Chobani yogurt seeks investors. The Greek yogurt maker Chobani Incorporated wants a $5 billion valuation as it explores capital raising options. An initial public offering is not imminent, but the company is attempting to first raise capital for a new product development plan ahead of any an initial public offering (IPO).
Options include entering into a strategic partnership or selling a stake to a private investor. Another position would be incurring more debt in its expansion. Working in conjunction with Bank of America, Chobani is considering selling up to 20 percent of the company to private equity investors that would give the company a valuation of up to $2.5 billion. The company could also move directly toward an IPO should private investors fall short of the company’s goal.
Founded by Hamdi Ulukaya, a Turkish immigrant in 2005, Ulukaya first began production of Chobani at a what once was a Kraft plant in South Edmeston, New York. Ulukaya currently holds the majority stake in Chobani and seeks investors for a brand that has experienced exponential growth in markets across American since its arrival on grocer’s shelves in 2007. Since then, Chobani has become one of the best selling Greek yogurts in the US. Customers prefer the Greek yogurt for its lower sugar content, high protein, and thick, creamy consistency.
Chobani is both the Turkish and Greek word for “shepherd.” A sponsor of the US Olympic team at the Winter Games in Sochi, the company began an advertising campaign and ran spots during the recent Super Bowl and Academy Awards.
Rising from a market share of less than one percent a decade ago, Chobani yogurt seeks investors to grow its market share. Greek yogurt now accounts for over half all US yogurt sales and is credited for its health benefits and as weight loss aide. Previously discussions about pursuing an IPO stopped when mounting competition from General Mills’ Oilkos under Dannon and Yoclay’s Greek 100 forced Chobani executives to focus more on its product placement in the $7.6 billion American yogurt market.
The company suffered a setback in September 2013 when moldy cups were found on store shelves. Customers complained that the Greek yogurt tasted runny and fizzy. Some customers reported illnesses. In December 2013, Whole Foods said that it would stop selling Chobani yogurt in 2014. Whole Foods wanted a disclosure of all genetically modified ingredients. Chobani purchases milk from dairies that feed its cows genetically modified soybeans. Chobani refused to comply. The break up between Whole Foods and Chobani represented only .05 percent of Chobani’s distribution in the retail market.
Now with its headquarters in New Berlin, N.Y. Chobani has experienced a 32 percent increase in sales to over $1 billion in 2013. The company believes it will exceed higher sales in 2014 due to new product lines such as a 100 calorie yogurt called Chobani Simply 100. By June, the company will launch ten more product lines. Production at its Twin Falls, Idaho facility has expanded to keep up with the demand. International markets in South America, Asia, and Europe will see an expansion of the brand in the near future. Chobani yogurt seeks investors; it is likely to find them.
By Brian T. Yates