Lessons from a fast growing start-up. Surprise, it’s yogurt not software.

 
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Chobani is a company which has grown from startup to a staggering US$1 billion in annual revenue in just 7 years based not on the sales of a new software or app, but on yogurt. And what’s most surprising is that the company has achieved this success with no private equity investment, and no TV advertising before 2011.

 

So how did they do it?

In 2007 Greek-style yoghurt was uncommon in the US, with consumers more familiar with thinner, sweeter varieties.  With a high protein content and low in fat, you might think the market would be restricted to health-conscious buyers, But Chobani’s CEO and founder, Hamdi Ulukaya was adamant that his product was for everyone, and not just a speciality item.

This attitude lead to one of their early successes, with distributors reluctantly agreeing to place Chobani yogurt in the standard dairy aisle, rather than in specialty cases giving it a much wider audience.  And from the beginning the yogurt was priced at an accessible US$1 per cup, a price point intended to suggest quality and good taste, without pricing itself into a small a niche market.    

This distribution is replicated in Australia where Chobani sits amongst more familiar brands.  Australian consumers are regularly offered ‘buy 4’ discounts, which encourages multi-purchases as well as trial of new flavours and packaging options with promotional items like ice cream moulds and online recipe ideas helping to demonstrate other uses for the product. 

With a focus on maintaing a quality product and through the support of a passionate fan base - the Chobaniacs - Chobani spearheaded a new market, and by 2010 the US Greek yogurt market was experiencing an annual growth of 203%, compared to just 3% for traditional forms of yogurt.

Since then they have consolidated their positioning as real, authentic and simple with sponsorships of the Olympics, and some recent TV advertising again showing a wide appeal for the brand.

 


And some smart real-time marketing during the 2014 Oscars saw their Twitter feed filled with reminders that special effects are only good in the movies.

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Lessons from Chobani:

Do what you know. Ulukaya had already established a feta cheese factory and was making Turkish-style yogurt on a small scale for himself when he came across an old Kraft factory and realised there was an opportunity to introduce this product into the US.  

Make the product great. One of the first things Ulukaya did was to hire a master yogurt maker from Turkey, knowing that the secret to success would be having a great product. 

Create desire. Think about what makes what you’re offering special.  While being aware of possible substitutions is important, don’t market your product as a substitute - use your marketing to make people want it for itself.

Bring your values to life. Taking advantage of the independence offered as founder, Ulukaya has created a company with strong brand values which are reflected both in their business activities (donation of 10% annual profit to charity), as well as wider social activity including involvement in a government program to improve school meals.  What actions can you take to bring your values into the real world?

Take help when it’s offered. While Ulukaya turned down private equity investments and buyout offers, he did take advantage of small business loans and government grants to assist with funding the growth of the business, giving him the financial power not only to invest in facilities and machinery, but provide for an amount of working capital.  

Keep transparent and connected. With a mantra of offering each customer the best possible experience every time, Chobani actively engages with its fan base through social media. They make use of hashtags including #nothingbutgood, and have discovered that the posts with the highest engagement are those which are in line with their brand values, but not specifically about yogurt.  Analyse your social media results for moments of high engagement, and consider your product and brand - what tangental content could be created and shared? 

 

Images via Flicker CC/MrTinDC + Daniel