“We’ve been actively working on this for about five to six months, but we’ve been thinking about it for a while,” he told FoodNavigator-USA.
“It’s a case of connecting the consumer dots. Coffee pairs beautifully with yogurt as a morning combination, and we’ve had cold brew at our café in Soho for about four years. But we also make creamers and we make oatmilk, and cold brew pairs beautifully with both of them.”
He added: “And then you connect some further dots: It’s kind of on the same shelf in the same stores, so you get yogurts, then creamers, then milks, then RTD coffee, and in many cases, we’re dealing with the same buyer at the customer level. We also have a dedicated team of Chobani employees that are already in these store replenishing shelves with yogurts, creamers, and oatmilk.”
‘We’ve already proven that the brand can stretch’
So how have retail buyers responded to the innovation, given that Chobani – while a trusted partner and proven innovator - is not a coffee brand?
“First of all, there are a lot of random brands in coffee and they are not turning and they are not productive,” noted McGuinness. “But to be frank, if we’d have done coffee two years ago, our customers probably would have taken it because they know we would have invested behind it and our brand stands for trust and quality.
“But they are taking it now for those reasons, plus the fact that our creamer business and our oatmilk business is doing well. We’ve already proven that the brand can stretch, and our customers do think it’s a logical adjacency. We’ve sold it to all of our customers and had good acceptance out of the gate.”
He added: “You can also bundle it, the RTD coffee with the creamers, with the oatmilks, with the four-pack yogurts and now all of a sudden you can go in there from a commercial perspective and say we’ll get this off to a good start because we can cross bundle and cross promote it. They see it as exciting and low risk.”
'It’s a $1.6bn market growing at a 15-20% clip, which kind of blew my mind'
So what’s the size of the addressable market?
“It’s a $1.6bn market growing at a 15-20% clip, which kind of blew my mind,” said McGuinness, who said Chobani had enjoyed double-digit growth in 2020. “We think it’s an exciting category to enter that also makes sense for us.”
A move into RTD coffee also consolidates Chobani’s position at the breakfast table, given that yogurt is still primarily eaten in the morning in the US, while its oatmilk and creamers also help it “shore up that morning day part,” said McGuinness.
A flurry of innovation
The RTD line is the latest in a series of recent innovations at Chobani, which has just launched probiotic yogurts, shakes, and fermented beverages; the protein- and fiber-packed Chobani Complete range; and a line of oatmilks and dairy creamers.
Chobani’s core yogurt portfolio is also performing well, buoyed in part by a resurgence of growth in the yogurt category, which has been amplified by COVID-19 (as more food consumption has shifted towards the home) but was evident well before the pandemic hit, stressed McGuinness.
“The overall yogurt category was declining in 2017, 2018, most of 2019, and then it started to rebound in Q4 2019 and became flat to positive, and continued to grow in Q1, 2020 before the pandemic. Buyers took things out that were not working and Greek really came back.
"We’re driving most of the growth in Greek, and Greek is driving a lot of the growth in the category, so what's great about these new launches (RTD coffee etc) is that we're innovating from a position of strength. The base business is strong. It's not like we're innovating out of a core decline to chase growth."