Chief marketing and brand officer Peter McGuinness was speaking to FoodNavigator-USA following the publication of an article in the New York Post alleging that Ulukaya “is being replaced as CEO and may even be stripped of his chairman role”.
The Post, quoting anonymous sources, said Ulukaya “has effectively been sidelined while [interim president and COO Kevin] Burns runs much of the company”; that Chobani was “still scrambling to reverse financial wreckage” caused by the 2013 moldy yogurt recall; and that it had had operational problems at its “badly designed” yogurt plant at Twin Falls, Idaho.
We first started talking about considering a new, operationally oriented CEO last April
McGuinness confirmed that Burns, a partner at private equity firm TPG Capital (which pumped $750m into Chobani last year), was in the running for the CEO role, but said Ulukaya - who remains the majority shareholder in Chobani - would make the final decision, and would remain chairman of the board.
He added: “The fact that we were conducting a search for a new CEO was first reported last April in the Wall Street Journal at the time of the deal with TPG.
“But TPG invested in Chobani because it believed in the company and it believed in Hamdi so to imply that he is being pushed out by the board is completely ridiculous. We’re looking for an operationally oriented CEO to complement Hamdi, who is very brand and innovation oriented and extremely involved in R&D.
“There’s not a single product that we’ve launched that he has not personally approved and tested himself. He’s also in control of the company’s three-to-five year roadmap."
He added: ”Kevin Burns has worked part time as interim president and COO since August and is one of several exciting and highly qualified candidates [for the CEO position], but he is not 'running the company'. Hamdi is the CEO and he is running the company.”
And the timetable to make a decision?
“There is no hard deadline,” said McGuinness. “But the goal is to wrap this up in the first half of this year.”
Twin Falls badly designed?
Asked about claims that the Chobani factory at Twin Falls had been badly designed and built too rapidly, he said: “If you are building a million square foot facility, it’s going to take time to ramp up, but we are well past ‘ramp-up’ phase now.
"As for the design, it’s the most beautiful, well-designed, well-positioned, most productive and modern yogurt plant in the world.
“The plant has been fully optimized with new and highly experienced leadership and is at full capability per the original design. I’d also point out that the plant was already built and up and running for some time before TPG invested in the company.”
We’ve grown our market share in the last four consecutive Nielsen periods
Asked about claims that Chobani is still “scrambling to reverse financial wreckage” associated with the 2013 recall of moldy yogurt, he said: "We’re expanding margins, our cost of goods is going down, we’re in positive EBITDA territory, we’ve made dramatic distribution gains this January as categories have been reset, and we’ve grown our market share in the last four consecutive Nielsen [four-week] periods.”
Asked to comment on reports that Chobani’s market share, which has traditionally hovered at around 18-19% of the overall US yogurt category, dropped to 16.3% last summer, he said: “That figure is not accurate. We’re at around 17.5% now but quoting any market share figures for a short period out of context when there are promotions and new launches and so on isn’t very meaningful.
“We’re executing on our strategy. The capital from TPG is being deployed on people - we’ve hired 75 people in the last six weeks alone; on brand - we’re launching a big ad campaign in the next few months; and product - we’ve delivered new innovations which have involved new equipment.”
Oats has a repeat purchase rate of 40%
But what about allegations that recent product launches Chobani Kids and Chobani Oats had “flopped”?
This is “completely ridiculous” claimed McGuinness, who said he was “extremely happy” with both products, and that they were still ramping up from a distribution perspective.
He added: “Oats has a repeat purchase rate of 40% which is what I look for with new products, and Kids is only just getting started. We’re also seeing a high repeat rate on Indulgent and Flip products.”
More broadly, he said, Chobani still sees significant growth opportunities in the US yogurt market given that Americans are eating just 13lbs per person per year compared with 40lbs in Europe.
The deal with TPG
TPG (formerly Texas Pacific Group) has a seat on Chobani’s board, but Ulukaya retains his majority stake in the business.
Chobani - which has factories in New York, Idaho and Australia - is understood to have chosen TPG as a partner in part because of the expertise it could provide should it seek to go public via an IPO (initial public offering), and in part because there was a good cultural fit.
While the $750m is in the form of a loan, TPG also received warrants that might allow it to obtain an equity stake of up to 33% in Chobani, sources close to the deal told us at the time. For example, in the event of an IPO, the warrants could be converted into equity.
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