"America is drowning in milk nobody wants"
From Bloomberg, Oct. 19:
A decade ago, Greek yogurt was ascendant in America. In New York
state, the hope among farmers and politicians was that their fortunes
would benefit as well.
In 2005, Hamdi Ulukaya spent less than $1
million buying an old Kraft yogurt processing plant in New Berlin, 150
miles northwest of New York City. Within two years, the native of Turkey
was already a success. His yogurt brand Chobani was in supermarket
refrigerators everywhere, pushing aside older, big-name brands while
making Greek yogurt a staple of the American diet. Rich but also
healthy, it made its way into recipes for everything from smoothies to
muffins and even popsicles.
“Greek yogurt was a very big
innovation in the yogurt market,” says Caleb Bryant, senior drink
analyst at Mintel. For decades, yogurt was runny and high in sugar.
“Then Chobani comes onto the scene and changes the idea of what yogurt
can be.” With sales on the rise, New York Governor Andrew Cuomo convened
the state’s first Yogurt Summit in 2012. In 2013, after the state
became the top U.S. yogurt producer, he changed state law to allow
farmers to have up to 299 cows instead of just 199 before they had to
comply with certain environmental regulations.
The dairy industry in New York expanded rapidly. Yogurt production in the state peaked that year, triple what it was in 2007.
But in the years that followed, Greek yogurt began to suffer the same
fate that’s bedeviled the broader dairy industry—changing tastes.
Between
April 2017 and April 2018, sales of Chobani products grew by only 1
percent while sales by all companies in the segment slipped by 2.2
percent. Chobani’s growth is largely coming from Chobani Flip, a mixable
yogurt product, and yogurt drinks, according to Bryant. (While the
company’s New York facility still produces significantly more total
yogurt, those products are both made in the its Idaho plant.) Meanwhile,
Chobani’s bonds are among the worst performers in the global food and
beverage sector.
New York dairy farmers who jumped at the chance
to expand their herds five years ago are now wondering whether it was
the right move. “We were told we needed to expand,” says Deb Windecker, a
dairy and beef farmer in the Mohawk Valley, and a former Chobani
supplier. “’Yogurt capital, grow, grow, grow.’ And now everybody’s
turned their back on us.”...MUCH MORE
