Hamdi Ulukaya is holding a cup of Greek yogurt that his German shepherd, Panya, is lapping out of his hand. Her nose is dotted with the product that sped her master's young business from revenue of zero to an expected $1 billion over five years. Ulukaya, svelte and 40, is the owner of Chobani, a start-up reared on small-business loans among crumbling barns and sleepy towns in central New York.
When Ulukaya sold his first cups of Chobani, at a Long Island grocery store in 2007, Greek yogurt accounted for a piddling 2% of U.S. yogurt sales. By last year, it was generating a quarter of all revenue in the $7.6 billion industry. Ulukaya isn't just riding the wave; he's dominating it. Over the past few years, Chobani has expanded at warp speed, capturing half of the Greek-yogurt market and beating out behemoths like General Mills and Dannon. "It's clearly a winner," says Nielsen consumer-insight analyst Todd Hale of Greek yogurt.
So what exactly is so irresistible about Ulukaya's creation? It has nothing to do with Greek roots. Greek yogurt is no more Greek than French fries are French. The name simply tells consumers that it's strained yogurt, standard fare across Europe and Asia, the land where Genghis Khan is said to have fortified himself and his fellow pillagers with fermented milk. The appeal of strained yogurt is its thicker texture, higher protein level and typically tangier taste than the sweetened yogurt common in American dairy aisles. In the U.S., consumers can also count on its being about 90% more expensive than the non-Greek stuff.
Chobani--the name is derived from the word for shepherd in Ulukaya's native Turkish--pegs itself as all natural and low fat. Ulukaya, who grew up on a farm in Turkey before moving to the U.S. as a college student, sticks to a short list of ingredients: only milk and cultures, proprietary blends of bacteria that ferment the liquid into something spoonable and mouth puckering. Many Greek-yogurt brands--like the Greece-based company Fage, which started sending its yogurt to American specialty stores over a decade ago and currently accounts for 15% of the U.S. market--claim similar characteristics. Ulukaya says Chobani's outsize success comes down to his belief early on that the product could appeal to a broad range of customers, not just those shopping in specialty stores. Within its first three years on the market, Chobani trounced Fage (pronounced Fay-yeh) by heading straight into deals with big grocery chains like Giant and ShopRite. A lower price point than that of other Greek yogurts and a larger container also appealed.