Chobani's $1.2B Lehigh Valley bet buys a milk shed

Chobani is spending $1.2 billion to convert the former Keurig Dr Pepper facility at 7356 Industrial Blvd. in Upper Macungie Township, Pa., into a 1.5 million-square-foot dairy campus, and the terms of the deal make clear the yogurt maker is buying a supply chain as much as a building. Chobani said Tuesday it will install 10 production lines and 900 jobs at the site, which will eventually process 3 billion pounds of milk a year from Pennsylvania farms. CEO Hamdi Ulukaya cited the state's high number of family-owned farms as the reason the factory fit, and the project is in Gov. Josh Shapiro's FastTrack permitting program.

The purchase price was $125 million, per Reuters, and it came alongside KDP's sale of $800 million in equity back to the yogurt maker. Chobani will keep manufacturing some KDP products at the site, while KDP continues to distribute ready-to-drink La Colombe, the coffee brand Chobani acquired for $900 million in 2023. That leaves the two companies sharing a factory floor rather than completing a clean divestiture.

The Lehigh Valley has been collecting food-and-beverage commitments: Freshpet signed a 216,000-square-foot cold storage lease in Bethlehem last month, and Spot & Tango followed days later with a $20 million expansion of its Upper Macungie plant. Eli Lilly announced a 925,000-square-foot, $3.5 billion manufacturing facility in Upper Macungie in January, and Nokia said in June it would spend $30 million expanding chip operations there. Chobani's 1.5 million-square-foot plant is the scale jump that turns that inventory of projects into a corridor.

The sharper read is that the scarce assets are not the buildings but the inputs around them. In the Lehigh Valley those inputs are dairy supply and a permitting fast lane: 3 billion pounds of milk a year and a streamlined approval process designed to move faster. Chobani is effectively buying the regional supply chain, with a warehouse attached.

The $800 million equity sell-back is the tell: Chobani consolidates control of a factory floor KDP still depends on. The transaction delivers a 900-job anchor and a 3-billion-pound dairy commitment to the Lehigh Valley while the yogurt maker takes the plant, the milk shed, and the fast-track permits in one stroke.