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A Chobani IPO Is Looming and Here's Why

Stocks in this article: SBUX

NEW YORK ( TheStreet) -- Chobani, the New York-based Greek yogurt company, will go to the public markets for funding as it looks to expand its roster of products that are sold in supermarkets.

Chobani Chief Marketing Officer Peter McGuinness said in an interview that "all options are on the table" as it pertains to an IPO or other measures to raise funds, adding, "I don't think an IPO is in the next year, but not sure if five years is right either; somewhere in that middle zone."

Chobani reportedly secured a $750 million loan from private-equity fund TPG in late April. For that loan, TPG is said to have received warrants that may allow it to obtain an equity stake in Chobani for as much as 35%. A key consideration for these warrants to turn into an equity stake would be Chobani IPO.

Chobani's market value could zoom beyond $5 billion given the life-to-date growth of the brand and its obvious future potential.

Deconstructing a Chobani IPO

Chobani's decision to be a publicly traded company centers on two primary ideas: First, it has to capitalize on unique opportunities in the rapidly growing $3 billion U.S. Greek yogurt market. Secondly, it has to establish a strong operating foothold overseas.

Chobani's yogurt bar concept is an example of an untapped U.S. opportunity. Nestled in New York's SoHo district, this lone flagship store by Chobani is serving as an incubation hub for ideas now penetrating supermarket aisles, such as seasonings to be applied to chicken dishes. McGuinness mentioned that the SoHo flagship store is posting astounding same-store sales growth of 50%, a number fed by creative sandwich combinations and breakfast items, and recently the introduction of coffee and rice pudding. The store has attracted the lunch crowd, according to McGuinness.

McGuinness acknowledged that opening more of these yogurt bars is "in our imminent plans." The company could be onto something, perhaps rivaling Starbucks (SBUX), which is aggressively releasing food and drink options to cater to multiple parts of the day. While Chobani prepares to open stores at a measured pace along the lines of Starbucks, the latter has begun to make greater inroads into supermarkets by opening mini shops at the ends of aisles.

Any eventual capital raise from the public markets is likely to also be allocated to bolstering manufacturing capabilities, specifically abroad. Chobani currently is an exporter to the Caribbean and Latin America markets from its East Coast plant, and ships into Malaysia from an Australian-based facility. On the topic of international expansion, McGuinness said, "When we do it in earnest down the road, we would do localized manufacturing, which is a big part of our plans."

Chobani also could allocate resources to adding a few more "CHOmobiles" to its fleet of quasi-food trucks that travel the country to dish out free samples of yogurt. 


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-- By Brian Sozzi CEO of Belus Capital Advisors, analyst to TheStreet. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff. At the time of this publication, Belus Capital Advisors rated Starbucks at a hold. Brian Sozzi is the CEO and Chief Equities Strategist of Belus Capital Advisors. He is responsible for developing and managing an equities portfolio of mid- and large-cap positions, in addition to leading the firm's digital content initiatives. He is also a personal finance columnist for Men's Health magazine.

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