Chobani president on product innovation and employee retention

Chobani president and COO Peter McGuinness discusses how the company has adapted amid the pandemic, the importance of employee retention as well as its latest product offerings and innovation.

Video Transcript

JULIE HYMAN: Well, over the past year a lot of people stuck at home have been eating an awful lot of yogurt. Let's talk about that and the dynamics of the business with Peter McGuinness. He's President and Chief Operating Officer at Chobani. Of course, one of the biggest yogurt brands.

Peter, I first want to talk to you about a theme that we've been talking about with a lot of our guests recently, and that has to do with input costs and the inflation that we're seeing in a lot of commodities. And I know at Chobani, you guys are really focused on keeping your products affordable. So how are you sort of digesting, if you will, increased milk costs, increased labor costs that we're seeing really across industries while still keeping a lid on prices?

PETER MCGUINNESS: Yeah, I mean, we're seeing inflation like many and most companies are throughout the US and globally. A lot of the inflation we're seeing, if you look at resin and distributional logistics, specifically trucks and truck drivers, we think are temporary. And demand has been so high for our creamer business and oat milk business and yogurt business that we've been able to absorb all of that, to be honest with you. and we have not passed any of that onto the consumer, because accessibility and better food for more people has been paramount to the company. And we do see a lot-- we think a lot of this is temporary. It's not going to be long-term.

And then on the labor market, labor market's tight. There's a lot of competition for labor as the economy opens up. But we've taken care of our employees. And that's been that age-old debate. Has that been an expense or an investment?

And so child care subsidies, and special bonuses, and paying people to get vaccinated, and raising 15 minimum many months ago to an average of 19, we have a healthy, productive, happy workforce. So our retention is high. So while that is a macro problem, we've weathered and fared better than most. And so in terms of our employees and in terms of our labor, we're in good shape.

JULIE HYMAN: Yeah. That's especially interesting, because yesterday we heard from Pilgrim's Pride, which is a big chicken processor of course, saying they were having trouble--

PETER MCGUINNESS: Chicken wings.

JULIE HYMAN: --finding people. Yeah. They were having trouble finding people, though, particularly because people were getting stimulus checks. And that was sort of a competition for them. Are you guys expanding your workforce right now? Are you hiring more people? And are you seeing any of that?

PETER MCGUINNESS: We are hiring right now. We continue to hire, because we're breaking into new categories. So as we got into oat milk 14 months ago, we basically built another plant within a plant. And that business is expanding, and our creamer business is expanding. And we just launched ready-to-drink cold brew coffee, which is a whole other category. I mean, a year ago we were in one category, yogurt, and now we're in four.

And so with the expansion into these new growth categories comes innovation and comes the need to add to our workforce. So we're currently hiring. And like I said, we are good on the labor front, because long since Hamdi started this company, we've taken care of our employees. That's kind of embedded in our DNA and culture. And that has been an expense historically.

But we always said it's good business to take care of your employees, because they're more productive, and you have higher retention and lower attrition. And so as a result and consequence of that deliberate action of taking care of our employees and supporting them, we have high retention. And since the brand is strong and growing and liked, we do really well in the recruiting front. So we don't have any issues on the labor front at all right now.

BRIAN SOZZI: Peter, I remember sitting inside a Chobani cafe with you in 2015. We were talking about a potential IPO. Chobani, it's still not public. What are your current thinking on a potential, on an IPO? And why-- why no IPO yet?

PETER MCGUINNESS: Brian, I've known you for years. Nice try. I'm not-- I'm not going to talk about the idea.

JULIE HYMAN: [CHUCKLING]

PETER MCGUINNESS: I don't blame you for trying, but I'm not going to talk about the IPO today.

JULIE HYMAN: OK, so let's talk about sales then for just a second. You guys-- you talked about how you were seeing higher demand for your products and that you've got this expanded suite of products. So IPO or no IPO, you guys are focusing on growing. What do the sales look like right now, and what do you see the growth trajectory like as we start to open back up, come out of the pandemic, maybe people eating out, not eating as much yogurt at home?

PETER MCGUINNESS: Yeah. And like, a lot of our products are on-the-go and at home. So we have a lot of drinks as well-- probiotic beverages, yogurt beverages. We have-- within oat milk, we have barista. Big barista business. So that's at cafes. So we're very bullish on the back half of the year. We've had a-- we had a very strong 2020. Q1 was very strong top-line growth across all of our business units.

The best thing is that our core yogurt business is growing, even the original products from 13 years ago. Our core yogurt cup is growing. And then of course, our Flip craveable, indulgent, better-for-you snack is growing double digits, which is great to see that as Americans look for healthier snacks. But even our drinks-- our core yogurt drinks are growing. And we launch complete.

So the yogurt business is growing at a rapid clip in a very strong way, in addition to oat milks. You know, that category is growing triple digits. We're going-- we're growing ahead of the category. And then when you go to the creamer business, you know, growing 20%, 25%. We're growing 4X to 5X that.

And then we just recently got into RTD coffee, and that's off to a great start. So growth across all business units, but growth in our core business as well. So it's not like we're innovating out of a base or core decline. And so we see that continuing.

We think Americans have formed healthier habits when it comes to snacking, and we have new baselines of growth. We lapped last March. And last March was a massive panic buying, surge buying that we all know, because there's a new baseline and there's a new-- and healthy habits have been formed with consumers as they look and desire healthier snacks.

JULIE HYMAN: Well, we definitely have some fans on our staff here, Peter.

PETER MCGUINNESS: That's great.

JULIE HYMAN: Great to catch up with you. We'll keep at it on the IPO questions. Don't worry. President and Chief Operating Officer at Chobani, take care of yourself, Peter.

PETER MCGUINNESS: I know you will, Julie.

JULIE HYMAN: We'll check in soon.

PETER MCGUINNESS: Take care, Julie.