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Chobani expands drink presence with La Colombe acquisition

Ingredients Network 2024-02-29
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Tag: beverages

After years of growing its brand beyond its signature Greek yoghurt, Chobani has made a significant step into the wider CPG arena with this acquisition of Philadelphia-based La Colombe. It will continue to operate as an independent brand under the Chobani umbrella, to preserve “the unique identity and innovation that La Colombe is known for”, Chobani said.

"At a time wher the industry has faced challenges to grow sales, Chobani has delivered double-digit, volume-led sales growth, and considerable margin expansion. We have never been stronger or better positioned to chart our next chapter of growth," said Hamdi Ulukaya, founder and CEO of Chobani.

"Weve already made an investment in the coffee category with our creamers and are excited about bringing La Colombe into the Chobani family, and offering the delicious, high-quality cold brew and ready-to-drink craftsmanship of La Colombe to a next generation of consumers, powered by a strong distribution partner in [Keurig Dr Pepper] KDP."

Ready to drink (RTD) convenience bridges coffee and dairy

In July 2023, La Colombe announced that Keurig Dr Pepper paid $300 million for a 33% stake in the company. The deal included plans for La Colombe-branded K-Cup coffee pods. With the new acquisition, KDP’s stake will be exchanged for Chobani equity.

"La Colombe is a unique brand and well positioned to continue its strong growth trajectory, including upside as its ready-to-drink line expands availability through our company-owned DSD network and with premium K-Cup pods now in the market," said Bob Gamgort, chairman and CEO of KDP.

Chobani primarily has its sights set on growing in coffee and RTD beverages. And though La Colombe has been known for its brick-and-mortar cafe locations since its founding in 1994, its RTD line has tripled in the last five years. Together the companies plan to expand the reach of La Colombe’s single serve product line and grow in underdeveloped channels like convenience retail.

The deal is likely to be a smooth transition, as Ulukaya is already the majority owner of La Colombe after investing $60 million in the brand in 2015. He first connected with the coffee company in 2012, when La Colombe supplied coffee to the Chobani cafe in New York City.

Chobani’s significant investments in innovation

The merger makes sense given that both brands are majority owned by Ulukaya, but even if that were not true, it would be a natural next step for Chobani to dive further into the beverage space with an acquisition such as this one.

The brand has never been one to shy away from innovation in multiple categories. But its investment in drinks especially has ramped up since the COVID-19 pandemic. Chobani currently sells a line of dairy coffee creamers, a line of non-dairy creamers, a line of regular oat milks and an oat milk creamer.

It has several lines of yoghurt-based drinks, including lactose-free, probiotic and zero sugar. In 2021, Chobani debuted an RTD cold brew coffee product, with four varieties sold in 32 ounce cartons. The line was discontinued earlier this year, perhaps to avoid competition with La Colombe’s own RTD canned latte products.

Over the last few years, Chobani has also introduced and subsequently discontinued yoghurt products marketed to children, coconut-based non-dairy yoghurt products, lines of ultra-filtered milk and half and half, and even peanut butter spreads.

Chobani filed for an IPO in 2021, with an initial expected valuation of $10 billion, but then withdrew it in 2022 due to tough market conditions. It is clear that Chobani has been preparing for years for a larger expansion and growth beyond yoghurt and dairy, and this merger with La Colombe will cement its place in coffee for years to come.

“Beyond plans to unlock La Colombes true sales potential, Chobani will also enhance La Colombes procurement practices, deliver meaningful cost synergies, and elevate its overall operational performance. In addition, given cultural alignment and shared values, La Colombe will play a key role in [our] ongoing journey to doing good and making the world a healthier place,” Chobani said.

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