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Chobani's $500M pitch deck

Chobani, a leader in the U.S. Greek yogurt market, received a $671 million investment from TPG to address financial challenges and restructure its operations. The document outlines Chobani's growth story, competitive landscape, operational challenges, and strategies for improving efficiency and customer service. It emphasizes the need for cost-saving measures and expanding the sales team to support ongoing growth and mitigate waste.

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TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION Investment: $671 Million (TPG VI - $336M; TOP II - $168M; TOP III - $168M) Total Valuation: $728 Million (1.1x Gross MoM) – $17M Realized; $711M Unrealized 35%1 April 2014 Market leader in the fast-growing US Greek yogurt category 1. TPG ownership includes controlled co-investment vehicles and is fully diluted based on the treasury stock method Note: Valuation and ownership as of September 30, 2014 is estimated, unaudited and subject to change Date Closed TPG Investment TPG Ownership Company
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 2 Chobani Greek Yogurt Primer Semi-liquid, runny texture –1 cup of milk makes 1 cup of yogurt Less protein, more calories Traditional Yogurt Chobani Greek Yogurt Greek is marketed as more natural and better for you Thick, creamy texture –3 cups of milk make 1 cup of yogurt More protein, fewer calories
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 3 Chobani The Yogurt Category Undergoes Tremendous Change $2.3 $2.5 $2.7 $2.9 $3.2 $3.5 $3.8 $4.0 $4.3 $4.5 $4.3 $3.8 $3.4 $0.1 $0.2 $0.2 $0.6 $1.4 $2.2 $3.1 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Greek Yogurt % of Spend (Nielsen)1 2% 4% 5% 12% 24% 36% 48% Total US Yogurt Spend (Retail) $ Billions Chobani was the category innovator in Greek yogurt 1. Based on Nielsen estimate of Greek yogurt retail spend as % of total yogurt retail spend Note: Past performance is not an indicator of future results Source: Euromonitor, Nielsen, Mintel, Analyst Estimates, Company Projections as of April 2014 Traditional Introduced -2% 9% 9% Traditional Yogurt Era Greek Yogurt Era 77% Greek All Yogurt
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 4 Chobani Chobani’s Start-up Story Incubation in Abandoned Kraft Factory Explosive Growth to >$1B in Sales Founder secures an $800K Federal SBA loan to buy an abandoned Kraft yogurt factory in NY First cup of yogurt sold in 2007 2009 2005 2007 2011 2013 $86 $439 $150 $265 $550 $1,000+ $71 $244 $629 $915 3 4 5 6 7 Google Facebook Chobani Annual Sales $ Millions Note: Past performance is not a guarantee of future results Source: Company financials and public filings as of September 30, 2014 Tremendous growth to $1+ billion revenue # of Years After First Sale
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 5 Chobani Growth Through Leverage Refusal to Take Outside Investment Leverage Funded Growth Capex “Chobani’s Founder on Growing a Start-up Without Outside Investors” – HBR “US Hunger for Yogurt Leads to Gigantic Factory – Chobani opens $450M Idaho facility” – NY Times Chobani largely financed its growth through debt
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 6 Chobani ‘Perfect Storm’ in 2013 $18 $50 $131 2011 2012 2013 Danone / Yoplait / Fage Combined Media Spend $ Millions US Milk Prices $ / CWT; Median Class II Prices 2013 Production Millions Pounds Intensifying Competition Milk Prices at All-time Highs Facility Start-up Challenges $16.77 $19.18 $23.73 2012 2013 2014 YTD 370 129 New York Idaho 89% Utilization Capacity = 420 Capacity = 644 20% Utilization Competition, milk price, and Idaho start-up created a ‘perfect storm’ in 2013 1. 2014 YTD is through April (pre-TPG investment) Source: Company financials and public filings as of September 30, 2014
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting $21 $20 -$28 -$87 Q1 Q2 Q3 Q4 7 Chobani In Need of a Partner to Continue Growth $ Millions $534 $579 $643 $708 Q1 Q2 Q3 Q4 Earnings declines forced Chobani to restructure its balance sheet 2013 Quarterly EBITDA $ Millions 2013 Quarterly Net Debt Source: Company financials as of April 2014
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 8 Chobani TPG’s Relationship Power of our global network Hamdi Ulukaya Cuneyd Zapsu David Bonderman
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 9 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way One of three parties contacted by BAML for a minority equity deal
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 10 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way Submitted first term sheet for convertible preferred equity with minority protections Selected as 1 of 2 parties to continue Firm B Firm C
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 11 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way Liquidity becoming tight – clock was ticking – and shifted to structured security Liquidity Deadline 45-60 days
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 12 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way Re-indicated as secured debt and preferred equity deal Liquidity becoming tight – clock was ticking – and shifted to structured security Liquidity Deadline 45-60 days
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 13 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way Selected as final party to finish negotiations – but leaked to the press Liquidity Deadline 30-40 days
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 14 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way Noise in the press Selected as final party to finish negotiations – but leaked to the press Liquidity Deadline 30-40 days
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 15 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way Re-indicate with numerous added protections and rights Liquidity Deadline 20-30 days
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 16 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way Hamdi calls Kevin – and he picks up – during Easter Mass INCOMING CALL Hamdi Ulukaya Liquidity Deadline 10-15 days
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 17 Chobani Then… the Napkin
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 18 Chobani Intersection of TPG Core Competencies TPG uniquely positioned Structuring Expertise Industry & Brand Knowledge Ops Capabilities Chobani
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 19 Chobani Downside Protected Structural downside protection… $405¹ $750 Chobani Capital Structure Downside Protection and Key Terms Secured investment $1 billion of capex in the ground 2nd lien with teeth L + 400 cash, 800 PIK interest 6 year maturity, non-call 2 Equal board representation with Founder $ Millions 1. $405 million represents amount of revolver when fully-drawn, plus $18 million of priority debt Source: Company financials as of April 2014 Bank: First Lien Debt TPG: Second Lien Term Loan TPG / Founder: Equity
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 20 Chobani Upside Opportunity Recent Healthy Food Transactions Public Healthy Food Comparables 1. Public valuations as of 9/17/2014 Source: Company filings and press releases … with breakout potential Multiple of LTM Revenue 2.7x 3.7x 2.9x 3.9x Plum Organics – 5/13 Kind Bar – 4/14 SkinnyPop – 7/14 Annie's – 9/14 2.4x 2.4x 2.7x 4.6x Pinnacle WhiteWave Hain Celestial Keurig Green Mountain Multiple of LTM Revenue1 Implied Chobani Valuation $ Billions $2.9 $4.1 $3.2 $4.3 $2.7 $2.7 $3.0 $5.1
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 21 Chobani Good News and Bad News What We Loved What We Needed to Fix Leading brand Great tasting product World-class facilities Exciting innovation pipeline Enthusiastic, motivated, “hip” culture Lots to do on Day 1 Little focus on cost and productivity Large amounts of waste in the plants Poor customer service Under-developed sales team Poor share trend
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 22 Chobani Five Priorities Go after cost Stop the waste Fix customer service Build sales capacity Get focused on growth 1 2 3 4 5
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 23 Chobani Procurement Savings Chobani Spend Base1 Savings by Category Saved $10 million on procurement to date – target of $30 million savings Additions to the Team Chief Procurement Officer Director – Indirect Director – Milk and Dairy Manager – Milk and Dairy Manager – Fruit More to come 1. Spend Base based on annualized 1H 2014 (point at which Chobani launched TPG-supported improvement initiatives) Source: Company financials as of September 2014 $68 $255 $91 $179 $84 $131 $140 $404 Chobani Spend Base $ Millions Milk Capex SG&A Warehousing & Logistics Other Plant Operations Indirect Procurement Packaging Fruit $1,352 $18 $20 $3 $15 $15 $2 Blueberry Fruit Tote Sleeves for Cups Business Insurance Baseline After Savings $ Millions -23% -25% -20%
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 24 Chobani Five Priorities Go after cost Stop the waste Fix customer service Build sales capacity Get focused on growth 1 2 3 4 5
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting Largest yogurt plant in the world Highly automated, state-of-the-art facility Opened in December 2012 Nearly 2x the capacity of South Ed, NY plant with ~6 million pounds / day milk intake Total capital spend of $530 million 25 Chobani Twin Falls, Idaho Facility 1. Based on management’s original model provided during diligence Source: Company financials as of March 2014 Chobani has the facility – but needs help to operate Original Mgmt. Volume Projections1 Twin Falls – Key Facts 372 508 651 804 943 2014 2015 2016 2017 2018 Millions of Pounds Mgmt. Expected to Be Produced at Twin Falls 26%
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 26 Chobani Measuring Waste We expected to find some waste but… Yogurt making is complicated… … so we expected some waste, but…
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 27 Chobani Measuring Waste TPG Ops has identified $76 million of waste across the company Yogurt making is complicated… Total Waste – Twin Falls … so we expected some waste, but… $ Millions $33 $18 $12 $13 Product Donations Milk Yield Raw Material Finished Goods $76 Source: Company data as of June 2014
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 28 Chobani Reducing Waste Sanitation Changes Initiatives across the company to reduce waste – already seeing results 81 61 26 21 12 47 50 10 7 8 Week 36 Week 37 Week 38 Week 39 Week 40 Cases Sent to Quarantine Cases Scrapped Twin Falls Plant - Thousands of Cases (Case = ~12 cups) Source: Company data as of October 2014 Old vacuum pump with mold Couplings with Sediment $56 $49 $70 $350 $329 Value of Scrap ($ K) Scrapped Yogurt Cases by Period
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 29 Chobani Five Priorities Go after cost Stop the waste Fix customer service Build sales capacity Get focused on growth 1 2 3 4 5
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting Cho Item Number Desc 10/14/14 In Stock 10/15/14 In Stock 10/16/14 In Stock Days on Jack's Report Cho Item Number Desc 8/11/14 In Stock 8/12/14 In Stock 8/13/14 In Stock Days on Jack's Report 228 CHO FLP CO/AL/CH 5.3 72% 66% 61% 10 308 CHO STRAW/BLUE 8PK 80% 74% 71% 29 293 CHO COCO 2% 5.3OZ 84% 82% 80% 15 463 CHO KID VAN CHOC 8PK 81% 77% 75% 43 450 CHO INDL BAN&CHC 4PK 65% 66% 55% 43 475 CHO GRK Watermelon 5.3OZ 85% 85% 87% 43 476 CHO GRK Grapefruit 5.3OZ 90% 90% 91% 43 451 CHO INDG MNT/CHC 4PK 83% 82% 79% 43 279 CHO FLIP BAN NUT 5.3 89% 89% 84% 3 300 CHO ST/BAN 2% 4PK n/a 94% 93% 2 277 CHO APR 2% 5.3OZ n/a 93% 94% 2 295 CHO KL 2% 4PK n/a n/a 91% 1 229 CHO FLP VAN/FLK 5.3Z n/a n/a 93% 1 30 Chobani Jack’s List We don’t want to be on Jack’s list Source: Company data as of October 2014 Jack’s List – Before Jack’s List – Today Jack Sinclair Executive Vice President, Grocery Division, Walmart US Oversees Grocery merchandising at 4,000 US Walmart stores Maintains list of “problem products” with customer service issues like cancelled Purchase Orders
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 31 Chobani Reducing “Cuts” Thousands of Cases Unfulfilled Improved operations is driving fulfillment and reducing lost sales Source: Company data as of October 2014 80 34 25 16 13 2 1H 2014 Avg. 2H 2014 Avg. Last 8 weeks Last 4 weeks 2 weeks ago Last week Weekly “Cuts” (Unfulfilled Orders) Report Average “Cuts” Per Period Week # 2014 Week 1 83,491 Week 2 95,417 Week 3 36,815 Week 4 44,837 Week 5 163,219 Week 6 196,544 Week 7 202,462 Week 8 105,427 Week 9 77,918 Week 10 60,300 Week 11 38,582 Week 12 54,115 Week 13 30,686 Week 14 27,450 Week 15 17,296 Week 16 8,624 Week 17 57,055 Week 18 82,837 Week 19 73,837 Week 20 74,253 Week 21 53,465 Cases Week # 2014 Week 22 162,851 Week 23 146,335 Week 24 79,496 Week 25 58,829 Week 26 50,218 Week 27 32,577 Week 28 38,186 Week 29 88,429 Week 30 28,936 Week 31 44,089 Week 32 55,634 Week 33 24,459 Week 34 16,288 Week 35 68,505 Week 36 26,801 Week 37 27,144 Week 38 25,318 Week 39 23,776 Week 40 12,700 Week 41 2,446 Cases
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 32 Chobani Five Priorities Go after cost Stop the waste Fix customer service Build sales capacity Get focused on growth 1 2 3 4 5
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 33 Chobani Sales Team Upgrade Number of FTEs 41 52 68 July Today End of Year Revamp of Chobani sales team underway July End of year 2 4 1 4 0 4 0 3 Source: Company data as of October 2014 Chobani Sales FTEs Major Account Sales Coverage 66%
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 34 Chobani Account Leads Recruited experienced sales leads for major accounts Source: Company data as of October 2014 Jane Block Sean Blackmore Rick Simington John Perugini Name Coverage Prior Experience Director, SC Johnson (Walmart account) Director, Frito Lay (Kroger account) Director, Kellogg’s (Target account) Director, Kellogg’s (Costco account)
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 35 Chobani Five Priorities Go after cost Stop the waste Fix customer service Build sales capacity Get focused on growth 1 2 3 4 5
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 36 Chobani Case Studies: Walmart & Kroger Deal Close Jan 2015 SKU count 55 75 ACV 62% 74% SKU count 45 47 ACV 70% 81% Deal Close Jan 2015 Continuing momentum at Walmart and stimulating growth at Kroger Chobani Share1 at Walmart (%) Chobani Share at Kroger (%) Growth Plans @Walmart Growth Plans @Kroger 5 10 15 20 Jan 15 Jul 14 Apr 14 Jan 14 Oct 14 Oct 13 5 10 15 20 Jan 14 Jul 14 Apr 14 Oct 14 Oct 13 Jan 15 Distribution points 3,423 5,542 Distribution points 3,142 3,799 Projection Projection 1 Share equals Chobani dollar-share of yogurt market Source: Nielsen (4 weeks ending 9/27/14), company data as of October 2014
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 37 Chobani Market Share Recovery Beginning to recover market share vs. big incumbents Dannon and Yoplait 1 Share equals Chobani dollar-share of yogurt market Source: Nielsen (4 weeks ending 9/27/14), company data as of October 2014 Chobani Market Share1 Share of Yogurt Sales in Dollars 18.3% 18.9% 17.2% 18.4% 18.1% 18.4% 18.2% 18.9% 18.2% 18.3% 18.7% 18.2% 17.5% 17.1% 16.3% 16.8% Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14 Apr 14 May 14 Jun 14 Jul 14 Aug 14 Sep 14 Oct 14
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting Ops Engagement – Summary Thoughts Chobani 38 Improvement opportunities are real GM: <20% 30% EBITDA: <5% 15% Relatively simple business model to fix –2 plants, mostly US, simple product offering Revenue / margin / cash – priority 1 Mix of quick wins and sustainability Very good Chobani receptivity and TPG engagement
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 39 Chobani Shift Toward Healthy Eating Favorable category tailwinds are foundational to the brand
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 40 Chobani NPS By Brand Percent of Responses (0 = Not at All Likely, 10 = Extremely Likely) 31 30 27 33 33 54 45 34 31 35 27 27 17 17 -3 -1 -8 6 6 37 28 Niche player with premium, exclusive focus Source: McKinsey yogurt survey as of March 2014 Clear NPS advantage over all but Fage, a premium niche player Attractors (9–10 Rating) Detractors (0–6 Rating) NPS score Customer Likelihood to Recommend Yogurt to Friend TPG/McKinsey consumer survey
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 41 Chobani Velocity and Distribution Velocity and Total Distribution Points Latest 24 Weeks 5/17/14 5,500 3,150 4,042 6,309 3,472 5,865 4,828 1,048 2,582 3,691 Velocity Total Distribution Points Chobani Dannon Yoplait Fage Private Label 14% higher velocity than closest competitor Source: Company data as of May 2014 But much lower distribution Chobani has the highest velocities, with distribution upside
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 42 Chobani Innovation Source: Company data as of October 2014 Chobani’s innovation pipeline is getting rave reviews
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 43 Chobani Pumpkin Spice Mania Pumpkin Spice Volumes Pumpkin Goes Viral Thousands of Cases Sold 1 18 30 21 25 51 51 47 Launch Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Fastest-selling product launch in company history Source: Company data as of October 2014
TPG HIGHLY CONFIDENTIAL — NOT FOR DISTRIBUTION 2014 Investors Meeting 44 Chobani Key Takeaways 1. Collaborative effort to get here 2. Operational turnaround with the hard work just beginning 3. Potential upside – we’re excited by brand and growth prospects 1 2 3

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Chobani's $500M pitch deck

  • 1.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION Investment: $671 Million (TPG VI - $336M; TOP II - $168M; TOP III - $168M) Total Valuation: $728 Million (1.1x Gross MoM) – $17M Realized; $711M Unrealized 35%1 April 2014 Market leader in the fast-growing US Greek yogurt category 1. TPG ownership includes controlled co-investment vehicles and is fully diluted based on the treasury stock method Note: Valuation and ownership as of September 30, 2014 is estimated, unaudited and subject to change Date Closed TPG Investment TPG Ownership Company
  • 2.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 2 Chobani Greek Yogurt Primer Semi-liquid, runny texture –1 cup of milk makes 1 cup of yogurt Less protein, more calories Traditional Yogurt Chobani Greek Yogurt Greek is marketed as more natural and better for you Thick, creamy texture –3 cups of milk make 1 cup of yogurt More protein, fewer calories
  • 3.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 3 Chobani The Yogurt Category Undergoes Tremendous Change $2.3 $2.5 $2.7 $2.9 $3.2 $3.5 $3.8 $4.0 $4.3 $4.5 $4.3 $3.8 $3.4 $0.1 $0.2 $0.2 $0.6 $1.4 $2.2 $3.1 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Greek Yogurt % of Spend (Nielsen)1 2% 4% 5% 12% 24% 36% 48% Total US Yogurt Spend (Retail) $ Billions Chobani was the category innovator in Greek yogurt 1. Based on Nielsen estimate of Greek yogurt retail spend as % of total yogurt retail spend Note: Past performance is not an indicator of future results Source: Euromonitor, Nielsen, Mintel, Analyst Estimates, Company Projections as of April 2014 Traditional Introduced -2% 9% 9% Traditional Yogurt Era Greek Yogurt Era 77% Greek All Yogurt
  • 4.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 4 Chobani Chobani’s Start-up Story Incubation in Abandoned Kraft Factory Explosive Growth to >$1B in Sales Founder secures an $800K Federal SBA loan to buy an abandoned Kraft yogurt factory in NY First cup of yogurt sold in 2007 2009 2005 2007 2011 2013 $86 $439 $150 $265 $550 $1,000+ $71 $244 $629 $915 3 4 5 6 7 Google Facebook Chobani Annual Sales $ Millions Note: Past performance is not a guarantee of future results Source: Company financials and public filings as of September 30, 2014 Tremendous growth to $1+ billion revenue # of Years After First Sale
  • 5.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 5 Chobani Growth Through Leverage Refusal to Take Outside Investment Leverage Funded Growth Capex “Chobani’s Founder on Growing a Start-up Without Outside Investors” – HBR “US Hunger for Yogurt Leads to Gigantic Factory – Chobani opens $450M Idaho facility” – NY Times Chobani largely financed its growth through debt
  • 6.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 6 Chobani ‘Perfect Storm’ in 2013 $18 $50 $131 2011 2012 2013 Danone / Yoplait / Fage Combined Media Spend $ Millions US Milk Prices $ / CWT; Median Class II Prices 2013 Production Millions Pounds Intensifying Competition Milk Prices at All-time Highs Facility Start-up Challenges $16.77 $19.18 $23.73 2012 2013 2014 YTD 370 129 New York Idaho 89% Utilization Capacity = 420 Capacity = 644 20% Utilization Competition, milk price, and Idaho start-up created a ‘perfect storm’ in 2013 1. 2014 YTD is through April (pre-TPG investment) Source: Company financials and public filings as of September 30, 2014
  • 7.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting $21 $20 -$28 -$87 Q1 Q2 Q3 Q4 7 Chobani In Need of a Partner to Continue Growth $ Millions $534 $579 $643 $708 Q1 Q2 Q3 Q4 Earnings declines forced Chobani to restructure its balance sheet 2013 Quarterly EBITDA $ Millions 2013 Quarterly Net Debt Source: Company financials as of April 2014
  • 8.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 8 Chobani TPG’s Relationship Power of our global network Hamdi Ulukaya Cuneyd Zapsu David Bonderman
  • 9.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 9 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way One of three parties contacted by BAML for a minority equity deal
  • 10.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 10 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way Submitted first term sheet for convertible preferred equity with minority protections Selected as 1 of 2 parties to continue Firm B Firm C
  • 11.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 11 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way Liquidity becoming tight – clock was ticking – and shifted to structured security Liquidity Deadline 45-60 days
  • 12.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 12 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way Re-indicated as secured debt and preferred equity deal Liquidity becoming tight – clock was ticking – and shifted to structured security Liquidity Deadline 45-60 days
  • 13.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 13 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way Selected as final party to finish negotiations – but leaked to the press Liquidity Deadline 30-40 days
  • 14.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 14 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way Noise in the press Selected as final party to finish negotiations – but leaked to the press Liquidity Deadline 30-40 days
  • 15.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 15 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way Re-indicate with numerous added protections and rights Liquidity Deadline 20-30 days
  • 16.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 16 Chobani The Deal… and its Iterations February April March Structured creative deal with lots of iterations along the way Hamdi calls Kevin – and he picks up – during Easter Mass INCOMING CALL Hamdi Ulukaya Liquidity Deadline 10-15 days
  • 17.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 17 Chobani Then… the Napkin
  • 18.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 18 Chobani Intersection of TPG Core Competencies TPG uniquely positioned Structuring Expertise Industry & Brand Knowledge Ops Capabilities Chobani
  • 19.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 19 Chobani Downside Protected Structural downside protection… $405¹ $750 Chobani Capital Structure Downside Protection and Key Terms Secured investment $1 billion of capex in the ground 2nd lien with teeth L + 400 cash, 800 PIK interest 6 year maturity, non-call 2 Equal board representation with Founder $ Millions 1. $405 million represents amount of revolver when fully-drawn, plus $18 million of priority debt Source: Company financials as of April 2014 Bank: First Lien Debt TPG: Second Lien Term Loan TPG / Founder: Equity
  • 20.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 20 Chobani Upside Opportunity Recent Healthy Food Transactions Public Healthy Food Comparables 1. Public valuations as of 9/17/2014 Source: Company filings and press releases … with breakout potential Multiple of LTM Revenue 2.7x 3.7x 2.9x 3.9x Plum Organics – 5/13 Kind Bar – 4/14 SkinnyPop – 7/14 Annie's – 9/14 2.4x 2.4x 2.7x 4.6x Pinnacle WhiteWave Hain Celestial Keurig Green Mountain Multiple of LTM Revenue1 Implied Chobani Valuation $ Billions $2.9 $4.1 $3.2 $4.3 $2.7 $2.7 $3.0 $5.1
  • 21.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 21 Chobani Good News and Bad News What We Loved What We Needed to Fix Leading brand Great tasting product World-class facilities Exciting innovation pipeline Enthusiastic, motivated, “hip” culture Lots to do on Day 1 Little focus on cost and productivity Large amounts of waste in the plants Poor customer service Under-developed sales team Poor share trend
  • 22.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 22 Chobani Five Priorities Go after cost Stop the waste Fix customer service Build sales capacity Get focused on growth 1 2 3 4 5
  • 23.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 23 Chobani Procurement Savings Chobani Spend Base1 Savings by Category Saved $10 million on procurement to date – target of $30 million savings Additions to the Team Chief Procurement Officer Director – Indirect Director – Milk and Dairy Manager – Milk and Dairy Manager – Fruit More to come 1. Spend Base based on annualized 1H 2014 (point at which Chobani launched TPG-supported improvement initiatives) Source: Company financials as of September 2014 $68 $255 $91 $179 $84 $131 $140 $404 Chobani Spend Base $ Millions Milk Capex SG&A Warehousing & Logistics Other Plant Operations Indirect Procurement Packaging Fruit $1,352 $18 $20 $3 $15 $15 $2 Blueberry Fruit Tote Sleeves for Cups Business Insurance Baseline After Savings $ Millions -23% -25% -20%
  • 24.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 24 Chobani Five Priorities Go after cost Stop the waste Fix customer service Build sales capacity Get focused on growth 1 2 3 4 5
  • 25.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting Largest yogurt plant in the world Highly automated, state-of-the-art facility Opened in December 2012 Nearly 2x the capacity of South Ed, NY plant with ~6 million pounds / day milk intake Total capital spend of $530 million 25 Chobani Twin Falls, Idaho Facility 1. Based on management’s original model provided during diligence Source: Company financials as of March 2014 Chobani has the facility – but needs help to operate Original Mgmt. Volume Projections1 Twin Falls – Key Facts 372 508 651 804 943 2014 2015 2016 2017 2018 Millions of Pounds Mgmt. Expected to Be Produced at Twin Falls 26%
  • 26.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 26 Chobani Measuring Waste We expected to find some waste but… Yogurt making is complicated… … so we expected some waste, but…
  • 27.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 27 Chobani Measuring Waste TPG Ops has identified $76 million of waste across the company Yogurt making is complicated… Total Waste – Twin Falls … so we expected some waste, but… $ Millions $33 $18 $12 $13 Product Donations Milk Yield Raw Material Finished Goods $76 Source: Company data as of June 2014
  • 28.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 28 Chobani Reducing Waste Sanitation Changes Initiatives across the company to reduce waste – already seeing results 81 61 26 21 12 47 50 10 7 8 Week 36 Week 37 Week 38 Week 39 Week 40 Cases Sent to Quarantine Cases Scrapped Twin Falls Plant - Thousands of Cases (Case = ~12 cups) Source: Company data as of October 2014 Old vacuum pump with mold Couplings with Sediment $56 $49 $70 $350 $329 Value of Scrap ($ K) Scrapped Yogurt Cases by Period
  • 29.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 29 Chobani Five Priorities Go after cost Stop the waste Fix customer service Build sales capacity Get focused on growth 1 2 3 4 5
  • 30.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting Cho Item Number Desc 10/14/14 In Stock 10/15/14 In Stock 10/16/14 In Stock Days on Jack's Report Cho Item Number Desc 8/11/14 In Stock 8/12/14 In Stock 8/13/14 In Stock Days on Jack's Report 228 CHO FLP CO/AL/CH 5.3 72% 66% 61% 10 308 CHO STRAW/BLUE 8PK 80% 74% 71% 29 293 CHO COCO 2% 5.3OZ 84% 82% 80% 15 463 CHO KID VAN CHOC 8PK 81% 77% 75% 43 450 CHO INDL BAN&CHC 4PK 65% 66% 55% 43 475 CHO GRK Watermelon 5.3OZ 85% 85% 87% 43 476 CHO GRK Grapefruit 5.3OZ 90% 90% 91% 43 451 CHO INDG MNT/CHC 4PK 83% 82% 79% 43 279 CHO FLIP BAN NUT 5.3 89% 89% 84% 3 300 CHO ST/BAN 2% 4PK n/a 94% 93% 2 277 CHO APR 2% 5.3OZ n/a 93% 94% 2 295 CHO KL 2% 4PK n/a n/a 91% 1 229 CHO FLP VAN/FLK 5.3Z n/a n/a 93% 1 30 Chobani Jack’s List We don’t want to be on Jack’s list Source: Company data as of October 2014 Jack’s List – Before Jack’s List – Today Jack Sinclair Executive Vice President, Grocery Division, Walmart US Oversees Grocery merchandising at 4,000 US Walmart stores Maintains list of “problem products” with customer service issues like cancelled Purchase Orders
  • 31.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 31 Chobani Reducing “Cuts” Thousands of Cases Unfulfilled Improved operations is driving fulfillment and reducing lost sales Source: Company data as of October 2014 80 34 25 16 13 2 1H 2014 Avg. 2H 2014 Avg. Last 8 weeks Last 4 weeks 2 weeks ago Last week Weekly “Cuts” (Unfulfilled Orders) Report Average “Cuts” Per Period Week # 2014 Week 1 83,491 Week 2 95,417 Week 3 36,815 Week 4 44,837 Week 5 163,219 Week 6 196,544 Week 7 202,462 Week 8 105,427 Week 9 77,918 Week 10 60,300 Week 11 38,582 Week 12 54,115 Week 13 30,686 Week 14 27,450 Week 15 17,296 Week 16 8,624 Week 17 57,055 Week 18 82,837 Week 19 73,837 Week 20 74,253 Week 21 53,465 Cases Week # 2014 Week 22 162,851 Week 23 146,335 Week 24 79,496 Week 25 58,829 Week 26 50,218 Week 27 32,577 Week 28 38,186 Week 29 88,429 Week 30 28,936 Week 31 44,089 Week 32 55,634 Week 33 24,459 Week 34 16,288 Week 35 68,505 Week 36 26,801 Week 37 27,144 Week 38 25,318 Week 39 23,776 Week 40 12,700 Week 41 2,446 Cases
  • 32.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 32 Chobani Five Priorities Go after cost Stop the waste Fix customer service Build sales capacity Get focused on growth 1 2 3 4 5
  • 33.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 33 Chobani Sales Team Upgrade Number of FTEs 41 52 68 July Today End of Year Revamp of Chobani sales team underway July End of year 2 4 1 4 0 4 0 3 Source: Company data as of October 2014 Chobani Sales FTEs Major Account Sales Coverage 66%
  • 34.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 34 Chobani Account Leads Recruited experienced sales leads for major accounts Source: Company data as of October 2014 Jane Block Sean Blackmore Rick Simington John Perugini Name Coverage Prior Experience Director, SC Johnson (Walmart account) Director, Frito Lay (Kroger account) Director, Kellogg’s (Target account) Director, Kellogg’s (Costco account)
  • 35.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 35 Chobani Five Priorities Go after cost Stop the waste Fix customer service Build sales capacity Get focused on growth 1 2 3 4 5
  • 36.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 36 Chobani Case Studies: Walmart & Kroger Deal Close Jan 2015 SKU count 55 75 ACV 62% 74% SKU count 45 47 ACV 70% 81% Deal Close Jan 2015 Continuing momentum at Walmart and stimulating growth at Kroger Chobani Share1 at Walmart (%) Chobani Share at Kroger (%) Growth Plans @Walmart Growth Plans @Kroger 5 10 15 20 Jan 15 Jul 14 Apr 14 Jan 14 Oct 14 Oct 13 5 10 15 20 Jan 14 Jul 14 Apr 14 Oct 14 Oct 13 Jan 15 Distribution points 3,423 5,542 Distribution points 3,142 3,799 Projection Projection 1 Share equals Chobani dollar-share of yogurt market Source: Nielsen (4 weeks ending 9/27/14), company data as of October 2014
  • 37.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 37 Chobani Market Share Recovery Beginning to recover market share vs. big incumbents Dannon and Yoplait 1 Share equals Chobani dollar-share of yogurt market Source: Nielsen (4 weeks ending 9/27/14), company data as of October 2014 Chobani Market Share1 Share of Yogurt Sales in Dollars 18.3% 18.9% 17.2% 18.4% 18.1% 18.4% 18.2% 18.9% 18.2% 18.3% 18.7% 18.2% 17.5% 17.1% 16.3% 16.8% Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14 Apr 14 May 14 Jun 14 Jul 14 Aug 14 Sep 14 Oct 14
  • 38.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting Ops Engagement – Summary Thoughts Chobani 38 Improvement opportunities are real GM: <20% 30% EBITDA: <5% 15% Relatively simple business model to fix –2 plants, mostly US, simple product offering Revenue / margin / cash – priority 1 Mix of quick wins and sustainability Very good Chobani receptivity and TPG engagement
  • 39.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 39 Chobani Shift Toward Healthy Eating Favorable category tailwinds are foundational to the brand
  • 40.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 40 Chobani NPS By Brand Percent of Responses (0 = Not at All Likely, 10 = Extremely Likely) 31 30 27 33 33 54 45 34 31 35 27 27 17 17 -3 -1 -8 6 6 37 28 Niche player with premium, exclusive focus Source: McKinsey yogurt survey as of March 2014 Clear NPS advantage over all but Fage, a premium niche player Attractors (9–10 Rating) Detractors (0–6 Rating) NPS score Customer Likelihood to Recommend Yogurt to Friend TPG/McKinsey consumer survey
  • 41.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 41 Chobani Velocity and Distribution Velocity and Total Distribution Points Latest 24 Weeks 5/17/14 5,500 3,150 4,042 6,309 3,472 5,865 4,828 1,048 2,582 3,691 Velocity Total Distribution Points Chobani Dannon Yoplait Fage Private Label 14% higher velocity than closest competitor Source: Company data as of May 2014 But much lower distribution Chobani has the highest velocities, with distribution upside
  • 42.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 42 Chobani Innovation Source: Company data as of October 2014 Chobani’s innovation pipeline is getting rave reviews
  • 43.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 43 Chobani Pumpkin Spice Mania Pumpkin Spice Volumes Pumpkin Goes Viral Thousands of Cases Sold 1 18 30 21 25 51 51 47 Launch Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Fastest-selling product launch in company history Source: Company data as of October 2014
  • 44.
    TPG HIGHLY CONFIDENTIAL— NOT FOR DISTRIBUTION 2014 Investors Meeting 44 Chobani Key Takeaways 1. Collaborative effort to get here 2. Operational turnaround with the hard work just beginning 3. Potential upside – we’re excited by brand and growth prospects 1 2 3