The deal comes after Chobani quietly discontinued its line of ready-to-drink single origin cold brew, which launched in January 2021 to positive consumer reviews and as a logical complement to the company’s creamers and oat milk, which launched in 2019.
Chobani recently told Reddit fans of its cold brew on Reddit that it discontinued the line after taking a step back to “look at our product offerings to ensure we are making the most of our ability to bring the very best products to market. Sometimes, that means we have to say goodbye to certain products to meet our needs of our consumers.”
It added that “while we’re no longer crafting our ready to drink Chobani Cold Brew, we encourage you to try our excellent creamer options,” which are available in dairy, non-dairy and oat varieties.
Deal brings together two fast growing businesses and taps KDP for support
Chobani’s re-entry into coffee category with the acquisition of La Colombe comes after the duo shared a booth at Natural Products Expo West last spring to much acclaim with La Colombe providing the coffee and Chobani providing creamer and non-dairy milk to attendees.
It brings together two fast-growing businesses, thanks in part to the guidance and business acumen of Chobani founder and CEO Hamdi Ulukaya, who has also held a controlling stake in La Columbe since its 2014 sale to a private equity firm, which he acquired for $60m.
“At a time where the industry has faced challenges to grow sales, Chobani has delivered double-digit, volume-led sales growth, and considerable margin expansion,” Ulukaya said in a statement. “We have never been stronger or better positioned to chart our next chapter of growth.”
La Colombe also is growing fast, according to Chobani, which said its RTD line has grown three times in the last five years.
To further accelerate growth under the new partnership, La Colombe will have access to Chobani’s “extensive retail execution, marketing and cold chain capabilities,” according to the announcement. It also will benefit from a previously announced sales and distribution agreement with Keurig Dr Pepper that will bring its recently launched K-cup pods to “underdeveloped channels like convenience retail,” Chobani notes.
La Colombe, which owns its own supply chain and roasting capabilities, will also benefit from Chobani’s help with its procurement practices going forward.
Financing brings together Keurig Dr Pepper, Chobani and La Colombe
The deal was made possible through a combination of available cash, oversubscribed loan and the exchange of KDP’s minority stake in La Colombe into Chobani equity.
Chobani said it financed the deal with a newly issued $500m term loan, $44m in cash on hand and by converting KDP’s 33% stake in La Colombe, which it acquired for $300m last July, into a minority position in Chobani.
Long before the acquisition by Chobani, Ulukaya was a silent investor in La Colombe. Chobani now owns Ulukaya’s share.
A hit-and-miss expansion strategy
Chobani’s return to the coffee category is part of its broader strategy to diversify beyond Greek yogurt, which has had mixed success.
As an established dairy player, Chobani in 2019 launched a line of clean-label dairy creamers along with Chobani Oat – a line of plant-based beverages made with organic oats. At the same time, it introduced plant-based yogurts and mix-in products under the new Chobani Oat brand.
This was followed by the 2021 launch of the company’s now discontinued RTD cold brew coffee and the 2022 launch of ultra-filtered milks and half and half.
Like the cold brews, Chobani discontinued the ultra-filtered milks within months of the launch, citing impact from inflation. The discontinuation also followed hot on the heels of a changing of the guard in which long-time former president Peter McGuinness left to join Impossible Foods and Kevin Burns returned as president and COO, positions which he held previously form 2014 to 2016.