Chobani COO on Ability to Innovate Amid Pandemic

He joins us on the phone from New York City. Peter, it's good to talk to you again. How are you doing, Hey, Tim, I'm well. How about yourself? I'm doing well. Thanks. How are things going at Chobani? How how has the pandemic been. What was the last year like for you? Well, the pandemic has been tough for everybody in all businesses. But I'm proud of how we performed. UM. We set out very early, Tim, very very early on UM to take

care of our employees, keep them safe and supported. Uh. Safe was the first thing, and so hoarded really was parallel and concurrent and supported was childcare subsidies and special bonuses, UH and time off to get vaccinated. And it really created a healthy, happy, productive workforce. And so we didn't close a single day. We operated twenty four hours a day, seven days a week throughout the entire pandemic because the

demand was there. So the plants, the factories ran really well, long and hard and UH and it was an investment. Wasn't an expense to take care of her employees like that because they're healthier and happier, more productive and wanted to come to work. It's really remarkable to hear because over the last year we've heard some just some devastating stories from food processing plants throughout the United States where

coronavirus outbreaks took the lives of so many employees. But you put measures in place early at the company, and as a result, there were no coronavirus outbreaks in your plant here in New York and South Edmonston and UH, neither in the one in Twin Falls, idahou as well. Correct. Correct, there was community spread, but there was no plant outbreak or spread and and that was critical. And we jumped on this in mid March to him when it was unpopular to be honest, I mean, let's set the frank

conversation here. Um, it was considered a downstate issue. If you go way back a year ago March, and there was no cases upstate New York. There were no cases in Idaho. And we jumped on masks when it was still confusing our mass good, bad, and different. Remember all that confusion, Um, And we mandated masks, and we were able to get equipment, ton of ppe equipment, and we cleaned every every two hours in the factories because remember back then they thought it was really spread able on surfaces.

And we're able to get temperature equipment when you couldn't find it. And this is all done second week of March. And it was interesting because, um, was it wildly popular initially? No. But our job as a company, your primary job, whether I'm president or CEO or the executive leadership team or as a company is to keep your employees safe and also keep the company operate. Well, let's talk about even

that there were surge demand. Well, want to talk about that surgeon demand, because you mentioned that you continued operating because the demand was there, even thinking back to last March, last April when so many companies were struggling with supplied chain issues. UM, how did you How were you able

to keep things going? Again, very proud of the team or sourcing team leaned in on preordering milk, cultures, fruit cups, foils, all up and down the supply chain UM and we have great partnerships UM throughout our supply chain, and we were able to secure and procure what we needed UM and so we had no interruption on the supply chain

side of things. So in terms of the plants running and us having enough raw material, we powered through it and even powered through the height of the pantry loading, which was third week of March, you know, year ago March and fourth week of March, and so proud of that. Not only did we do that him we launched three

new categories. We launched oat milk, creamers and and cough r t V Coffee in the pandemic, so three new platforms, and we launched fifty new line extensions throughout all of this, so we were able to innovate on top of just operating the base business effectively. How are those platforms doing those? How is the oat milk doing, how are the new products doings? It's great, I mean, within a year we became number two oat milk and US Food close to it.

You know, over twenty share, which is just phenomenal. We're really happy and that's really the strength of the brand branded Chobanni. Chobani stands for trust and quality, and so we have a master brand, not a house of brands. A lot of CpG companies have all these sub brands. We are Chabanni, So it's Givanni yogurt, Sabani oat milk,

Sibani coffee creamer. And so when you break into these categories, we get we get quick trial and we scale quick because the brand is known, trusted, loved, and then the food is great, so we have high repeat So the Oapen milk performance has been wild. We're really happy with it, and we continue to gain um distribution as we speak. And so i'd say we're just in the beginning, but

we're over twenty share already. Coffee creamer close to a twenty share and you know in U S Food overtook Starbucks and Dunkin Donuts in the creamer segment and then RTD Coffee has only been out for a few months. Peter Shabani was started back in two thousand seven, and there have been a handful of changes in how the company has been struck sure over the last few years. I know your role has changed significantly over the last few years, going from a marketing role to the chief

operating officer role. Talk to me about how you're thinking about the future of Chobani. The Wall Street Journal reporting earlier this this year, uh that you guys are eyeing an I p oh this year with evaluation between seven and ten billion dollars. Yeah, Tim, So I can't talk about an I p O today on this beautiful sunny Friday. Um, but look, I think we're going to continue doing what we're what we do, UM, we disrupt and we challenge the status quo. And I think that goes back to

Handy's really original vision and philosophy. He came to this country from Turkey. He looked at the food system in the food industry. He saw a lot of exclusive food and specialty stores that was high quality but but but high price. And so that notion of democratizing better options and better food from more people, and good food is a right, not a village, um, really is what keeps

us going every day. And so that's why we've built factories UM over the last several years, we've built critical disciplines. We're men housing our entire marketing department and advertising and designed to our sales functions to our retail execution team. All of that is now in house. UM. We've built a plant within a plant in Idaho to do creamers and rt D coffee and because we wanted to disrupt

those categories and elevate them. And so we're going to continue doing what we're doing, and that is UM providing better options for more people in many categories because the brand not only is it's strong, it can stretch. What are those are? What are those other categories, Peter that you're eying right now? We'll stick with the four because a year ago we were in one category. Today we're in four, and we have more work to do UM and so we're gonna focus on maximizing these four UM,

but it won't end there, Jim. And then we're also going into new channels. You know, we're deeper in drug and convenience. We're deeper into food service now, particularly with our oat milk barrista, so you're seeing us at more cafes. We went south of the border into Mexico. WHA is a huge market and um, we're gonna exponentially grow in Mexico. We went north of the border into Canada with all

of our plant based options as well. How do you how do you guys think about grocery delivery, Peter, I don't. I don't mean to keep cutting you off, but we only have a few minutes left and there's a lot that I want to get to. Um, how do you think about grocery delivery as it is increased during the pandemic? I mean, have you have you had to make changes to the way that you are allocating or at least selling to different types of grocery stores brick and mortar

versus the large players and delivery like Amazon owned Whole Foods. Yeah, we've always been big at Amazon, Kim we have like we're share leader, um, whether Yogurts there and now Oat Milks, So it has not fundamentally changed. And most of the brick and mortars, whether it's Walmart or Target or shop right here locally we're stopping shop on that is also deliver, So they're brick and mortar, but they're also they're not

sure play online. But they're they're brick and mortar, and they have online components and so they're doing delivery and we get our fair share of that. So we haven't had to fundamentally change our playbook on that to take advantage of, you know that trend. Let's talk labor and employees, because we got the jobs report last week that was a shock to many many people two sixty six thousand jobs added versus expectations from economists for a million new jobs.

There's tension between attracting employees because these jobs are available, as we learn from the Jolts data earlier this week, but people are not necessarily going to those jobs. Are you having a hard time attracting employees right now? We are faring better, tim but the labor market is tight,

and I don't want to say we're immune. We're faring better, and I really think it's a it's fundamentally tim from what I what we just discussed in the last segment, which is we took care for employees through the pandemic and they are that is that that pays off over time? I mean not, you know, it's an investment, not an extent, and doing the right thing, it's good for business and so our retention rates are quite high. So we haven't

had high attrition. That's the first piece. The second piece, the brand is pretty exciting and we're breaking in the new categories and we're liked as a company. So a recruitment UM has been good shape. It's been quite effective UM, but it's not what it used to be. So I'm not going to figure and tell you that we're completely insulated. We're just faring better. When to that point, when when you do find you you lose employees, where do they go? A myriad of places? There's more options tim UM And

like I said, our attrition is very low. But when people do leave, UM, there are uh. First of all, the when you look at the federal programs and the state programs that all rolls up to that nineteen close to it right in New York. And I think that's what you're getting at. That's hard to compete with you think about it, UM, But look, because the economy is so hot, there's a lot of building going on here, so you know, could lose people to construction jobs and

landscaping jobs that have more flex hours. UM. There are a lot of distribution centers being built new factories being built. There's just more competition um, and it hasn't been an issue for us yet, and I think that's because of what we've We've been a very employee centered company from the beginning, and we took care of our people, and like I said, throughout the pandemic, we've given special bonuses and shy ot care subsidies. Those are still in place.

So all those things that we did in the pandemic um have come to play now in terms of our low attrition and high retention. Peter McGinnis, we are going to have to leave it there. It was really great to reconnect with you. Thanks so much for taking the time and for joining us on Bloomberg Business Week Radio. Peter McGinnis is president and chief operating officer at Chobani. He joined us today on the phone from here in

New York City. Well, it's Friday, just before five pm, so the perfect time to enjoy a glass of wine, or at least talk about wine, and that's gonna be with Terry Wheatley, president of Vintage Wine Estates. She joins us on the phone from Sonoma, California. Vintage Wine Estates as a portfolio of wines and spirits from wineries throughout Napa, Sonoma, Oregon, and Washington and also California's Central coast, which is where I'm from. So this is particularly special for me. Terry,

thanks so much for joining us. How you doing, Oh, I'm doing great. I'm doing great. Thank you for having me. Well, let's talk about the wine business right now, because Vintage Wine Estates is set to i p O later this month. Um, why is now the right time to to i p O? Well, you know, why go public now? I would say many of the wine companies have really suffered during the pandemic with their tasing rooms closed, which is a great source, primary source of wine club sign ups, uh, their on

premise business clothes across the country. So we are entering and precedented time of opportunity for acquisitions. So for us to access the public market, it just made sense for us to get that firepower in capital to go out and continue our track record of acquisition. So we've done We've done twenty acquisitions in the last ten years, so we're looking to do twenty more in the next town, if not more twenty or more in the next decade.

That's a large number. I'm I'm wondering, and then this is your you're planning to raise six million dollars in the I p o M. Are there certain regions that you're looking at. Are there's certain types of wineries? Are there certain types of spirits? What's appealing to you from an acquisition perspective right now? Well, we're really we will not acquire a spirit company. We will be looking in the wine space, primarily California. We do look um at

Califnor Washington and Oregon. If you're from the central coast, that's really attractive to us. We have that you might be familiar with the Latitia Winery here in San Luzibeth's boat. Oh my gosh, that's great. Well that that winery has been a tremendous purchase for us and continues to do really well. Um So that type of of of acquisition wineries, we we really play in that candid twenty retail sweet

spot will probably acquire there. We may step it up a little bit, maybe it'll go into a bottle at detail, but really focused on California, Washington, Oregon. You won't see us buying international properties or things on the East Coast or Texas or he placed alf really focused on the West.

So Terry, when you do buy a winery such as Letitia and you do incorporate it into the vintage Winea States portfolio, what are the changes that that you bring that you make to increase efficiencies to make the acquisition makes sense well for Letitia. The great thing about the way we purchase UM, maybe up against other people in our peer group, is that we did we try to keep the infrastructure the same. So the winemaker or Kicky Um is still the winemaker there. His father was actually

the winemaker previous to him. But we infused capital to We just put in some UM additional production capability there. We're improving the vineyard, just increased capital. We're working on as you probably know, driving into Letitia is a little interesting, so we're working on a new UM entrance and how you get out of of of the property. So again it's it's capital. We go in and we take out the redundancy, so we bring in their uh financial um,

you know, all their finance teams and stuff. We incorporate that. So the back office we really try to incorporate rate that into the village Juana States headquarters. But besides that, we try to keep these wineries, individual with individual personalities and and it's really worked for us. So I'm so pleased that you're so familiar with Latitia. Yeah, among many

I mean among many other. I mean you drive there these days in California Central Coast and it's just vineyards as far as the I can see, which raises the question just about climate change and water, because that's something that many areas of California struggle with. How do you think about the natural resource like water and and and that it is in fact, um, it's it's you know, always a drought, well not always, not always, but it feels like we're you know, we're in a drought right now,

which makes for interesting farming. But where we can we dry farm? Um, we are always looking at water conservation, recycling and so forth. We do that with the energy our production UM plant up in Hopland we have of solar, so we we try to make our entire facility there, um, you know, supported by our solar panels. So we really do have an eye on sustainability for um, you know, our vineyards, with water conservation and so forth. So it's top of mine in everything that we do. But you know,

we are in California. We are in in the farming heartlands and UM, so that is always a concern. But if you're constantly working on UM how you protect the water resources. We feel like that we have a good planet place. And Terry, you mentioned the way that the tasting rooms UH and and actually on premise just took a hit during the pandemic, and how wine clubs were really affected because tasting rooms are such a big part

of how people actually learn about wines. What adjustments did did you guys make to your portfolio of brands at Vantage Wines States. How did you get through the pandemic. Well, you know, unlike other wineries in our parent group, we actually grew during the pandemic in our directed consumer of business. So we are lucky that we're diversified, and we have fourteen tasting rooms. Again that really feeds our nineteen wine clubs. But we have an e commerce UH email list of

over eight hundred and fifty thou people. We mind that e commerce list during the pandemic. We own the Cameron Hughes brand. We believe that's the largest digitally native wine rand now out there that really grew during the pandemic. We have a telesales group that is selling the telephone. Yes, people still do that, but the Windsor wine brand where you're do custom labels and people shop that. And last but not least, we we do probably the wines that

are sold on TBC. That business just went through the roof. So there's we had multiple letters that we could pull to grow during the pandemic, Unlike other people in the wine space. Terry Wee, Lee's president of Vintage Wine Estates joining us on the phone from Sonoma, California. Terry, thanks so much for taking the time