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Coke not exploring stake in Chobani: Sources

with Marc Gilbert
Source: Chobani

The field has narrowed in the yogurt battle: Coca-Cola is not exploring a stake in Chobani, sources told CNBC Wednesday.

People familiar with the situation previously reported that PepsiCo and rival beverage giant Coke were in talks to take a stake in Greek yogurt maker Chobani. The process was reportedly being managed by Goldman Sachs, and other food and consumer companies are in talks to invest as well, the sources said.

Such an investment could value Chobani at as much as $3 billion, including debt, a figure first reported by Reuters. Importantly, private equity firm TPG, which invested in Chobani last year and has been heavily involved in the company's operations, could have its position bought out in any new investment.

Chobani would continue to be led by founder and CEO Hamdi Ulukaya, who is now looking for a strategic investor to help expand and enter new product categories.

The company has introduced a number of successful new products like Flip; has had positive EBITDA growth for more than a year — up $200 million over where it was in 2014; and is gaining market share again.

The growth follows a period of uncertainty for Chobani, which experienced a meteoric rise after its launch in 2007, which captured huge market share with its thicker, creamier Greek-style yogurt, but then had to deal with a costly recall after opening a massive $450 million plant in Twin Falls, Idaho, in 2012. Flip in particular, which allows the company to sell yogurt along with dry ingredients in a separate section within the package, has been a growth driver for the company — a product made possible by Chobani's investment in the new Idaho facility.

Coca-Cola and PepsiCo have both been making investments to grow beyond the slowing soda market.

PepsiCo in particular has benefited from its Frito-Lay division — snacks, cookies, chips and its Quaker Oats brand.

Chobani Inc. greek yogurt at a supermarket in Princeton, Illinois.
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Coke has taken a different strategy, making strategic investments by buying minority stakes in Keurig Green Mountain, Monster Beverage and more recently juice brand Suja Life.

As for dairy, Coca-Cola does have a new joint venture with Fairlife, which makes "premium" milk with less sugar and more protein than regular milk, along with being lactose-free. When asked, Coca-Cola hasn't ruled out interest in the yogurt market.

Chobani, TPG, PepsiCo, Coca-Cola and Goldman all declined to comment.