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Chobani founder turns centuries old Greek yogurt into billion dollar craze

By Alissa Figueroa
Rock Center

One day in 2005 Hamdi Ulukaya, owner of a small feta cheese company in upstate New York, took a tour that would change his life. As he walked through the 100-year-old yogurt factory, a handful of employees were busying themselves with the work of shutting the factory down.

“On the way back, I called my attorney and I said, ‘I just saw a plant and I think I want to buy it,’” explains Ulukaya, a 40-year-old immigrant who grew up on a dairy farm in eastern Turkey. “He said, "You’re really, really crazy. That's not going to happen.’"

But Ulukaya saw something in the defunct factory that no one else did: an opportunity to bring the yogurt of his youth to the masses. So using loans of less than $1 million, some backed by the Small Business Administration, he bought the plant.

Ulukaya spent the next two years developing the recipe for Chobani yogurt.

“That place became my home,” Ulukaya told Rock Center's Harry Smith in an interview airing Thursday, Dec. 13 at 10pm/9CT on Rock Center with Brian Williams. “It was lonely days, difficult days, a lot of question marks, a lot of pressure to see if I would make it to the next day.”

No longer does Ulukaya have to worry if his company will make its next payroll.

Since launching in 2007, Chobani has grown into a $1 billion business, according to Ulukaya, with no signs of slowing down. He also did something arguably more impressive: he changed what Americans eat.

Before Chobani came along, Greek yogurt sales in America were nearly nonexistent. Now, more than a third of the yogurt we eat is Greek, and Chobani is the biggest seller.

Ulukaya's personal wealth is now valued at $1.1 billion by the Bloomberg Billionaire's Index.


 

Impact on the local community

The good fortune, though, is not only his. Chobani's rise has been a lifeline for one of the most economically depressed parts of the country: rural upstate New York. This area was struggling long before the recession hit, with tens of thousands of manufacturing jobs disappearing in the last few decades.

“I expected the plant to sit there vacant [after Kraft left]. I had these visions of it becoming dilapidated and falling apart,” says Maria Wilcox, one of the four remaining Kraft workers that Ulukaya hired from New Berlin, the tiny town where the plant is located. 

Growing from those first few workers, Chobani now employs more than 1,300 people in upstate New York and has made $193 million in capital investments on the old factory.

“Other companies came and looked at the plant and the surrounding area and left. [Ulukaya] always had a vision for the plant here that included the community,” says New Berlin Mayor Terry Potter.  “He’s brought a sense of rejuvenation to the community.”

Along with good-paying jobs, Chobani built New Berlin its first little league field, free of charge.

Chobani also trucks 4 million pounds of milk daily to its New Berlin factory from the area's 5,300 dairy farms. New York produced some 530 million pounds of yogurt in 2011 -- more than twice 2008 levels – and a direct result of Greek yogurt production.

A new kind of CEO

Ulukaya has been able to accomplish all of this so quickly by bypassing many of the traditional models for business success, especially in the food industry. Instead of focus groups, consultants and big marketing campaigns, Ulukaya has focused on perfecting his product based on response from consumers. Ulukaya still has messages from customers (every single one) forwarded to his cell phone daily.

The company has been particularly good at harnessing the power of positive feedback online.

“The communication is so fast; you don't need huge money for the marketing or your voice to be heard,” says Ulukaya. “It's a flat world.”

In fact, Chobani has only launched two television ad campaigns, the most recent during the 2012 London Olympics, for which they were an official sponsor. Ulukaya had to pull the ads because the factory couldn’t keep up with the increased demand.

Chobani runs on the idea that consumers’ voices will shape the market; with the internet, word of mouth is a more valuable marketing tool than ads, says Ulukaya. This helps new guys on the scene make a big impact quickly. And, he adds, it’s their responsibility to challenge the status quo.

“It's a shame what's in the supermarkets today,” says Ulukaya. “It doesn't have to have all these preservatives.  It doesn't have to have all these bad colors and stuff like that. . . It's the manufacturer's responsibility. They can make it better. They can make it nutritious, and they can make it accessible. That's what we did in Chobani.”

So what’s next for the company?

Chobani just opened its first retail store, a boutique yogurt bar in SoHo, this summer. Now customers can sit down to enjoy a “yogurt creation," with gourmet fresh toppings and, of course, Chobani.

Ulukaya is coy about what’s on the horizon for Chobani as far as new products, but he’s clear about one thing: this is only the beginning.

Editor's Note: Click here to watch Harry Smith's full report from NBC's Rock Center with Brian Williams.