Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well, if
Speaker 1: you walk into a grocery store, you go to the
Speaker 1: dairy section, you're going to see Chobani. It's certainly a
Speaker 1: mainstay of yogurt here in the United States. The company
Speaker 1: launched back in two thousand seven and in recent years
Speaker 1: has been branching out beyond traditional Greek yogurt. Let's get
Speaker 1: to Peter McGinnis. He's president and chief operating officer at Chobanni.
Speaker 1: He joins us on the phone from New York City. Peter,
Speaker 1: it's good to talk to you again. How are you doing, Hey, Tim,
Speaker 1: I'm well. How about yourself? I'm doing well. Thanks. How
Speaker 1: are things going at Chobani? How how has the pandemic been.
Speaker 1: What was the last year like for you? Well, the
Speaker 1: pandemic has been tough for everybody in all businesses. But
Speaker 1: I'm proud of how we performed. UM. We set out
Speaker 1: very early, Tim, very very early on UM to take
Speaker 1: care of our employees, keep them safe and supported. Uh.
Speaker 1: Safe was the first thing, and so hoarded really was
Speaker 1: parallel and concurrent and supported was childcare subsidies and special bonuses,
Speaker 1: UH and time off to get vaccinated. And it really
Speaker 1: created a healthy, happy, productive workforce. And so we didn't
Speaker 1: close a single day. We operated twenty four hours a day,
Speaker 1: seven days a week throughout the entire pandemic because the
Speaker 1: demand was there. So the plants, the factories ran really well,
Speaker 1: long and hard and UH and it was an investment.
Speaker 1: Wasn't an expense to take care of her employees like
Speaker 1: that because they're healthier and happier, more productive and wanted
Speaker 1: to come to work. It's really remarkable to hear because
Speaker 1: over the last year we've heard some just some devastating
Speaker 1: stories from food processing plants throughout the United States where
Speaker 1: coronavirus outbreaks took the lives of so many employees. But
Speaker 1: you put measures in place early at the company, and
Speaker 1: as a result, there were no coronavirus outbreaks in your
Speaker 1: plant here in New York and South Edmonston and UH,
Speaker 1: neither in the one in Twin Falls, idahou as well. Correct. Correct,
Speaker 1: there was community spread, but there was no plant outbreak
Speaker 1: or spread and and that was critical. And we jumped
Speaker 1: on this in mid March to him when it was
Speaker 1: unpopular to be honest, I mean, let's set the frank
Speaker 1: conversation here. Um, it was considered a downstate issue. If
Speaker 1: you go way back a year ago March, and there
Speaker 1: was no cases upstate New York. There were no cases
Speaker 1: in Idaho. And we jumped on masks when it was
Speaker 1: still confusing our mass good, bad, and different. Remember all
Speaker 1: that confusion, Um, And we mandated masks, and we were
Speaker 1: able to get equipment, ton of ppe equipment, and we
Speaker 1: cleaned every every two hours in the factories because remember
Speaker 1: back then they thought it was really spread able on surfaces.
Speaker 1: And we're able to get temperature equipment when you couldn't
Speaker 1: find it. And this is all done second week of March.
Speaker 1: And it was interesting because, um, was it wildly popular initially? No.
Speaker 1: But our job as a company, your primary job, whether
Speaker 1: I'm president or CEO or the executive leadership team or
Speaker 1: as a company is to keep your employees safe and
Speaker 1: also keep the company operate. Well, let's talk about even
Speaker 1: that there were surge demand. Well, want to talk about
Speaker 1: that surgeon demand, because you mentioned that you continued operating
Speaker 1: because the demand was there, even thinking back to last March,
Speaker 1: last April when so many companies were struggling with supplied
Speaker 1: chain issues. UM, how did you How were you able
Speaker 1: to keep things going? Again, very proud of the team
Speaker 1: or sourcing team leaned in on preordering milk, cultures, fruit cups, foils,
Speaker 1: all up and down the supply chain UM and we
Speaker 1: have great partnerships UM throughout our supply chain, and we
Speaker 1: were able to secure and procure what we needed UM
Speaker 1: and so we had no interruption on the supply chain
Speaker 1: side of things. So in terms of the plants running
Speaker 1: and us having enough raw material, we powered through it
Speaker 1: and even powered through the height of the pantry loading,
Speaker 1: which was third week of March, you know, year ago
Speaker 1: March and fourth week of March, and so proud of that.
Speaker 1: Not only did we do that him we launched three
Speaker 1: new categories. We launched oat milk, creamers and and cough
Speaker 1: r t V Coffee in the pandemic, so three new platforms,
Speaker 1: and we launched fifty new line extensions throughout all of this,
Speaker 1: so we were able to innovate on top of just
Speaker 1: operating the base business effectively. How are those platforms doing those?
Speaker 1: How is the oat milk doing, how are the new
Speaker 1: products doings? It's great, I mean, within a year we
Speaker 1: became number two oat milk and US Food close to it.
Speaker 1: You know, over twenty share, which is just phenomenal. We're
Speaker 1: really happy and that's really the strength of the brand
Speaker 1: branded Chobanni. Chobani stands for trust and quality, and so
Speaker 1: we have a master brand, not a house of brands.
Speaker 1: A lot of CpG companies have all these sub brands.
Speaker 1: We are Chabanni, So it's Givanni yogurt, Sabani oat milk,
Speaker 1: Sibani coffee creamer. And so when you break into these categories,
Speaker 1: we get we get quick trial and we scale quick
Speaker 1: because the brand is known, trusted, loved, and then the
Speaker 1: food is great, so we have high repeat So the
Speaker 1: Oapen milk performance has been wild. We're really happy with it,
Speaker 1: and we continue to gain um distribution as we speak.
Speaker 1: And so i'd say we're just in the beginning, but
Speaker 1: we're over twenty share already. Coffee creamer close to a
Speaker 1: twenty share and you know in U S Food overtook
Speaker 1: Starbucks and Dunkin Donuts in the creamer segment and then
Speaker 1: RTD Coffee has only been out for a few months.
Speaker 1: Peter Shabani was started back in two thousand seven, and
Speaker 1: there have been a handful of changes in how the
Speaker 1: company has been struck sure over the last few years.
Speaker 1: I know your role has changed significantly over the last
Speaker 1: few years, going from a marketing role to the chief
Speaker 1: operating officer role. Talk to me about how you're thinking
Speaker 1: about the future of Chobani. The Wall Street Journal reporting
Speaker 1: earlier this this year, uh that you guys are eyeing
Speaker 1: an I p oh this year with evaluation between seven
Speaker 1: and ten billion dollars. Yeah, Tim, So I can't talk
Speaker 1: about an I p O today on this beautiful sunny Friday. Um,
Speaker 1: but look, I think we're going to continue doing what
Speaker 1: we're what we do, UM, we disrupt and we challenge
Speaker 1: the status quo. And I think that goes back to
Speaker 1: Handy's really original vision and philosophy. He came to this
Speaker 1: country from Turkey. He looked at the food system in
Speaker 1: the food industry. He saw a lot of exclusive food
Speaker 1: and specialty stores that was high quality but but but
Speaker 1: high price. And so that notion of democratizing better options
Speaker 1: and better food from more people, and good food is
Speaker 1: a right, not a village, um, really is what keeps
Speaker 1: us going every day. And so that's why we've built
Speaker 1: factories UM over the last several years, we've built critical disciplines.
Speaker 1: We're men housing our entire marketing department and advertising and
Speaker 1: designed to our sales functions to our retail execution team.
Speaker 1: All of that is now in house. UM. We've built
Speaker 1: a plant within a plant in Idaho to do creamers
Speaker 1: and rt D coffee and because we wanted to disrupt
Speaker 1: those categories and elevate them. And so we're going to
Speaker 1: continue doing what we're doing, and that is UM providing
Speaker 1: better options for more people in many categories because the
Speaker 1: brand not only is it's strong, it can stretch. What
Speaker 1: are those are? What are those other categories, Peter that
Speaker 1: you're eying right now? We'll stick with the four because
Speaker 1: a year ago we were in one category. Today we're
Speaker 1: in four, and we have more work to do UM
Speaker 1: and so we're gonna focus on maximizing these four UM,
Speaker 1: but it won't end there, Jim. And then we're also
Speaker 1: going into new channels. You know, we're deeper in drug
Speaker 1: and convenience. We're deeper into food service now, particularly with
Speaker 1: our oat milk barrista, so you're seeing us at more cafes.
Speaker 1: We went south of the border into Mexico. WHA is
Speaker 1: a huge market and um, we're gonna exponentially grow in Mexico.
Speaker 1: We went north of the border into Canada with all
Speaker 1: of our plant based options as well. How do you
Speaker 1: how do you guys think about grocery delivery, Peter, I don't.
Speaker 1: I don't mean to keep cutting you off, but we
Speaker 1: only have a few minutes left and there's a lot
Speaker 1: that I want to get to. Um, how do you
Speaker 1: think about grocery delivery as it is increased during the pandemic?
Speaker 1: I mean, have you have you had to make changes
Speaker 1: to the way that you are allocating or at least
Speaker 1: selling to different types of grocery stores brick and mortar
Speaker 1: versus the large players and delivery like Amazon owned Whole Foods. Yeah,
Speaker 1: we've always been big at Amazon, Kim we have like
Speaker 1: we're share leader, um, whether Yogurts there and now Oat Milks,
Speaker 1: So it has not fundamentally changed. And most of the
Speaker 1: brick and mortars, whether it's Walmart or Target or shop
Speaker 1: right here locally we're stopping shop on that is also deliver,
Speaker 1: So they're brick and mortar, but they're also they're not
Speaker 1: sure play online. But they're they're brick and mortar, and
Speaker 1: they have online components and so they're doing delivery and
Speaker 1: we get our fair share of that. So we haven't
Speaker 1: had to fundamentally change our playbook on that to take
Speaker 1: advantage of, you know that trend. Let's talk labor and employees,
Speaker 1: because we got the jobs report last week that was
Speaker 1: a shock to many many people two sixty six thousand
Speaker 1: jobs added versus expectations from economists for a million new jobs.
Speaker 1: There's tension between attracting employees because these jobs are available,
Speaker 1: as we learn from the Jolts data earlier this week,
Speaker 1: but people are not necessarily going to those jobs. Are
Speaker 1: you having a hard time attracting employees right now? We
Speaker 1: are faring better, tim but the labor market is tight,
Speaker 1: and I don't want to say we're immune. We're faring better,
Speaker 1: and I really think it's a it's fundamentally tim from
Speaker 1: what I what we just discussed in the last segment,
Speaker 1: which is we took care for employees through the pandemic
Speaker 1: and they are that is that that pays off over time?
Speaker 1: I mean not, you know, it's an investment, not an extent,
Speaker 1: and doing the right thing, it's good for business and
Speaker 1: so our retention rates are quite high. So we haven't
Speaker 1: had high attrition. That's the first piece. The second piece,
Speaker 1: the brand is pretty exciting and we're breaking in the
Speaker 1: new categories and we're liked as a company. So a
Speaker 1: recruitment UM has been good shape. It's been quite effective UM,
Speaker 1: but it's not what it used to be. So I'm
Speaker 1: not going to figure and tell you that we're completely insulated.
Speaker 1: We're just faring better. When to that point, when when
Speaker 1: you do find you you lose employees, where do they go?
Speaker 1: A myriad of places? There's more options tim UM And
Speaker 1: like I said, our attrition is very low. But when
Speaker 1: people do leave, UM, there are uh. First of all,
Speaker 1: the when you look at the federal programs and the
Speaker 1: state programs that all rolls up to that nineteen close
Speaker 1: to it right in New York. And I think that's
Speaker 1: what you're getting at. That's hard to compete with you
Speaker 1: think about it, UM, But look, because the economy is
Speaker 1: so hot, there's a lot of building going on here,
Speaker 1: so you know, could lose people to construction jobs and
Speaker 1: landscaping jobs that have more flex hours. UM. There are
Speaker 1: a lot of distribution centers being built new factories being built.
Speaker 1: There's just more competition um, and it hasn't been an
Speaker 1: issue for us yet, and I think that's because of
Speaker 1: what we've We've been a very employee centered company from
Speaker 1: the beginning, and we took care of our people, and
Speaker 1: like I said, throughout the pandemic, we've given special bonuses
Speaker 1: and shy ot care subsidies. Those are still in place.
Speaker 1: So all those things that we did in the pandemic
Speaker 1: um have come to play now in terms of our
Speaker 1: low attrition and high retention. Peter McGinnis, we are going
Speaker 1: to have to leave it there. It was really great
Speaker 1: to reconnect with you. Thanks so much for taking the
Speaker 1: time and for joining us on Bloomberg Business Week Radio.
Speaker 1: Peter McGinnis is president and chief operating officer at Chobani.
Speaker 1: He joined us today on the phone from here in
Speaker 1: New York City. Well, it's Friday, just before five pm,
Speaker 1: so the perfect time to enjoy a glass of wine,
Speaker 1: or at least talk about wine, and that's gonna be
Speaker 1: with Terry Wheatley, president of Vintage Wine Estates. She joins
Speaker 1: us on the phone from Sonoma, California. Vintage Wine Estates
Speaker 1: as a portfolio of wines and spirits from wineries throughout Napa, Sonoma, Oregon,
Speaker 1: and Washington and also California's Central coast, which is where
Speaker 1: I'm from. So this is particularly special for me. Terry,
Speaker 1: thanks so much for joining us. How you doing, Oh,
Speaker 1: I'm doing great. I'm doing great. Thank you for having me. Well,
Speaker 1: let's talk about the wine business right now, because Vintage
Speaker 1: Wine Estates is set to i p O later this month. Um,
Speaker 1: why is now the right time to to i p O? Well,
Speaker 1: you know, why go public now? I would say many
Speaker 1: of the wine companies have really suffered during the pandemic
Speaker 1: with their tasing rooms closed, which is a great source,
Speaker 1: primary source of wine club sign ups, uh, their on
Speaker 1: premise business clothes across the country. So we are entering
Speaker 1: and precedented time of opportunity for acquisitions. So for us
Speaker 1: to access the public market, it just made sense for
Speaker 1: us to get that firepower in capital to go out
Speaker 1: and continue our track record of acquisition. So we've done
Speaker 1: We've done twenty acquisitions in the last ten years, so
Speaker 1: we're looking to do twenty more in the next town,
Speaker 1: if not more twenty or more in the next decade.
Speaker 1: That's a large number. I'm I'm wondering, and then this
Speaker 1: is your you're planning to raise six million dollars in
Speaker 1: the I p o M. Are there certain regions that
Speaker 1: you're looking at. Are there's certain types of wineries? Are
Speaker 1: there certain types of spirits? What's appealing to you from
Speaker 1: an acquisition perspective right now? Well, we're really we will
Speaker 1: not acquire a spirit company. We will be looking in
Speaker 1: the wine space, primarily California. We do look um at
Speaker 1: Califnor Washington and Oregon. If you're from the central coast,
Speaker 1: that's really attractive to us. We have that you might
Speaker 1: be familiar with the Latitia Winery here in San Luzibeth's boat.
Speaker 1: Oh my gosh, that's great. Well that that winery has
Speaker 1: been a tremendous purchase for us and continues to do
Speaker 1: really well. Um So that type of of of acquisition wineries,
Speaker 1: we we really play in that candid twenty retail sweet
Speaker 1: spot will probably acquire there. We may step it up
Speaker 1: a little bit, maybe it'll go into a bottle at detail,
Speaker 1: but really focused on California, Washington, Oregon. You won't see
Speaker 1: us buying international properties or things on the East Coast
Speaker 1: or Texas or he placed alf really focused on the West.
Speaker 1: So Terry, when you do buy a winery such as
Speaker 1: Letitia and you do incorporate it into the vintage Winea
Speaker 1: States portfolio, what are the changes that that you bring
Speaker 1: that you make to increase efficiencies to make the acquisition
Speaker 1: makes sense well for Letitia. The great thing about the
Speaker 1: way we purchase UM, maybe up against other people in
Speaker 1: our peer group, is that we did we try to
Speaker 1: keep the infrastructure the same. So the winemaker or Kicky
Speaker 1: Um is still the winemaker there. His father was actually
Speaker 1: the winemaker previous to him. But we infused capital to
Speaker 1: We just put in some UM additional production capability there.
Speaker 1: We're improving the vineyard, just increased capital. We're working on
Speaker 1: as you probably know, driving into Letitia is a little interesting,
Speaker 1: so we're working on a new UM entrance and how
Speaker 1: you get out of of of the property. So again
Speaker 1: it's it's capital. We go in and we take out
Speaker 1: the redundancy, so we bring in their uh financial um,
Speaker 1: you know, all their finance teams and stuff. We incorporate that.
Speaker 1: So the back office we really try to incorporate rate
Speaker 1: that into the village Juana States headquarters. But besides that,
Speaker 1: we try to keep these wineries, individual with individual personalities
Speaker 1: and and it's really worked for us. So I'm so
Speaker 1: pleased that you're so familiar with Latitia. Yeah, among many
Speaker 1: I mean among many other. I mean you drive there
Speaker 1: these days in California Central Coast and it's just vineyards
Speaker 1: as far as the I can see, which raises the
Speaker 1: question just about climate change and water, because that's something
Speaker 1: that many areas of California struggle with. How do you
Speaker 1: think about the natural resource like water and and and
Speaker 1: that it is in fact, um, it's it's you know,
Speaker 1: always a drought, well not always, not always, but it
Speaker 1: feels like we're you know, we're in a drought right now,
Speaker 1: which makes for interesting farming. But where we can we
Speaker 1: dry farm? Um, we are always looking at water conservation,
Speaker 1: recycling and so forth. We do that with the energy
Speaker 1: our production UM plant up in Hopland we have of solar,
Speaker 1: so we we try to make our entire facility there, um,
Speaker 1: you know, supported by our solar panels. So we really
Speaker 1: do have an eye on sustainability for um, you know,
Speaker 1: our vineyards, with water conservation and so forth. So it's
Speaker 1: top of mine in everything that we do. But you know,
Speaker 1: we are in California. We are in in the farming
Speaker 1: heartlands and UM, so that is always a concern. But
Speaker 1: if you're constantly working on UM how you protect the
Speaker 1: water resources. We feel like that we have a good
Speaker 1: planet place. And Terry, you mentioned the way that the
Speaker 1: tasting rooms UH and and actually on premise just took
Speaker 1: a hit during the pandemic, and how wine clubs were
Speaker 1: really affected because tasting rooms are such a big part
Speaker 1: of how people actually learn about wines. What adjustments did
Speaker 1: did you guys make to your portfolio of brands at
Speaker 1: Vantage Wines States. How did you get through the pandemic. Well,
Speaker 1: you know, unlike other wineries in our parent group, we
Speaker 1: actually grew during the pandemic in our directed consumer of business.
Speaker 1: So we are lucky that we're diversified, and we have
Speaker 1: fourteen tasting rooms. Again that really feeds our nineteen wine clubs.
Speaker 1: But we have an e commerce UH email list of
Speaker 1: over eight hundred and fifty thou people. We mind that
Speaker 1: e commerce list during the pandemic. We own the Cameron
Speaker 1: Hughes brand. We believe that's the largest digitally native wine
Speaker 1: rand now out there that really grew during the pandemic.
Speaker 1: We have a telesales group that is selling the telephone. Yes,
Speaker 1: people still do that, but the Windsor wine brand where
Speaker 1: you're do custom labels and people shop that. And last
Speaker 1: but not least, we we do probably the wines that
Speaker 1: are sold on TBC. That business just went through the roof.
Speaker 1: So there's we had multiple letters that we could pull
Speaker 1: to grow during the pandemic, Unlike other people in the
Speaker 1: wine space. Terry Wee, Lee's president of Vintage Wine Estates
Speaker 1: joining us on the phone from Sonoma, California. Terry, thanks
Speaker 1: so much for taking the time