As Greek-yogurt maker Chobani positions itself as a food and wellness brand, its CMO Peter McGuinness minces no words about his disdain for the massive food companies, such as General Mills and Danone, that it competes with.
In April, Chobani unveiled a feel-good fruit-centric TV ad campaign by Wieden+Kennedy to cap off its wide range of marketing that includes sampling trucks, myriad community events and even prototype Chobani Cafes in Target and Walmart stores. The approach is to ignore expensive, natural-food settings and offer average American shoppers healthier options they can afford.
To further disrupt Big Food, company founder Hamdi Ulukaya came up with the idea of providing $25,000 grants and hands-on mentorship to build a community of ambitious, Chobani-friendly food startups. The Chobani Food Incubator started last year with 450 applicants for six spots, attracting makers of no-gluten pasta, grass-fed bone broth, juices and other trendy foods anxious to reach the mass market. The next class starts this fall.
McGuinness explains how the $2 billion U.S. company, which about a decade ago was itself a startup founded by an Middle Eastern immigrant, is trying to shift the food landscape and help other food entrepreneurs—with hopes of boosting its own brand in the process.
There has been talk in the business press that Chobani is angling to go far beyond yogurt and morph into a lifestyle brand. Is that true?
"Lifestyle brand" is something of a marketing cliché, isn't it? Actually we've gone from a leading yogurt brand to a modern food company and now we are becoming a wellness company that uses food as a force for good.
Chobani has set up a mentorship program for food startups that gives them money, advice and connections, but doesn't ask for any equity in return. How does this program benefit the Chobani brand?
We designed our startup incubator to be a direct reflection of our brand. From the beginning Chobani went up against Big Food as an entrepreneurial pioneer that upended the market [for yogurt]. We have a restless, challenger spirit, that's our culture. So now we are helping startups that have the same mission: To offer affordable nutritious and delicious food. We want there to be more good food for regular folks as opposed to the kind of crap that everyone can afford but that their bodies don't want. We want these startups to be challengers, like us, in their respective categories, to able to go up against the behemoths.
And yes, over the years we've been through a lot of ups and downs. We were lucky, and we came out with a lot of learning. We want to help others not make the same mistakes.
How are you getting out the word about your efforts with startups like Banza, producer of chickpea pasta, and Kettle and Fire, the bone broth maker?
We treat the Chobani Food Incubator similar to the way we treat our community events, we don't over-commercialize them. We promote it on our website, on social media, and with a video series. We want the promotions to be scrappy in keeping with what the incubator is about. Jackie Miller, the incubator's director, has a strong entrepreneurial background and she says she believes these startup founders can become ambassadors for the Chobani brand.
It's becoming common for large food companies, such as General Mills, Campbell's Soup, Kellogg and Unilever, to have venture capital units that support food startups and invest millions of dollars for an equity stake. How is your program different?
These other programs are wolves in sheep's clothing. It may seem like they are helping the entrepreneurs but in reality, they marginalize the startup companies and often change the trajectory of the startups' growth. By taking equity, they are preying on entrepreneurs.
Keep in mind, the big traditional food companies are in the startup business because their core business isn't growing and they need the startups' ideas to redirect their product lines.
But there are not enough startups in the world to stem the decline that the traditional food companies face.
In contrast, Chobani does not take any equity, our core business is growing not declining and we are not taking advantage of entrepreneurs.
When talking about your startup incubator and your overall brand, Chobani often says it is trying to "fix a broken system" of food in America. Can you define what you mean?
What is broken about the system is that the food industry, which is controlled by a few big entities, lags in both technology and innovation. Big Food uses artificial ingredients and preservatives that were introduced in the 1940s to preserve food for soldiers. But now, that is the lazy and cheap way to make food, and is totally unnecessary. To do without [those additives] you have to clean the factory more often, which is more costly, but that's what we do. And if we can do it, with less of a budget than the big companies, then why can't they?
Back in January 2016, a federal court forced the company to pull ads that suggested that certain artificial ingredients that your rivals use, such as potassium sorbate, were unsafe to eat. Will Chobani attack the "broken system" in future marketing and advertising?
No. That message will not be part of our general marketing. Our ads will continue to focus on our values, mission and purpose, not make comparisons with others. For example, you see that approach in our current "Chobani Food Symphony" campaign with the song "What the World Needs Now."
Beyond general marketing, you oversee a variety of branding efforts. For instance, you recently opened another Chobani Café, where your yogurt is served in sweet and savory dishes along with beverages, salads and sandwiches. Where are your cafes and do they serve food from the startups in your incubator program?
We have two cafes in New York, one in SoHo and another in the Target store in Tribeca. Three months ago we opened a third one in a prototype Walmart in Tomball, Texas, outside of Houston. This particular Walmart includes various tech services and a healthcare clinic and seemed like a good fit.
As far as including products from our family of food startups, we aren't doing that now. But hmmmm, all ideas are on the table.