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Chobani: It's Hard Out There for a Yogurt-Maker

Though Chobani is the quintessential fast-growing American company, it still faces challenges in the global market. Here, the CFO explains.
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Chobani's CFO James McConeghy testified before a small business subcommittee of the House of Representatives on Tuesday during a hearing about America's competitiveness in the global economy. 

The dairy start-up's main claim: It's hard out there for a yogurt-maker.

McConeghy took the stand to recount the company's now famous story of fast growth--from defunct factory to the number one producer of Greek yogurt in America.  But he also expressed that at this stage in the company's life, Chobani still faces challenges when it comes to competing in the world market.

Here are the highlights from his testimony. You can read a full transcript here.

1. Outdated standards give imposters an advantage. Under current FDA standards, any yogurt producer can advertise their product as Greek yogurt--whether it actually qualifies as "true" Greek yogurt or not, said McConeghy.

"The definition does not reflect the composition and processes used to manufacture Greek yogurt, which is very distinct from traditional yogurt. Greek yogurt is to yogurt as sour cream is to milk," he added. 

"[This] makes it difficult for consumers and the USDA to differentiate between yogurt and Greek yogurt for purposes of the nutrition programs," he explained. Which could be problematic, given Chobani's recent partnership with the Department of Agriculture to serve authentic Greek yogurt in select schools across the country.

2. Overseas labeling laws impede marketing efforts. McConeghy cited one problem that Chobani encountered in Europe: "We recently embarked on a costly and difficult process of re-labeling in England and Wales after it was, incorrectly in our opinion, ruled that using the term 'Greek' on our true Greek yogurt product mislead consumers into presuming the yogurt was made in Greece."

He added, "Arguing that a small group of producers should have an exclusive right to use such names is like claiming that only Italians should be permitted to use the term 'pizza.'...We hope Congress will continue to urge our negotiators to take an aggressive stance on the matter of geographic indicators in future trade negotiations."

3. It should be easier to export products to Canada. "Chobani recently engaged in an extensive process to bring our product to Canada. In the case of importing yogurt, we found this to be essentially impossible, as there is a 237.5 percent duty for virtually all yogurt imports," McConeghy stated.

It shouldn't be this hard to export an American-made product, he insisted. "Accordingly, we recommend that the Congress...look at the closed borders for dairy trade with Canada. We understand that other countries are recommending the same course of action."

IMAGE: Caitlin Berens
Last updated: Jul 9, 2013

FRANCESCA FENZI | Staff Writer

Francesca Fenzi reports on entrepreneurship, technology and small business news from San Francisco. Her work has previously appeared in TIME, USA Today, Pop City and The Northside Chronicle.




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