Not bad Greek debt – it’s brilliant Greek yoghurt
If you want a Greek growth story, here’s one that’s not about debt and defaulting – but it’s set in New York and we’re talking Greek yoghurt. One of the best-selling foods in American grocery stores is back in the news…
The Athens-based company Fage brought the Greek trend to the US about a decade ago, but Chobani — only in existence since 2007 — has taken it to another level. In just four years, it’s gone from non-existence to at least $500 million in sales.
But before getting to what might be the best consumer product growth story of this young millennium, let’s start with a little “101” on Greek yoghurt.
First, texture and taste. This strained yoghurt is thicker and tangier than what Americans consider traditional yoghurt. Then, there’s the health benefit. Greek yoghurt is high in protein and low in fat, making it the rage all the way from Hollywood dieters to everyday athletes and stay-at-home moms.
The distinct qualities come from the production process. Chobani uses three litres of milk for every litre of yoghurt because it separates the whey from the yoghurt, which is not done for your everyday Dannon or Yoplait. In fact, it’s such a proprietary production system that both Fage and Chobani forbid CNBC from filming in almost every area of their facilities.
The companies have to be protective because the major players in yoghurt are frantically trying to catch up.
General Mills is making a major push with its Yoplait Greek product. Groupe Dannone has two offerings: Dannon Greek and Stonyfield’s Oikos.
Kraft is an interesting component of this story. Several years ago, it closed its plant in South Edmeston, New York where it produced 150,000 units a week under the Breyer’s label. Chobani moved in and now produces 1.4 million units — on the same property. Now, Kraft has re-entered yoghurt with a Greek brand called Athenos.
The numbers are astonishing. According to research service IRI, Chobani is now the country’s No. 1 yoghurt in terms of revenue. That’s not just Greek. That’s of all the yoghurt brands in the $4 billion space.
In terms of units, Chobani is No. 2 behind Yoplait — and closing.
Want more numbers? IRI also says in their last report, which looked at a 12-week span this US spring, Chobani showed revenue growth of almost 140-percent. The next three brands all showed declines.
“We liken it to even greater than what you saw with energy drinks,” said UBS analyst David Palmer, who wrote a widely distributed research note entitled “The Rise of Greek”, even though the top two names are private.
“The thing that was amazing about the Greek yoghurt segment is that it grabbed such significant share right under the noses of some very good companies in a place (the supermarket aisle) where it’s not easy to grab share.”
Related reading: US goes crazy for Greek yoghurt
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