Please ensure Javascript is enabled for purposes of website accessibility

Greek Tragedy: Chobani's Tasteless Recall

By Alyce Lomax - Sep 7, 2013 at 11:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Chobani's mold misstep may grow a culture of distrust.

Greek yogurt is a bona fide craze these days. It's not just that Jamie Lee Curtis and John Stamos are pushing different brands of yogurt on television. "Good bacteria" in yogurt is increasingly associated with health, and Greek yogurts have proliferated on demand. Now, though, Greek yogurt Chobani may have inadvertently created another culture: one of consumer distrust.

Some recent Chobani yogurts contained mold -- hardly an ingredient anyone clamors for. In fact, its presence in some recent Chobani batches made some people ill. The only good thing might be the lesson we've learned: If something other than good bacteria has taken residence in yogurt, it's likely that the container will begin "bloating and swelling." Some customers even noted that their yogurt was "hissing" or "fizzing."

Measuring the mea culpa
For a while, Chobani didn't conduct an official recall at all, and even said it didn't intend to. After a week of advising supermarkets to pull affected yogurts off their shelves, Chobani finally went ahead with a recall.

In other words, for a while customers had no idea that some Chobani yogurt contained mold, which is frankly shocking. (Incidentally, the affected yogurt's codes are 16-012.)

Chobani has been insisting this was an honest mistake, and that its recall was voluntary and not FDA mandated. One part of the "honest mistake" argument: its yogurt doesn't contain preservatives. In addition, it says that variety of mold is common in dairy products.

You can see Chobani's recall notice and apology on its website, and make your own decisions as to whether it goes far enough.

Yogurt everywhere
Chobani has plenty of competition in the yogurt space. Yogurt products are one of the fastest-growing areas in grocery stores, probably because word's gotten out about its positive health attributes.

In America alone, yogurt has become a $7 billion market, and over five years, it's been growing at about 8.5%. Even more significant for Chobani, Greek yogurt has taken 40% of the market.

Several months ago, PepsiCo (PEP 0.58%) decided to expand its Muller yogurt brand into new areas, and that brand includes some Greek varieties. Greek yogurts like Chobani have been taking some momentum from some of the other yogurt brands, such as General Mills' (GS -0.25%)Yoplait and Danone's Dannon. Danone also owns Stonyfield Farms and Activia. Danone's got some star power behind its yogurts; its advertising features Jamie Lee Curtis (Activia) and John Stamos (Oikos Greek yogurt).

Mondelez (MDLZ 1.20%), when it was still under the Kraft banner, had a Greek yogurt offering -- Athenos -- but it gave up after two years. That indicates some intense competition, and it doesn't bode well for Chobani to make a misstep.

Who benefits?
Apparently only a few Chobani customers got sick, but that's not an excuse. In addition, Chobani said only 5% of its yogurt products were affected. Still, nobody should get sick, and none of the yogurt should be moldy.

Although many grocers and brands occasionally have to recall products, it's important to deal with food problems swiftly and fully. After all, this can smear reputations as well as an even worse outcome: making tons of consumers dreadfully ill.

Chobani competitors get a tip and a possible benefit here, though. One is to deal with recalls as fast as possible, and get the word out so their customers know exactly what's going on. The second lesson, of course, is more like a boon. When a competitor screws up, rivals find it much easier to grab some market share -- a positive for their businesses in a growing market.

Alyce Lomax has no position in any stocks mentioned. The Motley Fool recommends Goldman Sachs and PepsiCo and owns shares of PepsiCo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
$354.97 (-0.25%) $0.88
Pepsico, Inc. Stock Quote
Pepsico, Inc.
$180.32 (0.58%) $1.04
Mondelez International, Inc. Stock Quote
Mondelez International, Inc.
$65.96 (1.20%) $0.78

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.