The Rise of the Greek Yogurt Industry in Central New York - NADO.org

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Growing Jobs fromthe Entrepreneur up:The Chobani Story inChenango CountyChobani founder and CEO HamdiUlukaya accepts the national 2012 SBAEntrepreneurial Success Award Award.Photo by Risdon Photography.While FAGE is a good example of promotingeconomic development withina region through successful business recruitmentand expansion, the emergenceof Chobani in central New York providesa profile in entrepreneurship and homegrownjobs. The Chobani story began in2005 when Hamdi Ulukaya, a feta cheeseproducer in Johnstown, New York, purchaseda yogurt facility approximately 60miles away in Chenango County that hadbeen recently closed by Kraft Foods. 40This 100-year-old property waspurchased with the help of a Small BusinessAdministration (SBA) loan packagethrough the agency’s 504 program (SBAand Key Bank), and the company’s meteoricrise began. Additional fundingwas also secured in 2006 and 2007 fromnumerous local economic developmentfinancing programs as well as a U.S. Departmentof Housing and Urban Devel-10opment Community Development BlockGrant from New York State, providingUlukaya the foundation to build a successfulbusiness model, beginning withthe manufacturing of private label yogurtsat the Chenango County facility. 41Ulukaya, with the help of a “yogurtmaster” from Turkey, also proceededover this time to develop the recipe for astrained yogurt that would be rolled outin 2007 as the highly popular Chobanibrand. In just seven short years fromstart-up, and five years from the Chobanibrand launch, the results have beennothing short of extraordinary, as Ulukayaand his team have proven to be mastermarketers as well as yogurt makers.The company has grown from fivepeople to over 1,200 employees (1,000 ofwhich are in Central New York), and anew facility under construction in Idahoin 2012 is expected to employ an additional400 people. After starting out inthe Northeastern United States, Chobaniproducts are now available nationwideand in Canada, the United Kingdom,and Australia. Sales have grown at adizzying pace since 2007, and Ulukayaexpects to hit $1 billion in annual revenuesby the end of 2012, according toa recent interview. 42 As any experiencedeconomic developer or commercialloan officer can see,this level of success is rarely seen amongstart-ups, where only about half survivetheir first five years.The SBA certainly took note when itawarded Ulukaya the prestigious national2012 Entrepreneurial Success Award,which recognizes business ventures thathave received SBA assistance and haveperformed at the highest levels basedon such factors as sales growth, employment,and financial performance. 43 Insummarizing the award, SBA not onlypointed to the company’s impressivesales growth, but also its accumulatednet worth.Ulukaya also recently received theErnst & Young Entrepreneur Of The YearAward for the New York area as the winnerin the Retail and Consumer Productscategory, selected by his peers in the privatesector. The Bloomberg Billionaire’sIndex estimates that Ulukaya, as thefounder and sole owner, has a net worthof $1.1 billion. 44The success of Chobani has certainlygiven Chenango County and surroundingareas a much-needed shot in thearm. Chenango County sits within theservice area of the Southern Tier EastRegional Planning Development Board(STERPDB), which serves as the EDAdesignatedEconomic DevelopmentDistrict as well as the Local DevelopmentDistrict under the multi-Photo courtesy Commerce Chenango
state Appalachian Regional Commission.According to Dick McCormick,Deputy Director of the STERPDB, the2010 per capita income for ChenangoCounty was $31,792, which is slightlyless than 80 percent of the national average,qualifying the county as “economicallydistressed” under the guidelines ofthe U.S. Economic Development Administration.45 Population in the ChenangoCounty was also projected to decline by2.2 percent from 1990 – 2010, comparedto a 10.5 percent increase in the state as awhole over this period according to dataprovided in the Chenango County EconomicDevelopment Strategic Plan. 46Jennifer Tavares is the economicdevelopment director with CommerceChenango and is charged with connectingcounty businesses with economicdevelopment resources and capitalsources. 47 She has held this position since2007 and thus has been on the front linesof the Greek yogurt boom in ChenangoCounty. As Tavares outlines, the impactshave been substantial. 48 Based on April2012 data, the company has madeapproximately $193 million in capitalinvestments at their Chenango Countylocations, including the constructionof a new state-of-the-art distributionfacility in Columbus and the purchaseof the corporate campus in Norwich,both in 2010. 49 These facilities have afar-reaching impact, drawing over 1,000Chobani, Inc.: Total Benefits/Assistance as of July 31, 2012Funding Name Funding Type Funding Amount Funding Agent YearDevelopment Chenango BALF Loan $100,000 Local 2006Chenango County RLFLoan $75,000 Local2006Broom County IDA-STEED Loan $168,000 Local 2006Empire Zone Tax credits $9,388,877 State 2007-2010CDBG Loan/Forgivable Loan Loan/Grant $590,000State/County2007IDA Tax Abatement $1,001,200 State 2010IDA Tax Abatement $2,445,286 Local 2010IDA Phase III Tax Abatement $3,837,297Local/State2011-20122011 CDBG Loan/Forgivable Loan Loan/Grant $984,000 State 2011NMTC (cash) Grant $2,000,000 State 2011NYSERDA Grant Grant $3,000,000 State 2011Empire State Development Grant Grant $1,500,000 State 2011-2012Excelsior Tax Credits Tax credit $8,500,000 State 2011Total:employees from a 17-county region withan annual payroll estimated at around$30 million.Chobani also purchases vast quantitiesof milk to make its yogurt, as approximately4.5 million pounds of milkis delivered each day to the New Berlinplant, benefiting farmers throughout thestate. 50 “Through the enormous increasein demand for Class II milk, prices have$33,589,660- Funding amount is estimated, the actual funding received may differ.- Some funding is still in process and funding has not yet received.NOTESPercent loans: 2.43%Percent tax credits: 51.72% Eligible until 2015Percent grant/equity: 24.80%Percent tax abatements: 21.06%Until 2021$840,000$17,888,877$8,577,000$7,283,783Source: Commerce Chenangoincreased, thereby providing farmerswith greater income and larger marginon their product,” according to CommerceChenango.For their part, the state and localauthorities have certainly kept up theirend of this private-public partnership, asoutlined by Commerce Chenango in thetable above of state and local benefits andassistance provided to Chobani since itsinception through the end of April 2012.The package includes potential benefitsof up to $33.6 million, consisting of variousforms of tax relief, grants, and loansfrom different entities and programs.Based on an estimated 1,200 jobs createdto date, this represents about one jobcreated per $28,000 invested, assumingChobani realizes the full value of all theprograms—an exceptional deal underany economic development return-oninvestment(ROI) standard. 51Chobani groundbreaking (above) for new warehouse and distributionfacility, 2010. Photo courtesy Commerce Chenango11
Page 2 and 3: Greek Yogurt:An Economic Driver inC
Page 4 and 5: The Greek YogurtPhenomenonand New Y
Page 6 and 7: As for Chobani, it is winning someg
Page 9: of making Greek yogurt generates mo
Page 13 and 14: The expanding market for Greek-styl
Page 15 and 16: Connecting to Markets and Suppliers
Page 17 and 18: officials, planning and development
Page 19 and 20: About the NADO Research FoundationF

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