Bloomberg News

Hidden Chobani Billionaire Emerges as Greek Yogurt Soars

September 14, 2012

Hidden Chobani Billionaire Emerges as Yogurt Sales Surge

Chobani, the best-selling yogurt brand in the U.S., has given Hamdi Ulukaya a net worth of at least $1.1 billion, according to data compiled by Bloomberg. Source: Chobani Inc.

A shuttered plant, a small business loan and Americans’ growing taste for Greek-style yogurt combined to make 40-year-old Turkish immigrant Hamdi Ulukaya a billionaire.

Chobani, the best-selling yogurt brand in the U.S., has given Ulukaya a net worth of $1.1 billion, according to the Bloomberg Billionaires Index. He is founder and sole owner of Chobani Inc., whose sales have quintupled since 2009, and has never appeared on an international wealth ranking.

Based in Norwich, New York, the company -- formerly known as Agro-Farma Inc. -- began producing Chobani five years ago. It controls about 17 percent of the U.S. yogurt market, more than double the share of Yoplait Original, according to Chicago-based market research firm SymphonyIRI Group. The Yoplait Original brand, which is made by Yoplait USA Inc., is a subsidiary of Minneapolis-based General Mills Inc. (GIS:US)

“Chobani’s growth is unbelievable,” said Sam Hamadeh, chief executive officer of PrivCo, a New York-based firm that analyzes private companies’ financial data, in an interview earlier this month. “If you blocked out its name, you’d think it’s a software company.”

Chobani says on its website that it processes more than 3 million pounds of milk every day. The company’s revenue more than doubled to $745.6 million in the year ending May 13, 2012, according to London-based research company Mintel Group Ltd. The company’s $1.1 billion valuation is based on the average enterprise value-to-sales and enterprise value-to-Ebitda multiples of two publicly-traded dairy companies, Danone SA (BN) and Saputo Inc. (SAP)

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Ulukaya’s grip on the company is being threatened by competitors and his ex-wife, Ayse Giray, a pediatrician, who sued him in New York last month seeking more than half of Chobani.

The billionaire, in an e-mailed statement sent by Nicki Briggs, a company spokeswoman, said the suit is “without merit.” He declined to discuss his net worth.

Richard Feldman, Giray’s lawyer at New York-based Rosenberg Feldman Smith LLP, declined to comment.

Ulukaya came to the U.S. in 1997 from Turkey, where his family operated a dairy farm. After taking a few business courses at the State University of New York at Albany, he began making feta cheese at a factory in Johnstown, New York.

He got into the yogurt business in 2005, after seeing a classified advertisement for a factory near Utica, New York, that Northfield, Illinois-based Kraft Foods Inc. (KFT:US) had shuttered. He bought the facility with help from a Small Business Administration loan. The first cases of Chobani Greek yogurt were shipped to Long Island supermarkets less than two years later.

Turkish Shepherd

Since 2009, sales of Chobani have increased almost 400 percent, according to PrivCo. That surge has been fueled in part by Americans’ appetite for Greek-style yogurt, which contains less sugar and more protein than the regular variety. Greek yogurt is strained to remove excess liquid, leaving the concentrated whey protein behind. A 6-ounce serving of Chobani yogurt contains 13 grams of protein.

“At a consumer level, the Greek yogurt trend is the biggest innovation in the dairy industry since individual packaging of things like yogurt and mozzarella sticks,” said Robert Ralyea, head of Cornell University’s Food Processing and Development Laboratory. The company, he said, has “marketed it really well.”

Chobani, whose name is derived from the Turkish word for shepherd, was a London Olympics sponsor this summer. One of its TV advertisements touted its grass-roots origins, with scenes of a rural community building a makeshift theater to watch the games. In July, the company opened its first retail store, in Manhattan’s SoHo neighborhood. The yogurt bar offers 10 different combinations of toppings and sells bottled water branded with the name of the company’s foundation, Shepherd’s Gift.

Ex-Wife Sues

According to Nielsen Co. data, Chobani controls half of the U.S. Greek yogurt market, a segment whose sales have doubled every year since 2009.

Competition looms. Alpina Foods, the U.S. arm of Bogota, Colombia-based food manufacturer Alpina Productos Alimenticios SA, and Purchase, New York-based PepsiCo, Inc. -- through its joint venture with German dairy company Theo Muller GmbH -- are building Greek yogurt plants 175 miles from Chobani’s headquarters.

The U.S. plant of the country’s second-most popular Greek yogurt, Fage, is about 90 miles away, in Johnstown. Sales of the brand, which is made by Fage Dairy Industry, have grown at an average annual rate of 34 percent since 2009, according to a bond rating outlook by Moody’s Investors Service.

Ulukaya is also under fire from his ex-wife, Ayse Giray, who sued him on Aug. 13 in New York State Supreme Court, demanding a 53 percent stake in Chobani.

Defunct Factory

According to court filings, Giray claims she gave Ulukaya $500,000 between 1997 and 2003 to help start and build his original feta cheese business in return for a majority stake in the company.

Giray says instead of using the funds to expand the cheese operation, Ulukaya spent some of the money to acquire the defunct Kraft Foods factory and start Agro-Farma. The couple divorced in 1999.

When Giray learned of the new yogurt business in 2007, she confronted Ulukaya, who agreed that her interest in the feta unit applied to Agro-Farma as well, according to the complaint. The suit also alleges that Ulukaya then refused to pay her share of the profits from Chobani or the cheese business, and has misappropriated her stake in the operation.

“The real story here is the collective success of Chobani and how we as a company, through our fans and community, have left an indelible mark on the yogurt industry,” Ulukaya said in a statement.

To contact the reporter on this story: Devon Pendleton in London at dpendleton@bloomberg.net

To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net


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