Welcome to The Business Buying Academy with Sieva Kozinsky.

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🔑 He bought a closed down factory and turned it into a billion dollar business

In the early 2000s, a Turkish immigrant named Hamdi was running a feta cheese business in Upstate New York.

$2 million in revenue with about 35 employees.

That's the American Dream, right?

Not quite.

The business had razor thin margins and barely broke even most years.

Growth was slow.

Feta cheese was a commodity, so Hamdi had no pricing power for his product.

At the same time, he was annoyed by one American food in particular: Yogurt.

He missed the thick Greek-style yogurt from his youth in Turkey.

American yogurt was thin, overly sweetened, and lacked the protein of yogurt from his home country.

In the spring of 2005, he received a piece of junk mail advertising a fully equipped but vacant 84-year-old yogurt factory (about 65 miles from his feta plant) that Kraft Foods had closed down.

Should he buy it?

People around him said it was a bad idea.

Focus on your core business.

Kraft closed it for a reason.

You won't do better than the one of the largest food companies in the world.

But he went for it anyway.

He toured the plant and bought it in a fire-sale deal.

The total acquisition cost: Less than $1 million.

He financed it primarily through an $800,000 Small Business Administration (SBA) loan backed by a bank, plus local business-incentive grants.

Hamdi Ulukaya personally put up 10% of the purchase price as a down payment and provided a personal guarantee.

The loan covered the plant plus a small amount of working capital. He closed on the deal around August 17, 2005, and rehired several of the former Kraft employees who had just lost their jobs.

The original factory lacked a key piece of equipment for making strained (Greek) yogurt: a commercial milk separator to remove whey.

He sourced a used one for just $50,000 from Wisconsin.

I could not find the same high-quality yogurt we made on our family farm—a food that was so much a part of my childhood and identity. American yogurt was sugary, watery, and not nutritious. As I learned more about how food was made in the United States, I became convinced that this wasn’t because of different taste preferences, but because of choices made by big companies who prioritized low cost of production over the real desires—and well-being—of consumers.​
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- Hamdi Ulukaya in Chobani's S-1

Then he recruited a master yogurt maker from Turkey (Mustafa Doğan) and spent nearly two years perfecting the recipe, focusing on triple-straining (using about three pounds of milk per pound of yogurt), natural ingredients, and no preservatives.

The company was initially incorporated as Agro Farma Inc., but today you know it by another name: Chobani.

The name Chobani is a variation of the Turkish word çoban, meaning "shepherd".

Chobani officially launched its Greek yogurt in October 2007 with its first small shipments (a few hundred cases) to a Long Island grocer.

Like any new business, the marketing tactics were scrappy: the team paid stores in yogurt instead of cash for slotting fees, negotiated deferred payments, and relied on in-store sampling and early social media (blogs, Facebook, Twitter) rather than big advertising budgets.

A mobile sampling truck (the "CHOmobile") distributed 150,000 full-size containers in its first year.

Hamdi knew the yogurt was better than the current options; but his target customers didn't necessarily know that until they sampled it.

Growth was explosive.

By mid-2009, major chains like Stop & Shop, ShopRite, BJ’s Wholesale Club, and Costco picked up the product.

Chobani was selling 200,000 cases per week.

Sales doubled each from 2009 through 2013, crossing $1 billion by 2012.

Greek yogurt’s share of the overall U.S. yogurt market went from under 1% at launch to more than 20% by 2021 (and roughly 50% today, largely thanks to Chobani’s influence).

Chobani hit $3.8 billion in annual revenue last year and expects to be over $5 billion this year. For comparison, Kraft Heinz, the company that let the old yogurt factory go for pennies, did $24.9 billion last year and is declining in revenue.

Chobani raised $650 million last year and is valued at $20 billion (only 25% less than Kraft Heinz).

Sieva

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Disclaimer: nothing here is investment advice. Please do your own research. The information above is just for information and learning.