Greek yogurt feeds upstate N.Y. economy

When Kraft Foods decided to close its yogurt plant in Chenango County in 2005, it shut down an 85-year-old dairy processing operation, threw 55 employees out of work and added a new chapter to the story of fading economic fortunes in upstate New York.

As it turns out, the move was an economic blessing to the region. Today, South Edmeston is the epicenter of the skyrocketing supermarket category of Greek yogurt. Since late 2007, the former Kraft plant about 60 miles southeast of Syracuse has been home to Chobani, the best-selling Greek yogurt in the United States.

The plant now has 600 employees (and growing). It sold about $500 million worth of yogurt in the past year, a 206 percent year-over-year increase. It consumes more than 2.8 million pounds of milk — enough to fill roughly 50 tanker trucks — each day. That's helped spur a mini-resurgence in New York's dairy industry.

"It caught the right wave," said Michael Sansolo, a Washington, D.C.-based food industry consultant. "Consumers are always looking for food that has a different taste, a different vision, plus a health attribute. That can strike a chord. At the moment, Greek yogurt is it."

Greek yogurt, a somewhat misnamed and ancient food from the eastern Mediterranean, is thicker, denser and tangier in taste than the standard yogurt most Americans have consumed for the past few decades. Its sales grew 160 percent in the past year, compared to about 3 percent for "regular" yogurt.

"Yogurt is simple," Chobani chief executive Hamdi Ulukaya likes to say, frequently adding the company's marketing tagline, "Yogurt is nothing but good."

It took less than four years for Ulukaya to build this phenomenon. He sold a few hundred cases of yogurt, to stores on Long Island, in the first few months after he launched Chobani in October 2007.

Now Chobani ships 1.2 million cases each week, to all 50 states.

Ulukaya, a native of Turkey, was making feta cheese at a plant in Johnstown, Fulton County, when he learned of the empty Kraft plant. It took him two years to put a company called Agro Farma together. He chose the brand name Chobani, which means shepherd in Greek.

His motivation, aside from making money, was simple: "I always believed the yogurt here (in the United States) wasn't as good as in the rest of the world."

If it were up to Ulukaya, the product he makes might be called Turkish yogurt. But Greek was the name already attached to this variety, just a niche product in the United States five years ago.

"It could be Lebanese yogurt," Ulukaya said. "This is how it's made in these countries, in Turkey, in Greece, in Israel."

Greek yogurt differs from standard American varieties because the liquid whey is strained out of the raw milk, eliminating much of the lactose, plus much of the carbohydrates, salt and acidity. What's left is a yogurt that not only has more tang but also is higher in protein than standard yogurt. That's helped it become a big hit with people on diets, such as the Weight Watchers Points Plus program.

And, like all yogurt, it has the natural probiotic bacteria considered essential to good digestive health.

Driving south from Route 20 on Route 8 through Chenango County's rolling farm country, you top a hill about five miles south of the village of Leonardsville. The Chobani plant sprawls in the distance. Tanker trucks rumble down the bumpy rural roads and line up at the milk intake facility, adjacent to the original processing plant, a concrete block building with the construction date "1920" emblazoned at the top.

Contractors adding on to the complex scurry about, especially across the road at the ultra-modern 160,000-square-foot warehouse, which opened last winter. It can hold 2.4 million cases of yogurt. A tractor-trailer driver waits for the finished product at each of the dozen or so loading docks.

Growth has been lightning fast. The company spent $100 million on upgrades last year, Ulukaya said.

Ulukaya said the rapid growth underscores one of Chobani's biggest challenges: Finding enough milk. The plant's primary supplier is Dairylea, a farmer-owned dairy cooperative based in DeWitt.

Dairylea CEO Greg Wickham recalls that he hadn't paid much attention to Chobani at first.

"I thought, that's nice, they're going to make yogurt at the old plant and they'll need milk," Wickham said. It wasn't long before Dairylea realized something special might be happening in South Edmeston.

"We met with them and told them they needed to get us a 5-year-plan for their expected growth," Wickham said. Chobani came up with a plan estimating they would eventually need 10 million to 20 million pounds of milk each month.

"We thought that was aggressive," Wickham said.

Not even close.

The actual growth was "phenomenal," Wickham said.

"So every three or four months they're blowing through the 5-year-plan and setting a new one," he said. "Then they blow through that and set another one."

The rise of Chobani came at an opportune time for the state's dairy industry.

"In the early 2000s, a number of dairy plants closed in the Northeast," Wickham said. "The farmers were understandably concerned. It's too expensive to ship out of state."

Greek yogurt marked a change in fortunes. In addition to Chobani, the Greek brand Fage (pronounced FA-hay) has a New York plant, in Johnstown. Some bigger name brands make or are planning to make the product in the state, too.

In the past few years, dairy farm production in New York has been rising at about 10 percent to 12 percent per year, Wickham said.

"Almost all of that is attributable to Greek yogurt," he said.