How Chobani Won The Subcategory Competition

In the future, branding and business, in general, is going to involve more subcategory creation and competition and less “my brand is better than your brand” competition. This is because, with rare exemptions, that is the only way to achieve real profitable growth. In category after category, real growth results not from market share increases, but from brands that have created a set of “must-haves” that define a new subcategory and then manage that subcategory by becoming its exemplar.

These brands continue to innovate and create a moving target. By managing the perceptions and attitudes toward the subcategory, the subcategory wins. I’ve previously discussed in my blog and my book, Brand Relevance, a host of examples of brands that have created subcategories and won a subcategory battle. The Chrysler minivan, Asahi Super Dry, Enterprise-Rent-a-Car, Muji (the no-brand retailer), Patagonia, Zipcar, Tesla, Red Bull, IKEA, Gillette razors in India, the list goes on and on.

“Real growth results not from market share increases, but from brands that have created a set of “must-haves” that define a new subcategory.”

Chobani, recently written about in Marketing News, is another good example. Hamdi Ulukaya, a native of Turkey and the owner of a small cheese business, bought a former Kraft yogurt plant in New York in 2005. His goal was to produce Greek yogurt, back then a minuscule and unnoticed part of the yogurt scene dominated by Yoplait and Dannon. He named it “Chobani,” and in just over five years, was making 1.4 billion dollars. The share of the yogurt market held by the Greek subcategory went from 0.7% in 2006 to 52% in 2014. The Greek subcategory won.

Four observations about Chobani’s achievement:

1. The product has a distinct value proposition. It’s thicker, which makes it have a richer, creamier texture. With the same amount of calories, it usually has twice the protein, half the sugar, and half the carbs as regular yogurt. That has an appeal to those interested in high protein diets as well as those that want or need to avoid meat. The low sugar, carb, calorie counts are valued by anyone into health or trying to lose weight.
2. Chobani created a unique package design. Their cup was shorter and fatter than the prototypical yogurt container and displayed vivid colors. That provided a symbol of the new subcategory that helped customers recognize which option was Greek. It also provided the self-expressive benefit of knowing that what you are buying and eating was the authentic Greek yogurt with all its attributes.
3. Chobani positioned itself as a subcategory and not as a specialty product. It wasn’t to be used only by those that would want a niche, ethnic product. That enabled the brand to become a mass product with appeal to a broad segment.
4. Chobani fought back. When its rivals, particularly the big players Dannon and Yoplait, attempted to become relevant, Chobani leveraged its exemplar position by innovating and framing the subcategory. As a result, the upstart Chobani still retains a 40% share of the Greek yogurt market. Chobani innovated. It now offers a 100-calorie version (Simply 100), a flip yogurt with added toppings such as blueberries, a breakfast line labeled Chobani Oats, a line of seasonally inspired yogurt flavors called Chobani Indulgent, a line of dips, and a full-fat yogurt in large containers for cooking and as a substitute for sour cream. They have even opened retail cafes that stock more exotic versions of their product.

Further, Chobani framed the subcategory to include natural ingredients, where Chobani has an edge. Their “How Matters” campaign highlights the Chobani production process and will become a theme of a larger campaign about how important process is when training for the Olympics, as well as making yogurt. How could the two dominant yogurt brands sit by while a newcomer with very limited resources grew to a 1.4 billion business in under six years?