Chobani: The Yogurt That Ate America | Nothing But Good | 1

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0:23It's January 2005, and in his office in Johnstown, New York, Hamdi Ulukaya is tidying his desk. He grabs a pile of unsorted papers and starts tossing unwanted items into the nearby garbage can. Ulukaya is 32 years old and a Kurdish immigrant who grew up in Turkey, milking sheep on his family's farm. He moved to the United States 11 years ago and now runs a small business making feta cheese. But the feta business isn't what Ulukaya imagined it would be. It barely turns a profit, and selling a cheese that people toss on salads without a second thought doesn't exactly set his soul on fire. He flings a coffee-stained pizza menu into the garbage can and glances down at the next item.

1:13It's a postcard from a real estate firm, advertising a fully-equipped yogurt factory.

1:24Ulukaya drops it straight in the trash bin with the rest of the junk mail and his used tea leaves. But as he continues cleaning up, the postcard lingers in his mind. Back home near the Kurdish mountains, his family made yogurt. Greek-style yogurt. Tart, creamy, and custard thick. The kind of yogurt that's good for you. Nothing like the thin, sweet glop sold in U.S. supermarkets. Ulukaya looks over again at the garbage can. Maybe he could... No, no, no, that's ridiculous. He resumes tidying his desk. But soon, his eyes drift back to that garbage can. It's as if the postcard's calling him. Before he knows what he's doing, He's on his knees fishing through the trash.

2:17He pulls out the now grimy postcard and reads the words again. Fully equipped yogurt factory for sale. He stares at it for a few seconds. Then calls the number on the card. Hi, I got your postcard, the one about the yogurt plant in New Berlin. I'd like to see it. Mm-hmm. Yes, that time tomorrow is perfect. See you then. Ulukaya hangs up and looks at the postcard again, at the image of the factory that could give him a new purpose, introducing America to the delights of Greek yogurt. There's just one problem with the factory. He can't afford to buy it. When a charming neurosurgeon rode into Western towns selling a persona of confidence and care, patients trusted him.

3:19He wore cowboy boots in the operating room and became sought after by patients. He promised to heal them. Instead, he left a trail of broken bodies. This is a story of greed, betrayal, and a fight for justice. Listen to Dr. Death, The Cowboy, wherever you get your podcasts, or binge the entire series right now only with Audible. Whether you're exploring your fascinations or discovering new ones, Audible has stories that will introduce you to your most fascinating self. Tap into a whole new world of heated conversations with a saucy romantic series. Know how true the latest blockbuster movie stayed to the sci-fi story it was based on or find unexpected reveals through an exclusive true crime podcast.

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4:25From Audible Originals, I'm David Brown, and this is Business Wars.

4:53When Hamdi Ulukaya pulled that realtor's postcard out of the trash, few could imagine where that might land him. That postcard would lead him to found Chobani, the Greek yogurt empire that grabbed a massive 20 % of America's multi-billion dollar yogurt market and turned the industry upside down. But disrupting the market is only half the battle. The real test is what comes next. When your competitors wake up, when growth hits a wall, and when staying ahead means going beyond the confines of your original brand. But that's all to come for Ulukaya. Right now, it's 2005, and he's facing a problem that could snuff Chobani out before it even gets started, getting hold of the factory that his creamy dreams will be built on when he can't afford to buy it, and no one thinks he should.

5:53This is Episode 1. Nothing but good.

6:03It's January 2005, and Hamdi Ulukaya is driving through the leafy back roads of upstate New York. He's just visited the former Kraft yogurt factory in New Berlin, and he hasn't been able to sit still since. He really, really wants this factory. He pulls over, grabs his phone, and calls the one person he trusts for business advice. His attorney, Mario Papa. Hi, Hamdi. What's up? Ulukaya can barely contain himself. His words tumble out in a rush. Factory, New Berlin, Kraft, yogurt,$700 ,000. Whoa, slow down. Breathe, Hamdi. Come on, breathe. Ulukaya catches his breath and lays it all out. His visit to the factory, how Kraft wants to offload it, that it's fully equipped, on sale at a bargain price, and he wants to buy it.

6:59But Papa's not sold. Handy, you don't have$700 ,000. In fact, you owe me money, if you remember. And Kraft is one of the largest food companies in the world. If they can't make it work, what makes you think you can? Ulukaya does indeed owe his attorney money. As for Kraft, well, it's decided yogurt isn't a core business. It feels it lacks a competitive advantage over market leaders Danon and Yoplait, so it's getting out. But what doesn't make sense to Kraft does make sense to Ulukaya. He tells Papa he can make it work because he's going to make Greek-style yogurt. He will give America yogurt that's healthy and free of preservatives.

7:47If people are willing to eat the watery goop currently sold in stores, they won't know what hits them once they try his family's recipe from turkey. But Papa isn't convinced. Greek-style yogurt is niche, expensive, imported and rarely seen outside specialty stores. This is a pipe dream, Hamdi. Your cheese business is barely turning a profit and you haven't paid me in six months. Ulukaya's shoulders sag. He mumbles a defeated, okay, and hangs up, the wind fully knocked out of his sails. But the yogurt factory won't leave his head. Ulukaya's still thinking about it a few weeks later, when two salesmen from Key Bank drop by his office.

8:37Key Bank is a regional bank looking to drum up new business. They came expecting to talk to Ulukaya about his feta cheese company. But Ulukaya can't help himself. Instead of talking cheese, he tells them about the factory he can't afford and his dream of turning Greek yogurt into an everyday grocery item. The salesmen offer a solution. KeyBank is partnered with the Small Business Administration, the federal agency that helps small businesses with funding, finance, and mentoring. With KeyBank's help, Hamdi writes his first-ever business plan and forms a new company, Agro Pharma Inc. He pieces together the money he needs from the Small Business Administration, two banks, and a grant from the local county.

9:24And in the summer of 2005, he buys the factory and hires a small team, four former craft employees, and a Turkish yogurt master named Mustafa Dohan. On August 17, 2005, Ulukaya gets the keys to the factory. The whole place reeks of milk that's been sitting in the hot sun for too long. There's so much to do, he doesn't even know where to start. So he and his new colleagues take it one step at a time, starting by cleaning and painting the walls. As they work, Ulukaya tells his team how he ended up here. He came to the U.S. in the mid-90s. He didn't intend to come to America, but he definitely needed to leave Turkey.

10:12Ulukaya is Kurdish, an ethnic minority that in the 90s was the center of an often violent conflict between a Turkish government that sought to erase Kurdish identity and a Kurdish separatist movement wanting independence. Ulukaya started a newspaper calling out human rights abuses against Kurds. That landed him a night in jail and was a clear signal that he needed to leave. He thought about going to France or Germany, but then someone said America was the place to go. Ulukaya shakes his head and smiles as he remembers his response. The U.S.? The home of capitalism and imperialism? No way. He looks around his new factory now, at his new colleagues, rollers in hand painting the walls.

11:00He giggles to himself, almost like a kid. Now he's the capitalist. In truth, Ulukaya didn't know a thing about America, other than what he'd seen in movies. So he asked the guy who suggested it, what do you actually know about the place? It turned out the man had studied in the U.S. and knew someone who could get Ulukaya into an English language school. And just like that, his new life began. He arrived in New York City with a visa and$3 ,000 and started learning English. One day he was given a writing assignment and he wrote about making cheese. It turns out his teacher owned a farm upstate and she and her family wanted help learning how to make cheese.

11:46Ulukaya didn't even know upstate New York existed. Ulukaya spent the next year and a half working on the farm, teaching them to make cheese while they taught him English. Then his father visited and complained about how bad the feta cheese in America was. So Ulukaya started a business importing feta from Turkey, which eventually turned into a business making it. But it's been tough. He's cried a lot. Feta cheese is a low-margin product, and since it's mainly consumed as part of a salad, it's hard to get people excited about the quality of it. But Ulukaya is certain Greek yogurt will be different.

12:31The U.S. yogurt market is worth$2.9 billion a year. Greek yogurt probably accounts for less than half a percent of that. The Greek brand Faye is importing its products, but sales are low. The name is hard to pronounce for many people, and the price is high. To Ulukaya, that spells untapped opportunity. In fact, he's sure that Americans will love Greek yogurt, if they try it. With his factory now painted and cleaned, Ulukaya's focus shifts to the recipe. He knows he only has one shot at this. Money's too tight for his company to survive a failure. His Greek yogurt has to be perfect. He wants it to be as good as the yogurt his mother used to make back in Turkey, the best yogurt he's ever tasted.

13:25But making a great Greek yogurt at scale is no small feat. His yogurt will contain live bacterial cultures, which means it's not a static product. What might taste perfect initially can taste terrible a few weeks later. Ulukaya and his yogurt master, Doan, want their product to hold its taste for six weeks. And it takes them a year of testing cultures to find the right one. During that time, Ulukaya interviews shoppers and learns that many of them are mixing fruit into plain, non-fat Greek yogurt themselves. They want non-fat, but they also want fruit. And the only non-fat Greek yogurt on sale is plain.

14:10So he decides he will give people what they want, nonfat yogurt pre-mixed with fruit. He's also making yogurt that's much thicker than ordinary yogurt by straining out the whey, the water that's left behind after the milk has been fermented with friendly bacteria. If it takes one cup of milk to make a cup of ordinary yogurt, it takes three or more to create the Greek-style version. Now, if you or I were to make yogurt like this at home, We would need to strain it through a piece of cheesecloth over several hours to remove the hue. But that method won't work for Ulukaya because he needs to do this at scale.

14:49And for that, he needs a piece of specialized equipment that the factory he bought doesn't have. The machine is called a separator, and it looks like an industrial washer-dryer had a baby with an unmanned space broke. It's about the size of a car engine, and it spins at high speed to separate the milk solids from the whey. But separators are pricey. A brand new one can cost around$1 million. And Ulukaya just doesn't have that kind of money. After buying the factory, he only has around$150 ,000 remaining from his initial funding. So he goes online and looks for something secondhand. Finally, he finds one in Madison, Wisconsin.

15:35He flies to Chicago and drives 200 miles to see it. And when he gets there, well, he's disappointed. The separator's covered in rust. It's been stored outdoors for who knows how long. But on the plus side, it's only$50 ,000. And one of his employees is a maintenance technician, so he should be able to fix it. Actually, he'll have to. On the journey back from Wisconsin, Ulukaya passes the time thinking about what to name his yogurt. He wants something that reminds him of his homeland. As he drives down the interstate through rural Wisconsin, he remembers the Turkish word for shepherd, choban. He adds an I at the end for a dash of panache and lands on chobani.

16:31Ulukaya now has his factory, his separator, and his product name. Next up, the packaging. He doesn't have much of a marketing budget, so the packaging has to do the heavy lifting. He knows what happens to unknown products with little ad spend behind them. They get banished to the bottom corner of the supermarket aisle, the least desirable spot in the store. So his packaging needs to do the hard sell by catching shoppers' attention. Traditional yogurt cups are tall and narrow. Chobani goes the other way, a squatter, fatter cup that mimics the serving bowls used for yogurt in Turkey. He also selects bright white plastic.

17:14Together, the shape and the plastic makes the cups look distinct from the competition. The label breaks with tradition, too. Most yogurt brands print their graphics directly onto the cups, but that process leads to dull colors and lower-quality graphics. Chobani opts for printing the graphics onto plastic sleeves that slide over the cups. It's more expensive, but the result is bolder, sharper, and harder to miss. Finally, Ulukaya is ready. He's got his factory, his recipe, his separator, and distinctive packaging. But he's also running out of time. It's taken 18 months to reach this point, and he hasn't sold a single cup.

18:02He's burning through his money fast. And to make this business profitable, he needs to be selling 20 ,000 cases of yogurt every week. Now, everything comes down to one question. Will anyone actually buy it?

18:43The Cowboy is the story of a charming neurosurgeon who rode into western towns selling a persona of confidence and care. He wore cowboy boots in the operating room and became sought after by patients. He promised to heal them. Instead, he left a trail of broken bodies. This season is about a doctor who was never truly held accountable for the patients whose lives he ruined. A story of greed, betrayal, and a fight for justice that will leave you questioning who to trust. Listen to Dr. Death, The Cowboy, wherever you get your podcasts. Or binge the entire series right now, only with Audible. Whether you're exploring your current fascinations or discovering new ones, Audible has all the stories that'll introduce you to your most fascinating self.

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20:36It's 2 a.m. on an October night in 2007. Ulukaya and his team have just finished hand-packing their first supermarket order, 300 cases of plain vanilla, peach, strawberry, and blueberry Chobani yogurt. Together, this order is worth$4 ,600. dollars. Cases packed, Ulukaya drives more than 200 miles to deliver them himself to a kosher grocery in the affluent village of Great Neck on the north shore of Long Island. Ulukaya has been picky when it comes to finding stores to stock Chobani. He has one salesman, Kyle O 'Brien, and he's been given strict instructions. If a grocer offers to put Chobani in the organic section instead of the regular dairy fridges, O 'Brien should walk away.

21:28Ulukaya wants Chobani to be a mainstream product. He's not thinking small stores. He's thinking national chains. But first, he needs proof that Chobani sells. Ulukaya spends the next week on edge, desperate for news about Chobani's sales. Every day seems to drag. Then, finally, the grocery store in Long Island calls. Ulukaya can't contain himself. He can barely get the usual pleasantries out. Tell me, how did it sell? Okay, well, we've sold out and we want another 300 cases. Sure, sure, but who is buying it, the same people or different people? What does it matter? Well, if different people are buying it, it means they like the packaging.

22:18If it's the same people, it means they like the product and will keep buying it. Well, then I've got good news. The same people are buying it, and they're telling their friends about it too. It's a promising start. But 300 cases a week from one store on Long Island isn't enough. To keep the lights on and recoup the cost of launching Chobani, Ulukaya needs to sell 20 ,000 cases a week. And to reach that goal, he needs the big stores. Ulukaya and his salesman O 'Brien sit down to plan their next steps. Ulukaya doesn't want to limit themselves to specialty stores. He doesn't believe that quality yogurt should be an elite product.

23:02He's determined to get Chobani into big chains like Costco and ShopRite, which has more than 200 grocery stores across the Northeast and mid-Atlantic states. But these stores charge slot fees, meaning Chobani will have to pay to be put on the shelves. Ulukaya asks O 'Brien how much a chain like ShopRite might charge in slot fees. O 'Brien estimates that the supermarket will charge around$20 ,000 per flavor of Chobani. Ulukaya thinks that's insane. He's determined to find a way around this. One week later, Ulukaya and O 'Brien are sitting across the table from ShopRite's buyer at the supermarket's New Jersey headquarters.

23:50They watch as the buyer scoops another large spoonful of Chobani into his mouth. Oh, this is great. I like the packaging, too. And the price. $1.29. That's smart. Tells people this is special without pricing them out like most artisan brands. Ulukaya smiles. So you'll stock Chobani? We'd be happy to. In every store. Our slot fee is$200 ,000. O 'Brien shoots Ulukaya and I told you so, look. Ulukaya turns to the buyer. Sounds great. The only problem is we don't have that kind of money. The buyer shrugs his shoulders as if to say, how's this my problem? The room goes quiet. What if we pay you in yogurt?

24:44Pay us in yogurt? Yes, you don't pay us anything until you've sold enough to earn out the slot fee. And what happens if your yogurt doesn't sell? We buy it back. Hey, I thought you said you didn't have any money. If you got no money and your yogurt doesn't sell, how am I going to recover the slot fees you owe us? Ulukaya thinks for a moment. Then smiles. Then you can have our factory. Wow. All right, then. If that's what you're willing to stake to get on our shelves, you got a deal. We'll stock Chobani. Ulukaya grins as they shake hands. But he's just bet his entire business on this deal. So this yogurt, it better be popular.

25:39In 2009, Chobani arrives in ShopRite with little marketing spend. Instead of a splashy ad campaign, they are relying on Chobani's distinct cup to do the work for them. But what a cup it is. That bright, attractive label. The unusual shape. The combo of nonfat and fruit. Something no one else is offering. A price that signals quality without whispering elite. lead. Shoppers pick it up out of curiosity. They buy it, taste it, and come back for more. The chains reorder. Shoppers tell their friends about the new super-thick yogurt they tried. Word spreads. Soon, other large grocery chains start stocking Jobani as well, like Stop and Shop and Whole Foods.

26:32Then, one day, an order lands for 25 ,000 cases. Ulukaya stares at it in shock. He wonders if someone added an extra zero by mistake and checks with his sales director. It's not a typo. Ulukaya asks if it's a monthly order. The sales director smiles. No. They want 25 ,000 cases a week. Chobani needed to sell 20 ,000 cases a week to break even. Now, it's smashing that target with a single customer. And the momentum's just getting started. And it got there with a promotional plan entirely built around better packaging. Now, wait a minute. When things seem to be going this well, it's tempting to think you've solved the marketing problem.

27:28But what's really happening here is alignment, product, price, and presentation, all reinforcing each other. See, the packaging didn't win on its own. It amplified everything else that was already right, from the recipe right down to the price point. But Ulukaya isn't relying entirely on his yogurt cup design. He wants to build a connection with his customers, which is getting a lot easier to do. And Chobani's timing, that couldn't be better. In 2010, social media is going supernova. Suddenly, any company can find and talk directly to the people who are buying its products. Chobani dives in, using Facebook and Twitter to connect with customers.

28:16It responds to posts and reacts to customer stories. Ulukaya even starts stenciling his favorite customer quotes on the walls of his factory. Quotes like, life is good when Chobani is in the fridge. And Chobani, your yogurt warms my soul. Wow. You know, direct connection with customers used to be rare nowadays. It's expected. But it only works if it feels real, right? Listen back to our series on Domino's vs. Pizza Hut. Domino's was getting trashed until it went on social media and said, we hear you, tell us what we need to do. Well, they listened and they made changes. And for the first time, Domino's became the world's number one in their segment.

29:02Done right, that relationship with your customers becomes an asset that competitors can't easily copy, even if they had the cojones to try. Chobani's customer outreach isn't entirely online, though. It also builds a yogurt bar on wheels, which turns up at festivals and food markets to hand out free samples. They call it the Chomobile. The Chomobile helps Chobani tap into a consumer demographic that yogurt has long struggled to reach. Men. Its drivers keep running into the same response. Some men think yogurt is women's food, But the drivers soon learn that when they hype up Greek-style yogurt's high-protein content, that attitude changes.