Chobani Selected As Food Processing 2012 Processor of the Year

Chobani CEO Hamdi Ulukaya grew up on a dairy farm in Erzinkan in eastern Turkey, his family made cheese primarily, and a little yogurt, both mostly using sheep's milk.

It's difficult deciding which Chobani story to tell first. The Horatio Alger story of a Turkish immigrant who bought a shuttered yogurt plant and became a successful businessman. The creation of a new and intensely hot food category. How a startup based on a single product grew into a billion-dollar company.

After a year in which Greek yogurt became the hottest-growth food category, we name Chobani Inc. our eighth Processor of the Year. In just five years, Chobani became the biggest-selling single brand in the overall yogurt category (admittedly, Dannon and Yoplait segment their brands much more).

While we'll recount the road to this phenomenal success story, it's essential to note up front 2013 will be a make-or-break year for this company. Can it operate a second U.S. plant, a greenfield that will be the world's biggest yogurt factory? Can it extend its success to other parts of the globe? Should Horatio Alger hire a professional manager? How far can you run on a single product category?

Those are issues Chobani is considering, and we all will witness the decisions and their outcomes. But for now, the party is for Chobani 2012, and all we're serving is Greek yogurt.

Horatio Alger of yogurt

Hamdi Ulukaya wanted to come to the U.S. to learn English since he was a child. Growing up on a dairy farm in Erzinkan in eastern Turkey, his family made cheese primarily, and a little yogurt, both mostly using sheep's milk.

He worked in the family business and studied political science at Turkey's Ankara University. But in 1994, he enrolled in Adelphi University, on New York's Long Island, to learn the English language. Within a year he moved to central New York, enrolling in the State University of New York's Albany campus intending to study business. But his family pressured him to get into business, rather than study it, and soon he was importing his family's feta cheese and selling it in central New York.

Chobani Inc.

Headquarters: Norwich, N.Y.
Employees: More than 1,700 globally
Key Executives: Hamdi Ulukaya, founder and president/CEO. Kyle O'Brien, executive vice president of sales.
Brand Names: Chobani, Chobani Champions, Chobani SoHo
Plant Locations: South Edmeston, N.Y.; Twin Falls, Idaho; Dandenong, Australia.
Other Facilities: Charlotte, N.C. (sales); New York City (marketing, communications, innovations and Chobani SoHo retail store)

"Sales were pretty good. I took it as a good sign," he says. "So I got a loan from the local economic development organization and bought a small plant in Johnstown, N.Y., to make feta."

That was 2002, and the company, Euphrates Inc., he still manages. He was struggling, making a living, but this was not to be a billion-dollar company.

In 2005, he saw an advertisement for a Kraft plant in nearby South Edmeston that was in the process of shutting down. As a dairy plant, the site dated back to 1885, and parts of the current buildings dated back to 1901. There was just a skeleton crew still hand-packing Breyers yogurt and starting to wind down the plant.

"It was like a cemetery. The environment was sad. The paint was peeling, water was dripping," Ulukaya recalls. "But the shell of the plant was OK. A lot of equipment remained – not in perfect shape, but a few weeks earlier it had been operating. It had tanks, pasteurizers, fillers. But it was clear Kraft had not invested much in the plant in the past 10-15 years."

Despite the category finally catching on in this country, Kraft was exiting the yogurt business, having just sold the Breyers business. Ulukaya was not fond of American-style yogurt. "It's like candy, full of sweeteners and texturizers and stabilizers," he said. "In Turkey, we eat strained yogurt – we don't call it Greek yogurt. It's a little bit sour, like sour cream or almost cheese, and has much more protein."

Ulukaya's family may not have called it Greek yogurt, but Fage did. The Greek company started importing strained yogurt from its homeland factory in the late 1990s, and in 2005 built its first U.S. plant – ironically, in Johnstown, N.Y.

Yogurt plays a large role in Mediterranean and Middle Eastern diets. It's not only a breakfast, it's a drink, a side dish to some meals and an ingredient in many more. "Yogurt is everywhere [in Turkey]," he recalls. "I can't think of a day when we did not eat some yogurt."

While a strained yogurt was his goal, making money came first, so Ulukaya hired four of the last Kraft employees and started copacking traditional cup-set yogurt. However, he immediately sent for Mustafa Dogan, who had a reputation as a "master yogurt maker" back in Turkey. Dogan moved to central New York to start working on the formulation that would be Chobani. Together, they worked 18 month at getting the recipe correct.

"There were several times I would taste a batch and say, 'This is awesome.' But a few days or weeks later, it didn't taste so good," says Ulukaya. The resulting product was not identical to the yogurt his family made in Turkey. It was close, but it did have some variations.

"There are a lot of reasons you can't do things the same way [we did in Turkey] for the U.S. market and distribution. Most yogurt in Turkey is plain; not here. Fruits are big in the U.S. – not in Turkey. We had no experience with that. You're dealing with a growing thing. Milk is different from batch to batch, and the cultures react differently. But we wanted to keep it natural, with no preservatives and colorants and a simple ingredient statement.

"I was very picky. It took us 18 months to get the recipe right. But in late 2007, we had it. I knew I had only one shot, and it had to be perfect."

Apparently it was perfect. And the name? Chobani (or chopani) means shepherd in Turkish and other Mediterranean languages. The company name at the time was Agro Farma Inc., but that was changed to Chobani Inc. in this past February.