Never Market the Middle: Q&A with Peter McGuinness, President, Chobani

One of the biggest mistakes that companies and brands make is they market the middle. In the end they please nobody. In the end, no one really understands what they stand for.

Peter McGuinness

President, Chobani

More than a decade ago, Hamdi Ulukaya, Chobani’s founder and CEO, took out a loan to buy an old food factory. At the time, nobody predicted that he was about to start a Greek yogurt revolution. But he did. Greek yogurt today accounts for more than 50% of all yogurt sold in the US. Chobani remains one of the most successful CPG companies in the grocery aisle. It’s privately owned and growing at an unprecedented pace. Peter McGuinness, President at Chobani, explains the brand’s success and why it’s not just about yogurt, but about the purpose and authenticity of the brand.

This interview has been lightly edited and condensed for clarity.

 

For those who don’t know – tell us a little bit about the Chobani success story over the past decade. You’ve taken the yogurt category by storm…

The success story is multi-faceted. Greek yogurt is the original highprotein, low-sugar food. Our founder and CEO, Hamdi Ulukaya, was on to that trend. He always said ‘people have good taste, they just need good options.’

Hamdi comes from Turkey and no matter if you come from the mountains or the city, if you’re rich or if you’re poor, you have access to a good cup of natural yogurt. It’s just a right, not a privilege.

When Hamdi started out, people said ‘Why would you make Greek Yogurt?! People in America don’t understand Greek yogurt. It’s a tiny part of the market.’ The little bit of Greek yogurt that was out there was $3 a cup. Hamdi kind of laughed to himself and said, ‘The last thing that should be exclusive is frickin’ yogurt.’ He said ‘I’m not going specialty – I’m going mass. I’m going to be mass and proud’.

Greek yogurt was 0.8% of the yogurt market. It’s 54% of the market today. Largely fueled by Chobani.

I always say we make yogurt, but our business is wellness. We provide better food for more people. We provide nutritional wellness. We want to participate in providing more people with better options. Which I think is the future of food.

From very early on, we believed that modern brands need to stand for more than what they make. And actually, consumers expect them to have a point of view. Those are the things that allowed us to gain an enormous amount of share, quickly.

Yes, it was the yogurt, but it was also all the other things we stood for — craft of our product and the beliefs and purpose of the brand.

 

If you’d been in the Danone camp or the General Mills camp – what would you have done, when Chobani was launched?

I think what can happen in the corporate market is that you can get complacent. You can fall out of touch with trends and what consumers are looking for. And I think it was just a perfect storm – in a good way for us and a bad way for our competition.

We created this better crafted product, that had all these values poured into the cup. We donated a portion of the proceeds from Cup #1. We didn’t decide to create a foundation eight years in when the brand got stale. Hamdi did it when no one even knew Chobani – so there’s an authenticity there. It’s genuine. Hamdi as an entrepreneur, had a pulse on what he thought consumers wanted. And he just made it, grabbed it, pushed it, and I think it just caught everyone by surprise. And then once you’re caught by surprise, you are, by definition, playing catch up. And when you’re catching up… It’s hard.

By the time our bigger competitors went and tried to create their own brands, they weren’t the original – and they weren’t as authentic. They didn’t seem as genuine. It seemed like they were entering the category for the market share and in the pursuit of money. They didn’t seem like they were doing it for the love of yogurt. And so for them, it never really caught on.

I think if there’s a lesson in all of this, it’s just always push and challenge yourself. Always stay close to the consumer. Always try to understand where the world is going and what the next generation wants and seeks. So that you’re always on that edge.

 

How do you stay close to the consumer? How do you keep the people you’re trying to serve front and center?

We operate out of New York, and I always say to the team here, ‘Don’t market with SoHo goggles on, right – because this is not reality. It’s not the real world.’

Stepping out of the bubble, we stay in touch with our consumers in a variety of different ways.

First, we have our CLT line – our consumer loyalty line – where we’re talking to consumers every day. That’s not a complaint line; it’s more a brand ambassador line. We’re having an active dialogue with consumers – and a lot of them – every single day.

Second, we’re a digitally native company. Chobani was launched socially. So, we have avid fans online. We call them Chobaniacs. They’re very, very loyal and very loud. A lot of our flavors came from them. A lot of their suggestions we deploy. And we have a very close social relationship.

Then, we have things like cafés. Our cafés are forms of marketing. They’re inspiration and incubation centers.

We’re manufacturers, so we don’t have a direct relationship. As a customer, you interact with our cups at the retailer: at a Walmart, at a Target, at a Kroger, or a Costco. Now that we have our own cafés, we’re going to make our own creations and invite you in. That’s a physical manifestation of the brand, and what the brand stands for, and the craft of the product. And we’re talking to consumers every day in our cafés. We’re gleaning a lot of information from them and there’s direct communication, which is great.

The fourth piece is to make it mandatory for our people to go out every couple of weeks into the market. We create these retail tours. They go to Missouri one day, Arkansas the next. Maybe Nevada the next. And we are just in the market.

We’re literally just walking stores, talking to dairy managers, talking to consumers at the shelf. It’s mandatory that our people do this.

I think that’s really, really important because you’re actually talking to consumers as they they’re purchasing – either our product or a competitor product. You’re talking to dairy managers. And a dairy manager will know more about that customer than we ever will because they’re actually managing that shelf. Every day.

 

Tell us a little bit about the Chobani Incubator. It’s a fantastic thing you do with entrepreneurs…

The Incubator is an extension of our brand in the purest sense. We do a no-strings-attached grants. We don’t want any equity in return. Participants come for 4-6 months and we share learnings. We share mistakes. It’s a pure pay it forward.

There are a lot of things we learned as we were growing. We pushed and we over-stretched, and we had quality issues and all sorts of different challenges that we powered through. That is the strength of the Chobani brand.

Hamdi always says if we didn’t have those distractions, we’d be further along than we are now. If we can impart some of that wisdom and maybe share some lessons and some of the mistakes we made, maybe other natural food companies could accelerate even faster than we did. It goes back to our core mission of better food for more people.

There’s a food revolution happening and the more we can fuel it and the more we can challenge the big guys, the more everybody wins.

With the Incubator, all you have to do is want to make natural food accessible to everybody.

If you want to make a $25 coffee in Brooklyn, we love you, but you’re not coming in the Incubator. If you want to make a great natural product and want to put it out there for everyone, no matter what your socio-economic status is, we want to help you.

We’ve expanded beyond food makers, into food technology. That could mean innovations in distribution, to lower carbon footprint. That could mean innovations in reducing waste or water. It could mean innovations in cleaning, in factories, using different enzymes or different approaches that are better for the planet and are more economical. Food technology is another thing that just makes a ton of sense to us.

 

Chobani vocally supports different social causes and topical social issues. How important is that to the brand?

I think it’s hugely important actually. We don’t mince words. Being a private company, we can say what we want. Say what we mean. That’s liberating. It allows us to have a strong point of view on things.

A third of our workforce is refugees. We’re really proud of that. It’s one of the bases of the company, from the very beginning. We believe in giving opportunity to everyone. Does everybody like that?! No.

We were an Olympic sponsor and it came to the Russian Olympics and we were asked to comment on inclusion and, you know, I didn’t run it by lawyers – I just said that the fact that we’re even talking about LGBT in a way that’s not inclusive, in this day and age, is insane.

I read other company’s responses. I needed a translator to understand their point of view. They’re trying to please everybody.

We believe in equality and inclusion. So, we said just that. And if that upset some people, fine. That’s what we believe in.

I think the biggest thing I learned is never market the middle. Have a point of view. It’s liberating – and you get rewarded by consumers.

One of the biggest mistakes that companies and brands make, is they market the middle. In the end, they please nobody. In the end, no one really understands what they stand for.

I don’t think that consumers like it – particularly modern consumers. And I think that consumers are smarter than that, better than that, and expect more than that.

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