IPO News: Chobani looks to public market to spice up biz. Here’s all you need to know

Food and beverages companies are the latest to join the IPO rush, in a market that witnessed record activity this year led by the healthcare and technology sectors. Unlike in the past, food companies have developed an appetite for stock listing, but investors’ response has not been very encouraging so far. Yogurt maker Chobani Inc. is looking to add flavor to its popular brands by becoming a public entity, after registering impressive sales growth.

Aims Nasdaq Listing

Chobani, the top-selling Greek yogurt brand in the U.S, in a regulatory filing last week revealed plans to list on the Nasdaq stock exchange under the symbol CHO. However, the management is yet to reveal details like the number of shares and the offer price. The group of book-runners will be led by Goldman Sachs and Bank of America Securities.

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Chobani was founded in 2005 by Hamdi Ulukaya who is currently serving as the chief executive officer. After starting operations as a yogurt maker, the company later diversified its portfolio by adding oak milk and coffee creamers. Of late, the company has been expanding its e-commerce capabilities encouraged by the pandemic-driven digital boom, which makes the offering and its timing significant.

Mixed Performance

Chobani’s core business is the production and distribution of Greek yogurt, which accounts for the lion’s share of its revenues. In fiscal 2020, total sales increased 5.2% from the prior year to $1.4 billion. The company incurred a net loss of $58.7million, wider than the $19.4-million loss recorded in 2019. The bottom-line performance was affected by a marked increase in costs and expenses.

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The unimpressive public listing of several food companies in recent months, including Krispy Kreme and Vita Coco that currently trade far below IPO price, might prompt investors to take a cautious stance. The value of rival oat milk company Oatly Group, which went public in May this year, has halved since then. Meanwhile, restaurant operator Portillo’s and drive-thru coffee chain Dutch Bros are exceptions when it comes to post-IPO performance, and are doing better than most others.  

Profitability

Chobani’s relatively high debt could be a concern for those looking to participate in the offering, though the company is going for a reorganization to streamline the business — to be funded using a part of the proceeds from the offering. The ongoing efforts to develop digital capabilities and to explore opportunities with partners will put pressure on cash flow. The company’s future prospects would depend on its ability to become profitable.