Chobani to invest $1.2 billion in Pennsylvania and create 900 jobs

Chobani, the yogurt company, plans to spend $1.2 billion to expand its operations at a manufacturing facility in Pennsylvania, which it is buying from Keurig Dr Pepper for $125 million.

The company, which bought Philly-founded La Colombe in 2023 for $900 million, plans to convert the 1.5-million-square-foot site into a dairy plant, and expects to add 900 workers over the next five years in the Lehigh Valley.

Keurig Dr Pepper will continue to employ some of the workers in corporate functions, including delivery and customer service, from the Allentown plant, and the rest of its employees there will be offered jobs with Chobani.

“We’re so happy to be here bringing our future innovation to life in Allentown, made with fresh Pennsylvania milk and delivered to families across the country,” Hamdi Ulukaya, founder and CEO of Chobani, said in a statement.

Chobani is buying back Keurig Dr Pepper’s equity in Chobani for $800 million, as Keurig Dr Pepper looks to reduce its debt, the company said in a news release.

Chobani got its start in 2005 with a facility in upstate New York, and produces yogurts, creamers, and oat milk.

Its move into Allentown is part of a larger $4 billion investment in manufacturing. That includes building a new facility in Rome, N.Y., and expanding a Michigan site that produces La Colombe products.

Chobani will “manufacture innovative food products beyond yogurt,” at the new Allentown site, located at 7356 Industrial Blvd. in Upper Macungie Township, according to a news release from Gov. Josh Shapiro. It will produce milk with less sugar and more protein than traditional milk, according to Chobani, which it will sell to customers directly, and use as the base of other products.

When the facility is up and running, Chobani expects to process more than three billion pounds of milk each year from the state — roughly 30% of what Pennsylvania currently produces annually, according to the governor’s office. Production at the facility is expected to begin next year.

In a statement, Shapiro touted Chobani’s commitment as the largest private-sector investment in the state’s agriculture industry in history.

The investment, he said, “will strengthen our dairy industry, support our farmers, and reinforce our position as a national leader in agriculture and food manufacturing.”

At a Tuesday news conference on a dairy farm in Schnecksville, Chobani CEO Ulukaya said challenges around water, waste water, and energy seemed poised to impede the deal early on. He credited Shapiro with allowing the project to become a reality.

“I would have given up right in the beginning, because the challenges were super big,” said Ulukaya. “I am so surprised … that the governor and his team pulled this off.”

While the facility itself will create 900 new jobs, Shapiro noted, the ripple effect is expected be larger, extending to Pennsylvania farmers given the increased demand for milk the facility will create.

Pennsylvania will provide $50 million in grants and loans toward Chobani’s project, in part for infrastructure improvements needed at the site. The state is also giving $127 million in loans and grants to dairy farmers to help them expand herds, buy equipment, and meet the new milk demand, Shapiro said Tuesday.

“This announcement is the biggest change for our dairy industry in a generation and represents the culmination of a journey built on collaboration, persistence, and a shared belief in the future of Pennsylvania dairy,” state Agriculture Secretary Russell Redding said in a statement.

Ulukaya noted Tuesday that he comes from a Kurd family of sheep herders. When he first moved to the United States, he said, his first job was milking cows in upstate New York.

“In my soul, I’m a farmer, I’m a sheepherder, I’m a nomad, and still trying to be a businessman,” Ulukaya said.

In July 2023, Keurig Dr Pepper made a $300 million investment in La Colombe, becoming its second largest investor with a 33% ownership stake. Later that year, when Chobani acquired La Colombe, Keurig Dr Pepper’s equity in La Colombe became Chobani equity. The company is now selling that full stake back.

“These transactions reflect the success of our partnership with Chobani and are designed to create value for both organizations,” Keurig Dr Pepper CEO Tim Cofer said in a statement. “Together, they enhance our financial flexibility, strengthen the efficiency of our manufacturing network and support the expansion of our important distribution partnership with Chobani.”

Ulukaya recounted on Tuesday how Chobani started out of a shuttered Kraft yogurt facility in New York state. Don Cunningham, president and CEO of the Lehigh Valley Economic Development Corp., said Chobani’s new Allentown site was previously a Kraft facility, before Kraft merged with Heinz.

“History comes around, and tomorrow that plant will be bigger and better than we could have ever dreamed,” said Cunningham.