, Chobani had become the U.S. market leader not only in Greek yogourt but also in the

overall yogourt category.5

CHOBANI’S PHILOSOPHY ON GREEK YOGOURT

In the United States, yogourt was traditionally perceived as a functional or health food. It was viewed as a

diet food with nutritional benefits and was positioned as an aspirational product meant only for the richer

segment of society.6 Chobani’s philosophy on Greek yogourt was built around a “back-to-basics” approach:

yogourt was to be real, natural, and simple, just like yogourt made by one’s mother at home. The only

difference, Ulukaya felt, between homemade yogourt and Chobani’s yogourt should be manufacturing

scale, since millions of pounds of yogourt had to be processed in a manufacturing unit. Also, yogourt

manufactured by Chobani had two times more protein than regular yogourt and was free from milk protein

concentrate or animal-based thickeners. Chobani used milk obtained from cows that were not treated with

recombinant bovine somatotropin (rBST).7 The product had zero grams of trans fat, contained less than 5

per cent lactose, and was gluten free.8 As a consequence, the yogourt was kosher certified and safe for

consumers who had corn, soya, or nut allergies. Ulukaya was clear that all of this was to be provided at the

affordable price of one dollar for a cup of yogourt.9

STRATEGIC INITIATIVES TO MAKE CHOBANI A SUCCESSFUL BRAND

Packaging

In 2007, due to resource constraints, Chobani could not advertise much; therefore, for Ulukaya, packaging

was as important as the product itself. Chobani’s engineering team focused extensively on packaging and

developed a unique design. Typically, Greek yogourt cups were long and cylindrical. Chobani’s

engineering team decided to change this tradition, creating a round and flat bowl-shaped package that was

more spoon friendly.

Similarly, yogourt labels were traditionally printed directly onto yogourt cups. However, this practice

resulted in labels with poor image quality and dull colours. To differentiate its packaging and make it more

attractive, Chobani’s engineers used a special technique called rotogravure10 to print graphics on the

package.11 Professional-quality photographs of real fruits and other ingredients in the yogourt were pasted

on the plastic sleeve of the package. “We photographed the real ingredients in an actual photoshoot; there

are no stock images,” commented one of Chobani’s executives.12 This packaging method helped provide a

personality for the flavours. Each flavour had packaging with a unique font, fun colours, and specific

flavour-related attributes. The unusual packaging especially helped to entice children, which was important

This document is authorized for use only by John Jastremski in 2017.

GLOBAL BUSINESS CHALLENGE

Page 3

after Chobani launched its yogourt variant for kids in 2014. The watermelon and lime flavoured yogourts

were packed in tubes with labels prominently portraying Disney and Marvel characters.13

Capacity Expansion

Chobani’s sales continued to grow. By 2011, sales orders rose to 1.2 million cases. At this point, it was

becoming challenging for Ulukaya to procure enough milk from New York, where his manufacturing plant

was located. New York farmers were reluctant to expand their herds as the price of milk was largely

controlled by the government. However, Ulukaya quickly met the increasing consumer demand by

purchasing a US$450 million14 plant in Twin Falls, Idaho, in December 2011. This plant, with one million

square feet, was the largest yogourt plant in the world and had a capacity to produce one million cases of

yogourt weekly.15

Understanding Consumers

As Chobani was gaining traction among U.S. consumers, it specifically appealed to athletes and young

consumers in the age group of 18–34 years because of its high protein and calcium content. Nevertheless,

average individual consumption of yogourt in the United States was only between seven and 10 pounds per

year in 2004–2007. This was far less than yogourt consumption in other regions such as Canada or Europe,

where the average individual consumption was 20 pounds and 40 pounds, respectively.16 In Canada and

Europe, yogourt was often consumed throughout the day, not only for breakfast, but also for lunch, snacks,

and desserts; it was even used for cooking. As a leader in the yogourt market, Ulukaya decided to educate

American consumers to increase their per day consumption of yogourt. He also recognized that there was

a significant population in the United States that was not consuming Greek yogourt. One of these segments

was children and toddlers.17 Ulukaya decided to launch several variants of Greek yogourt for this untapped

segment, as well as additional variants for Chobani’s current consumers.

Innovation Philosophy with Customer Involvement

Chobani’s innovation philosophy was driven by DNNA, meaning that the product was supposed to be

“delicious, nutritious, natural, and accessible.”18 Chobani implemented innovation more quickly than any

other consumer goods firm. The company’s innovation cycle, from concept ideation to delivery, was less

than six months.19 Part of the reason for its fast innovation was customer engagement. Chobani followed

what it called a “phigital approach of innovation.”20 In this approach, consumers not only shared their

experiences over social media in consuming Chobani products, but also made suggestions for product

improvement and new product uses. “Phigital” referred to integrating consumers’ physical experiences with

their digital or social media use. Chobani’s marketing team also tracked how fans were “pinning” pictures

on Pinterest and Instagram, and the different ways they used the yogourt. Chobani minutely noted these

observations. Consequently, almost every new flavour or yogourt use that the company introduced came

from customers describing their experiences over social media. For example, a bestselling Chobani flavour,

black cherry, was based on a consumer’s suggestion.21

Similarly, in 2013, when the company launched Chobani Flip—a combination of yogourt with granola on

two sides of the container—it tracked how consumers were mixing granola with yoogurt. Unlike other fruit-

based Greek yogourt, Chobani Flip was not positioned as a breakfast option but rather as a snack to satisfy

hunger between lunch and dinner. Chobani Flip, billed as the future of snacking, reported a run rate of

$300–350 million in 2013. It attracted not only regular yogourt consumers but also new yogourt consumers.

This document is authorized for use only by John Jastremski in 2017.

GLOBAL BUSINESS CHALLENGE

Page 4

The trial rate was 5 per cent, but the repeat purchase rate was 50 per cent. The year-on-year growth for the

Flip mix was expected to be 30 per cent.22

Chobani also diversified by launching its SoHo Café in 2012 in New York, a restaurant service that offered

yogourt-based products ranging from rice pudding to sandwiches made with yogourt cheese. SoHo Café

provided a platform for testing new yogourt flavours where consumers could share their experiences of the

yogourt, both in person and on social media. Bestselling flavours based on consumer recommendations

were then manufactured on a large scale for retail selling.

Targeting International Consumers

Apart from product-line extension, Chobani expanded internationally. In 2011, it started establishing a

footprint in Australia. After upgrading the company’s newly acquired $30 million plant in Melbourne,

Australia, Ulukaya intended to export yogourt to all Asian markets. By 2013, Chobani opened an

international sales office in Amsterdam. It also established a presence in the Greater Toronto Area, Canada,

and New South Wales, Australia.23 In August 2016, to further expand its international market, Chobani

began exporting its Greek yogourt variants from the United States to Mexico.

FINANCIAL AND NON-FINANCIAL ACHIEVEMENTS

As a consequence of its efforts, by 2011 Chobani had become the number one Greek yogourt brand in the

United States. Retail sales had risen from zero in 2007 to $1.1 billion by the end of 2011 (see Exhibit 1).

By early 2014, Chobani’s market valuation was estimated to be about $5 billion.24 Due to a healthy

corporate culture encouraged by Ulukaya, hardly any employee left the firm after joining. Ulukaya paid his

employees above the market rate and gave them full employee benefits. Ulukaya also believed in

maintaining a good relationship with stakeholders at large, including farmers, vendors, and people in the

local community. As a part of community development, he established the Shepherd’s Gift Foundation, to

which he contributed 10 per cent of Chobani’s profit after tax.25

Chobani was also socially responsible: to avoid overuse of plastics and cardboard, the company took several

initiatives that reduced its plastic requirement by 10 per cent. In 2012, due to his astonishing achievements

in business in a short time span, Ulukaya was granted the U.S. Small Business Administration’s National

Entrepreneurial Success of the Year Award. In 2013, he was also named as the Ernst & Young World

Entrepreneur of the Year. Building on his spirit of social responsibility, in July 2016, Ulukaya started an

incubator program to train talented entrepreneurs in managing start-up food companies.26

CHOBANI’S FALL

In 2012, problems started slowly plaguing Chobani at three ends: competition, decrease in demand for

Greek yogourt, and internal problems.

Competitive Rivalry

Apart from Chobani, there were three other dominant players in the U.S. yogourt market: Danone, Yoplait

(of General Mills), and Fage. To compete with Chobani, these companies launched new flavours. Chobani,

due to its small size, had a limited distribution network. Rivals leveraged their superior logistics and market

This document is authorized for use only by John Jastremski in 2017.

GLOBAL BUSINESS CHALLENGE

Page 5

power to capture shelf space in retail outlets. In addition to focusing on distribution, Danone and Yoplait

ran comparative ads in 2011–2012, with messages claiming that their yogourt tasted better than Chobani’s.

Consequently, by the end of 2012, Chobani’s market share in the Greek yogourt market declined for the

first time (see Exhibit 2).

Before Chobani, the Greek yogourt market in the United States was a mere 1 per cent of the total yogourt

market. However, because of the rise of Chobani, Greek yogourt occupied 50 per cent of the yogourt market

by 2011. To imitate the success of Chobani’s Greek yogourt, smaller start-ups mixed different forms of

starch, obtained from corn or tapioca, with regular yogourt. There was no legal definition of Greek yogourt,

which hurt Chobani. “You could make a bowl of macaroni, call it Greek yogourt, and nobody could do

anything to you. Which is sad!” explained Ulukaya.27 By 2015, various start-ups had launched 800 different

Greek yogourts on retail shelves.28 The cumulative impact of competition from large and small players

became more intense. Apart from market share, even in terms of year-on-year retail sales, Chobani reported

lower sales in 2015 compared to 2014 (see Exhibit 1).

Decrease in Yogourt Demand

Though consumers were enjoying savoury yogourt with their breakfast, the overall demand for Greek

yogourt fell. Reported sales growth for this category declined from 114 per cent in 2011 to 15 per cent in

2014.29 Research by Euromonitor in 2015 indicated that demand for most food products slowed down

rapidly in the United States. Even though U.S. consumers loved new foods or diets, they became bored

quickly and started looking for other products. “We grow tired of things pretty quickly here in the United

States,”30 commented an executive from Euromonitor. This slowdown in yogourt demand raised indirect

competition for Greek yogourt manufacturers from other food industry players. For example, fast food

restaurants such as McDonald’s widened their breakfast options with items such as egg sandwiches.

Internal Problems

In 2012, when Ulukaya purchased a new plant in Idaho to expand production capacity, critics said he made

the investment assuming that the yogourt market would expand at the rate it was growing until 2011, which

was more than 100 per cent. However, the absence of proper demand forecasting led to excess capacity

because demand for yogourt, and more specifically Greek yogourt, did not grow at the 2011 rate after 2013.

Furthermore, according to experts, Chobani did not invest in either supply chains or talent acquisition, both

important in managing such a large organization.

Though the new plant in Idaho, which was 2,000 miles away from Chobani’s New York plant, solved the

company’s dairy supply needs instantly, there were clear differences in the milk protein composition

between the Idaho and New York plants. This quality issue occurred because Chobani quickly set up its

new manufacturing facility in order to reach the required production level in less than a year’s time.

Ulukaya did not invest in proper training of workers, and even safety measures were treated leniently.31

Consequently, in 2013, some batches of Chobani were contaminated with mould, which affected several

hundred consumers. Although Chobani voluntarily recalled the entire batch of Greek yogourt and

Ulukaya apologized publicly, the company nonetheless suffered damage.

Decreasing consumer demand, Chobani’s internal problems, and increasing competition from already

established yogourt brands and upcoming private label brands negatively affected Chobani’s revenues. The

impact of all of these cumulative factors was so strong that by the second quarter of 2013 Chobani reported

losses of $115 million, whereas in the first quarter of 2013, it had achieved profits of $40 million.32

This document is authorized for use only by John Jastremski in 2017.

GLOBAL BUSINESS CHALLENGE

Through customer engagement and its own innovation team, Chobani significantly expanded its portfolio

in 2014. There were six major product innovations: Chobani launched Greek yogourt oats, which contained

strained Greek yogourt, real ripe fruit, and whole grain steel-cut oats. Yet another cereal variant included

roasted rice crisps with mango-flavoured Greek yogourt, sesame sticks, and salted cashews. Similarly,

Chobani launched a Greek yogourt-based dessert and new flavours for kids, such as grape, watermelon,

and chocolate, in innovative tube packages. For more health conscious consumers, Chobani launched

Simply 100 Greek yogourt in key lime and pineapple coconut flavours. Following consumption patterns in

other countries, Chobani launched a 4 per cent whole milk yogourt, Chobani Kitchen, intended for use as a

cooking ingredient in dishes like baked potatoes and fajitas. To position yogourt as a daylong consumption

product, Chobani launched a beverage called Drink Chobani in 2016. Like the yogourt, this drink was free

from any artificial additives and contained only natural ingredients. Chobani also launched savoury dips,

in which yogourt was mixed with real herbs and spices.

Customer-Centric Marketing Initiatives

Although Chobani had high repeat purchases, its product awareness was low. By 2012, only 37 per cent of

the U.S. population was aware of the Greek yogourt brand. To enhance awareness and encourage repeat

purchases, Chobani resorted to various new methods of marketing and promotion. It spent between $30

million and $56 million in 2012–2015 to promote its products.34

National TV Advertising

The first national TV ad for Chobani was launched in 2012 during the live broadcast of the London Olympic

Games. The ad was titled “Proudly with You.” It portrayed how members and farmers of Chenango County,

where Chobani’s New York plant was located, alongside Chobani’s employees, contributed to the

company’s success.35

The second ad, released in 2014, was called “Naturally Powering Team USA” to highlight how Chobani

was an important component of the diet plan of athletes. In the ad, Allison Jones, a U.S. Paralympic

medalist, commented, “Chobani has been a core part of my diet, whether it’s summer or winter, and whether

Page 6

Gradually, its Greek yogourt market share fell by 15 per cent in 2015, compared to its 47.3 per cent share

in 2012. Thus, by 2015, Chobani’s market share in the U.S. yogourt industry dropped to 40 per cent from

a high of 50 per cent in 2011.33

CHOBANI’S TURNAROUND

To turn around the crisis and improve its financial health, Ulukaya took several measures.

Continued Focus on Customer-Centric Innovation

I’m training or competing for gold.” She further stated, “It’s made a noticeable difference in my nutrition

plan, and I’m excited Chobani has committed to being a Team USA sponsor for the long term.”36

To further raise awareness, Chobani advertised during the 2014 Super Bowl in the United States. This time

it engaged the audience by showing the “how” of manufacturing Chobani. A male voice in the ad’s

background exclaimed: “It’s hard these days to find food made with only real natural ingredients. But at

This document is authorized for use only by John Jastremski in 2017.

GLOBAL BUSINESS CHALLENGE

Page 7

Chobani, it’s the only way we know how.” The ad used the tagline “How Matters,” highlighting Chobani’s

quality and manufacturing process. Then in the summer of 2015, Chobani launched “The Break You Make”

ad, which was aimed to position Chobani Flip as an afternoon snack yogourt. Within a few days of the ad

launch, sales grew by 300 per cent.37

The next step for Chobani was to entice consumers by promoting the yogourt-eating experience, rather than

presenting yogourt as a quality or healthy product. The company presented an ad with the tagline “To love

this life is to live it naturally.” The chief marketing officer explained, “We kind of went from how our

yogourt is made to how our yogourt makes you feel.”38

Finally, in January 2016, Chobani resorted to comparative advertising when launching its low calorie

Simply 100 yogourt in order to compete against Danone and Yoplait, two of its strongest competitors. Ads

highlighted that Chobani’s yogourt was natural, unlike that of its competitors, which was filled with

artificial ingredients such as sucralose. Further targeting Yoplait, the ads indicated that Yoplait contained

preservatives that were also used in pesticide sprays.39

Sports Marketing

Chobani not only launched ads during sports events, but also sponsored the 2012 London Olympic and

Paralympic Games on U.S. national television. Furthermore, in extending its partnership with the United

States Olympic Committee until 2020, Chobani became the official yogourt provider for Team USA.

Talking about the partnership, the U.S. Olympics Committee chairman commented, “Through its ongoing

commitment to creating healthy products and promoting healthy lifestyle choices, Chobani has been an

integral partner in our mission to support the competitive aspirations of current and future Team USA

athletes, many of whom include Chobani in their diets and training regimens.”40 Chobani also announced

partnerships with 17 schools to engage with college athletes.

Promotional Events

Social Media Marketing

Through social media, Chobani encouraged consumers to share their yogourt experiences. In 2012, the

company had nearly 600,000 fans on Facebook, exceeding some large multinational corporations such as

Nestlé (with 570,000 fans).41 Fans of Chobani were specifically called “Chobaniacs.” Whenever Chobani

launched a new variant or flavour, these fans received free samples of the product. A team of five employees

monitored social media keenly and responded promptly to customer complaints, requests, and queries.

Furthermore, consumers were encouraged to share their ideas over Facebook, Pinterest, and Instagram. On

its website, Chobani posted recipes, photos, and spotlights (such as customer profiles) to entice consumers.

Public Relations (PR) Management

Although Chobani did not heavily use PR as a platform to promote its yogourt, it did rely on PR to resolve

the crisis it had faced since 2013. First, there was a product recall of some batches in 2013, which were

found to be tainted with mould. Instead of designating a PR or marketing employee as a representative to

handle consumers’ concerns, Ulukaya himself responded to customer queries and sent 150,000 personalized

letters to customers who contacted the firm. Chobani went a step further and distributed free yogourt to

consumers who had had bad experiences with its product. The company did not give the media any

This document is authorized for use only by John Jastremski in 2017.

GLOBAL BUSINESS CHALLENGE

Page 8

opportunity to dramatize the crisis by proactively admitting its mistake, apologizing to consumers, and

explaining the reasons behind the crisis.

When another crisis occurred in 2015 with the launch of the Simply 100 yogourt, Chobani again relied on

PR to communicate with consumers. Some packages of Simply 100 yogourt had the following tagline

written on the bottom of the lid: “Nature got us 100 calories, not scientists. How matters.” This tagline

offended the scientific community. Chobani immediately issued an apology online and explained, “It was

meant to be competitive against our competitors. It certainly wasn’t meant to be an indictment of science,

but more of a celebration of nature.” Chobani’s team personally went to the Massachusetts Institute of

Technology to interview scientists about their viewpoints, followed by offering free Chobani gifts.42

Partnering with the Venture Capital Firm TPG Capital

To improve its financial condition, Chobani also sought loans from private equity firms. In early 2014, TPG

Capital (formerly Texas Pacific Group), a private equity firm, granted Chobani a loan of $750 million in

exchange for 35 per cent of preferred stock in the company. TPG also appointed its partner, Kevin Burns,

as head of Chobani’s global operations and interim president. Soon after joining Chobani, Burns identified

$10 million of cost savings in procurement and $76 million in preventing wastage, mainly bad yogourt. To

further expand its distribution network, Chobani sought to sell a minority stake to a larger food company

and thereby access the company’s well-established distribution network.43 In 2015, PepsiCo (Pepsi) showed

a keen interest in buying a stake in Chobani; however, Ulukaya denied the offer as Pepsi wanted a majority

stake in the firm.

In early 2016, Ulukaya decided to make Chobani’s 2,000 employees partners, giving them 10 per cent of

the company stock. He did this to reward employees for their support during the company’s hard times.

Shares were given on the basis of tenure—the more years spent with Chobani, the greater the number of

shares.44

THE ROAD AHEAD

Chobani became synonymous with Greek yogourt in the United States. However, with increasing

competition, the company continued to face several challenges. As a result of an ad on January 6, 2016,

Chobani’s competitors, Danone and Yoplait, took the company to court. In the ad, Danone and Yoplait

yogourts were shown to contain artificial flavours that had adverse health effects. Chobani had to withdraw

the ad. Nevertheless, to cope with competitive challenges, the company constantly focused on incremental

innovation. For example, instead of competing against fast food restaurants in the breakfast category, in

February 2016, Chobani partnered with McDonald’s, which agreed to use Chobani Greek yogourt in its

parfaits and smoothies.45

Founder Ulukaya believed that innovation and independence were Chobani’s key assets.46 To enhance

innovation, he hired a chief creative officer in July 2016. To retain independence, he denied Pepsi a large

stake in Chobani but offered Chobani’s employees shares in the company. Critics of this move believed that

Ulukaya did not intend to give thanks to employees or develop a partnership with them for the future growth

of Chobani; rather, they alleged that he intended to dilute TPG Capital’s stake.

On one hand, Chobani wanted to remain a private firm, but on the other hand, to compete against large

corporations, it needed a significant financial investment to build up distribution networks and a strong

group of business professionals. Due to scarcity of such network resources and despite continuous efforts

This document is authorized for use only by John Jastremski in 2017.

GLOBAL BUSINESS CHALLENGE

Page 9

on other fronts such as innovation, retail sales for Chobani continued to fall (see Exhibit 1). Industry experts

were keen to observe how Chobani would manage its growth without considering any further external

equity and without using seasoned professionals. “At that point, he has to realize he can’t run a good

company without professionals,” remarked one of these industry veterans.47 Under these challenging

circumstances, how would Chobani fuel further growth? Critics believed that it would be a watch-and-wait

situation.

This document is authorized for use only by John Jastremski in 2017.

GLOBAL BUSINESS CHALLENGE

Page 10

EXHIBIT 1: CHOBANI’S U.S. SALES OF GREEK YOGOURT IN 2007−2015 (US$ BILLION)

Source: Developed by the case authors using information from Roberto A. Ferdman, “Goodbye Good Old Greek Yogurt,” Washington Post, December 18, 2015, accessed May 23, 2016, www.washingtonpost.com/news/wonk/wp/2015/12/18/goodbye-good-old-greek-yogurt/; and “Yoghurt and Sour Milk Products in the US,” Euromonitor International, July 2015, accessed May 23, 2016, www.euromonitor.com/yoghurt-and-sour-milk-products-in-the-us/report.

EXHIBIT 2: CHOBANI’S MARKET SHARE IN THE U.S. GREEK YOGOURT MARKET

Source: Developed by the case authors using information from “Yoghurt and Sour Milk Products in the US,” Euromonitor International, July 2015, accessed May 23, 2016, www.euromonitor.com/yoghurt-and-sour-milk-products-in-the-us/report.

This document is authorized for use only by John Jastremski in 2017.

GLOBAL BUSINESS CHALLENGE

Page 11

ENDNOTES

1 This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives presented in this case are not necessarily those of Chobani or any of its employees. 2 Jason Owen, “Packaged Facts: Greek Yogurt Sales Jumped More Than 50% in 2012,” Drug Store News, April 9, 2013, accessed April 20, 2016, www.drugstorenews.com/article/packaged-facts-greek-yogurt-sales-jumped-more-50-2012?ad=latest-news. 3 Ryan Caldbeck, “The 25 Most Innovative Consumer and Retail Brands,” Forbes, July 30, 2013, accessed April 20, 2016, www.forbes.com/sites/ryancaldbeck/2013/07/30/25-of-the-most-creative-consumer-and-retail-brands/#4fb779d457ee. 4 “The Chobani Story,” Chobani, accessed April 21, 2016, www.chobani.com/core/wp-content/uploads/2013/04/Chobani-Media-Kit-2013.pdf. 5 Bryan Gruley, “At Chobani, the Turkish King of Greek Yogurt,” Bloomberg, February 4, 2013, accessed April 21, 2016, www.bloomberg.com/news/articles/2013-01-31/at-chobani-the-turkish-king-of-greek-yogurt. 6 Vanessa V. Edwards, “How Chobani Squeezed New Flavor into a Crowded Market,” Fast Company, March 28, 2013, accessed April 25, 2016, www.fastcompany.com/3007540/how-chobani-squeezed-new-flavor-crowded-market. 7 rBST is a growth hormone that is administered to cows so they can produce more milk. Administering this growth hormone results in a more efficient conversion of cow feed to milk. Though the U.S. Food and Drug Administration has not found in its tests any adverse effect on humans when they drink rBST-administered cow’s milk, some retailers avoid stocking milk that is produced by cows who have been administered this growth hormone (see “What is rBST?,” AnimalSmart.org, accessed September 21, 2016, http://animalsmart.org/feeding-the-world/food-safety/rbst). 8 “About Chobani® Greek Yogurt,” Chobani, accessed April 29, 2016, www.chobani.com/products/plain#non-fat-plain. 9 Vanessa V. Edwards, op. cit. 10 Rotogravure is a printing process that allows the printing of rich, colourful images in large quantities. This process is extensively used for producing fine and detailed photographs or images for newspaper supplements, catalogues, calendars, etc. Nevertheless, rotogravure is an expensive printing process. Compared to the traditional lithographic press, a rotogravure press is 10 times more expensive (see “Gravure Printing,” Printers’ National Environmental Assistance Center, accessed September 21, 2016, www.pneac.org/printprocesses/gravure/). 11 “The Engineering Design Process: The Chobani Yogurt Cup,” Ms. Shon’s Spectacular Science, September 15, 2014, accessed May 1, 2016, www.shonscience.com/unit-0-scientific-inquiry1/the-engineering-design-process-the-chobani-yogurt-cup. 12 Anne M. Mohan, “Two-Part PS Container Allows for ‘Amplified’ Yogurt Experience,” Packaging World, February 10, 2013, accessed May 1, 2016, www.packworld.com/package-type/thermoformed-packaging/two-part-ps-container-allows-amplified-yogurt-experience. 13 Rick Lingle, “Chobani Debuts Yogurt in Pouches and Tubes,” Packaging Digest, February 27, 2015, accessed May 2, 2016, www.packagingdigest.com/food-packaging/chobani-yogurt-debuts-pouches-and-tubes-150226. 14 All currency amounts are in US$ unless otherwise specified. 15 Bryan Gruley, op. cit. 16 “Yogurt Makers Stir Up New Sponsorships,” IEG Sponsorship Report, August 11, 2014, accessed May 3, 2016, www.sponsorship.com/iegsr/2014/08/11/Yogurt-Makers-Stir-Up-New-Sponsorships.aspx. 17 Monica Watrous, “Q&A: Innovation Insights from Chobani,” Food Business News, March 25, 2015, accessed May 3, 2016, www.foodbusinessnews.net/articles/news_home/Business_News/2015/03/QA_Innovation_insights_from_Ch.aspx?ID=%7BC52B1F62-5388-45C4-BC18-8389F83F62A4%7D. 18 “People Have Great Taste. They Just Need Great Options,” Chobani, accessed April 24, 2016, www.chobani.com/history. 19 Monica Watrous, op. cit. 20 “Chobani Taps ‘Phigital’ Marketing,” Warc, December 18, 2015, accessed May 15, 2016, www.warc.com/LatestNews/News/Chobani_taps_phigital_marketing.news?ID=35916. 21 Zog Digital, “Chobani’s Social Impact: Lessons in Brand Best Practices,” Aabaco Small Business, accessed May 17, 2016, www.aabacosmallbusiness.com/advisor/chobani-social-impact-lessons-brand-best-practices-153048602.html. 22 Elaine Watson, “It’s Called Chobani Flip; We Think It’s the Future of Snacking, and the Next Billion-Dollar Brand in Yogurt,” FoodNavigator-USA, November 2, 2015, accessed May 17, 2016, www.foodnavigator-usa.com/People/Flip-could-be-billion-dollar-brand-says-Chobani-at-Food-Vision-USA. 23 Bryan Gruley, op. cit. 24 Stephanie Strom, “At Chobani, Now It’s Not Just the Yogurt That’s Rich,” New York Times, April 26, 2016, accessed May 18, 2016, www.nytimes.com/2016/04/27/business/a-windfall-for-chobani-employees-stakes-in-the-company.html?_r=1&module=ArrowsNav&contentCollection=Business%20Day&action=keypress&region=FixedLeft&pgtype=article. 25 The Chobani Story, op. cit. 26 Chris Crowley, “A New Incubator Program Is Launching to Help Find the Next Great Food Company,” Grub Street, July 20, 2016, accessed August 2, 2016, www.grubstreet.com/2016/07/chobani-new-food-incubator-program.html. 27 Dan Charles, “High-Tech Shortcut to Greek Yogurt Leaves Purists Fuming,” NPR, July 19, 2012, accessed May 21, 2016, www.npr.org/sections/thesalt/2012/07/19/156997600/high-tech-shortcut-to-greek-yogurt-leaves-purists-fuming. 28 “The Sit-Down: Peter McGuinness, Chobani,” SportsBusiness Journal, January 12, 2015, accessed May 22, 2016, www.sportsbusinessdaily.com/Journal/Issues/2015/01/12/People-and-Pop-Culture/The-Sit-Down.aspx.

This document is authorized for use only by John Jastremski in 2017.

GLOBAL BUSINESS CHALLENGE

Page 12

29 Craig Giammona, “With Chobani Back on Track, Founder Is Staying Put,” Bloomberg Businessweek, September 10, 2015, accessed May 22, 2016, www.bloomberg.com/news/articles/2015-09-10/with-chobani-back-on-track-founder-is-staying-put. 30 Roberto A. Ferdman, “Goodbye, Good Old Greek Yogurt,” Washington Post, December 18, 2015, accessed May 23, 2016, www.washingtonpost.com/news/wonk/wp/2015/12/18/goodbye-good-old-greek-yogurt/. 31 SCDigest Editorial Staff, “Greek Yogurt Pioneer Nearly Loses It All Due to Supply Chain Woes,” Supply Chain Digest, May 26, 2015, accessed May 26, 2016, www.scdigest.com/ontarget/15-05-26-2.php?cid=9340. 32 Kristen Scholer and Anne Gasparro, “At Chobani, Rocky Road from Startup Status,” Wall Street Journal, May 18, 2015, accessed May 23, 2016, www.wsj.com/video/at-chobani-rocky-road-from-startup-status/BD5DC17C-3723-4286-A548-5444412CFBCF.html. 33 Ibid. 34 Maureen Morrison, “Droga5 No Longer Chobani’s Lead Agency as Brand Brings Marketing In-House,” Advertising Age, March 13, 2015, accessed May 28, 2016, http://webcache.googleusercontent.com/search?q=cache:_qq3S_YO7gQJ:adage.com/article/agency-news/chobani-brings-marketing-house/297575/+&cd=1&hl=en&ct=clnk&gl=in. 35 Camille Bautista, “Chobani’s First National TV Ad to Run During Olympic Opening Ceremonies,” www.syracuse.com, July 27, 2012, accessed May 28, 2016, www.syracuse.com/news/index.ssf/2012/07/chobanis_first_national_tv_ad.html. 36 United States Olympic Committee, “U.S. Olympic Committee, Chobani Announce Partnership Renewal through 2020,” Team USA, September 25, 2014, accessed May 30, 2016, www.teamusa.org/News/2014/September/25/US-Olympic-Committee-Chobani-announce-partnership-renewal-through-2020. 37 Kristina Monllos, “Chobani Extends Its ‘Flip’ Campaign after Sales Increase by 300%—Opperman Weiss Creates New Spot,” Adweek, September 28, 2015, accessed May 30, 2016, www.adweek.com/news/advertising-branding/chobani-extends-its-flip-campaign-after-sales-increase-300-167186. 38 Tim Nudd, “Ad of the Day: Chobani Gets Real with Ads That Are About a Lifestyle, Not a Product—‘Love This Life’ Campaign from Opperman Weiss,” Adweek, May 1, 2015, accessed May 30, 2016, www.adweek.com/news/advertising-branding/ad-day-chobani-gets-real-ads-are-about-lifestyle-not-product-164451. 39 Ashlee Kieler, “General Mills Sues Chobani for Advertising That Yoplait Contains ‘Bug Spray’,” Consumerist, January 12, 2016, accessed May 30, 2016, https://consumerist.com/2016/01/12/general-mills-sues-chobani-for-advertising-that-yoplait-contains-bug-spray/. 40 United States Olympic Committee, op. cit. 41 Samuel Greengard, “How Chobani Yogurt Used Social Media to Boost Sales,” Entrepreneur, September 16, 2012, accessed June 2, 2016, www.entrepreneur.com/article/223999. 42 Christine Birkner, “Scientists Flip Their Lids over Chobani Messaging,” American Marketing Association, June 19, 2014, accessed June 2, 2016, www.ama.org/publications/eNewsletters/MNE/Pages/chobani-scientists-lids.aspx. 43 Craig Giammona, op. cit. 44 Stephanie Strom, op. cit. 45 Ashlee Kieler, “McDonald’s Partners with Chobani to Test Greek Yogurt Smoothies, Parfaits in Southern California,” Consumerist, February 24, 2016, accessed June 3, 2016, https://consumerist.com/2016/02/24/mcdonalds-partners-with-chobani-to-test-greek-yogurt-smoothies-parfaits-in-southern-california/. 46 Libby Kane, “Chobani CEO Announces Plans to Give All of His Employees a Stake in the Company,” Founders 40, April 27, 2016, accessed June 4, 2016, www.inc.com/business-insider/chobani-ceo-hamdi-ulukaya-gives-10-percent-company-to-employees.html. 47 SCDigest Editorial Staff, op. cit.

This document is authorized for use only by John Jastremski in 2017.

GLOBAL BUSINESS CHALLENGE