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The Yogurt That Ate New York

The unlikely rebirth of a dairy town in the dumps.

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Chobani
Founded: 2005
Age of CEO: 42
Sales in 2012: $1 billion
Cups of yogurt produced each week: 30 million
Lesson: Food—even bland food—can be better.

The village of New Berlin in central New York sits on the banks of the windswept Unadilla River, 60 miles southeast of Syracuse. Main Street runs north to south through the middle of town, past a storefront church and the lone traffic light, which hangs above the intersection of Main and Genesee streets. There is one gas station, one pharmacy, and until recently, one restaurant, a cozy Italian joint called New York Pizzeria.

About seven years ago, Frank Baio, the proprietor of New York Pizzeria, was ringing up a purchase when a dark-haired stranger walked into the dining room. New Berlin’s population, as of the last census, was 1,028—and Baio prides himself on knowing all his customers. “So I went over and introduced myself,” Baio recalled the other day. “You know, to make him feel welcome.”

The stranger’s name was Hamdi Ulukaya. He was Turkish—a rarity in New Berlin. Ulukaya had grown up in a rural Kurdish region of Turkey, where his family ran a midsize dairy company. In the late nineties he’d emigrated to the States, and in 2002 opened a not particularly successful feta-cheese company. Now, he told Baio, he was in talks to purchase the old Kraft factory, out on County Road 25, and use it to produce strained, or “Greek,” yogurt.

Baio was skeptical. The closure of the Kraft factory, which had also produced yogurt, had devastated New Berlin to the tune of 250 jobs. Like many of the once-prosperous farming towns in the region, with their tired mansions and sagging silos, New Berlin was going to seed. Local kids were headed to the cities, dairy farms were closing down. Even if Ulukaya could get the plant back online and somehow dredge up a workforce, who would buy his product? “You figure that Greek yogurt was for people who look at their figures,” says Baio. “That’s not me. And that’s not really a lot of people I know, to be completely honest.”

Still, he liked Ulukaya personally, and Baio was happy when he decided to make New York Pizzeria a kind of second office. Every day—and sometimes twice a day—for four years, Ulukaya parked himself in a back booth, where he shoveled down slices of pie, worked the phones, and went over paperwork. “I don’t love to use the word, but I don’t know any other,” Baio says. “It was magic. Everything he said, it came true.”

In 2007, a year after Baio met Ulukaya, Ulukaya’s company, originally called Agro Farma, had five employees, most of whom had been former workers at the Kraft plant, and the company was deep in the red. By 2012, Chobani was the most popular yogurt brand in the United States, and Ulukaya was presiding over $1 billion in annual revenue. The 2013 figures are expected to reach $1.5 billion. As one analyst has noted, if you examined Chobani’s fiscal returns and “blocked out its name, you’d think it’s a software company.”

This past December, Chobani opened a million-square-foot plant in Idaho; the facility has helped serve as a bulwark to expand Chobani’s presence in the Midwest and West. (Between the Idaho and New Berlin plants, Chobani produces an average of about 30 million cups of yogurt a week.) Next up are Australia and the U.K., where Chobani already has footholds, and after that perhaps Canada. “We believe,” Ulukaya likes to say, “that the Greek-yogurt boom is just beginning.”

Hamdi Ulukaya is tall and slim, with wide eyes and a triangular face—big hair, broad forehead, tapered chin. He is the king of a yogurt empire that spills across continents, but almost all his employees call him by his first name. He owns a large estate near the upstate Chobani plant; at least once a week, he drives his Porsche SUV very fast (“I can produce the speeding tickets to prove it”) to the company’s Soho offices, where marketing and social media (Chobani’s Twitter feed has 65,000 often vocal followers) are managed. On the day I visited, a handful of tousled twentysomethings were clustered near the south windows, chatting amiably.

Opposite were a pair of chalkboards, emblazoned with inspirational quotes—Voltaire: “I have chosen to be happy because it is good for my health”—and a hulking fridge filled with Chobani yogurt.

When Chobani, which means “shepherd” in Turkish, launched, it offered six basic flavors, including strawberry and blueberry. As a progenitor of the Greek-yogurt craze, the company enjoyed a dominant share of the market—as much as half by some estimates. There was essentially only one other Greek brand on U.S. shelves: Fage, which is based in Athens. But Fage was typically sequestered in the specialty-foods section. In his very first deal with J&J Distributors, a company based in the Bronx, Ulukaya asked that Chobani be placed in the regular dairy aisle. In his recollection, there was some pushback from the grocery stores. “For a start-up, it’s very difficult to make that kind of request,” he told me. “It’s like, ‘Who are you to tell me where I should put this product?’ But we designed this product for everyone. Yogurt should not be a specialty item. It should be normal.” Eventually, the stores relented, and Chobani landed a spot next to Yoplait and Stonyfield Farms.


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