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Greek Yogurt Takes America By Storm

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Greece, the Mediterranean country in Southern Europe, has become synonymous with many things: The Acropolis. The Parthenon. The Olympics. Delphi. Zeus. Olive oil. Feta Cheese. The European debt crisis.

But these days Americans have a new appreciation for Greek culture: its yogurt. The creamy, thick, and slightly tangy tasting yogurt started to take off in 2007, a time when just two yogurt makers — Chobani and Fage — competed for consumers and shelf space.

Five years later Greek yogurt accounts for 35 percent of the total U.S. yogurt market, up from 4 percent in 2008, according to research firm Bernstein Research. And Americans just can't seem to get enough of it.

This summer Chobani opened its first yogurt bar in New York City's SoHo neighborhood, proof that the exotic yogurt has gone mainstream.

Customers pack the 500-square-foot store, ordering yogurt creations like "Pistachio + Chocolate," which contains Turkish pistachios, dark chocolate, honey, oranges and mint leaves and of course, Chobani plain yogurt. The store sells 600 to 700 "creations" a day and many are favorites of Chobani founder and CEO Hamdi Ulukaya. The "Pistachio + Chocolate" was an after dinner treat for Ulukaya's family and friends and the "Blueberry + Power" combo — which consists of yogurt, blueberries, chia seeds, hemp, walnuts and light agave — has been breakfast for the Turkish native for years.

Chobani took more than a year to transform the former Swatch store into its yogurt bar, which Ulukaya says was a long-time dream.

"I've had this in my mind for the longest time," Ulukaya tells The Daily Ticker's Aaron Task. "When I was walking around these streets I used to say 'one day we will have a shop.'"

Ulukaya's Chobani quickly established itself as the market leader and now commands a 47 percent share of the Greek U.S. yogurt market, according Bernstein Research's data. Chobani was able to wrest control of the Greek market from Fage, the first company to enter the Greek yogurt market, because of Fage's belief that Americans would simply view Greek yogurt as a niche product, says Bernstein analyst Andrew Wood. But Chobani's meteoric rise and tight grip on the market has been slowing largely because its competitors - namely Dannon and General Mills - are investing heavily in market after realizing that Greek yogurt was not a short-lived craze.

The Dannon Company debuted its Oikos brand in 2010 and currently holds a 20 percent stake in the market. This summer the 70-year-old yogurt maker opened The Yogurt Culture Company just a few short blocks from New York's Grand Central Terminal. The yogurt shop offers both traditional and Greek yogurt varieties to yogurt lovers along with a small selection of baked goods, salads and sandwiches. The majority of the store's customers are choosing Dannon's Greek yogurt over traditional yogurt, a trend that's not surprising given the current consumer interest in the product, according to Dannon Spokesperson Michael Neuwirth.

"The appeal of Greek yogurt is enormous," Neuwirth says. "Greek yogurt is definitely not a fad. A fad is something here today and gone tomorrow. And we don't believe that's the case with Greek yogurt."

Greek yogurt has attracted a loyal following mainly because of its nutritional perks. It has more protein, less sugar and fewer carbs than traditional yogurt. But the process of making a cup of Greek yogurt requires two to three times more milk than one cup of regular yogurt, a boon for U.S. dairy farmers but a costly consequence for consumers: Greek yogurt costs more per ounce compared to traditional yogurt.

The $6 billion Greek yogurt industry in the U.S. has encouraged more companies to enter the thriving market. Whole Foods Market sells five varieties of its 365 Everyday Value Greek Yogurt in addition to its competitors' brands. Even ice cream behemoth Ben & Jerry's went Greek, offering a handful of frozen yogurt flavors made from Greek yogurt. Analysts at Bernstein Research say the "revolution" in the U.S. yogurt market stems directly from the increasing popularity of Greek yogurt, which will "continue to grow strongly and gain market share…possibly peaking at over 50 percent of the market."

Chobani and Dannon are both betting that Greek yogurt will continue to win over the hearts and stomachs of American consumers. Chobani recently invested $250 million in its Central New York yogurt manufacturing plant and will start production at its brand new $128 million, 900,000-square-foot facility in Twin Falls, Idaho this fall. The company will hire 400 workers at the plant, increasing its total U.S. workforce to 1,600 employees.

Dannon, which produces its yogurt in Ohio and Pennsylvania, will boost yogurt production at its Utah plant later this year to keep up with demand.

New York Governor Andrew Cuomo hosted the state's first "Yogurt Summit" in August to help ensure New York's place as the yogurt industry's premier destination. According to the governor's office, the number of yogurt processing plants in the state have increased from 14 in 2000 to 29 in 2012. The state's yogurt plants doubled production from 2005 to 2011 and the dairy and yogurt industries have added $8.9 billion to New York's economy. Chobani and Fage both have their main production plants in Central New York.

"Yogurt is not going anywhere," Ulukaya says. "When it comes to yogurt America is still underdeveloped. If we keep making good yogurt, there's room for grow for everybody."

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