Dean Foods declares bankruptcy amid decline in milk consumption

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Brian Lutz
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Dean Foods declares bankruptcy amid decline in milk consumption

Post by Brian Lutz » November 12th, 2019, 8:36 am

https://komonews.com/news/nation-world/ ... -in-demand

Dean Foods, the largest processor of milk products in the US, has declared bankruptcy, citing a long-term decline in milk consumption and loss of business to Walmart opening their own dairy plant. They will continue to operate normally, but the company may be sold to the Dairy Farmers of America.

"Since 1975, the amount of milk consumed per capita in America has tumbled more than 40%, a slide attributed to a number of reasons but mostly the rise of so many other choices, including teas, sodas, juices and almond and soy milk."

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Re: Dean Foods declares bankruptcy amid decline in milk consumption

Post by storewanderer » November 12th, 2019, 10:30 pm

Dean Foods was pulled together through the purchase of many smaller "local" milk bottlers and I think they generally bought "local" milk bottlers and lost significant chunks of the local bottler business for one reason or another.

In Nevada, the dairy that Dean Foods ended up with was Model Dairy (it was first bought by Suiza, which Dean then bought). Model Dairy was a full dairy producing milk, ice cream, etc. back in the 90's. Back in the mid 90's, virtually all of the milk in Reno was filled by Model Dairy. Smiths and Safeway which had low store count in the region were the only two grocers who bought in any outside milk. They had a deal with Raleys to fill Sunnyside as well which at the time was sold in Raleys and Scolaris which were the two dominant grocers in the market. They did the private label milk for Albertsons as well. As Wal Mart and WinCo came into the market, they also did all of the private label milk for those two as well. All of the local convenience store sold Model Dairy milk as well.

Over the years, Dean and Suiza kept shrinking the Model Dairy operation. The Sunnyside filling was shifted to their own plant in CA by the early 00's. They stopped making ice cream, pints of milk, quarts of milk, and various other things beyond basic gallons of milk and half gallons. When Albertsons was sold to Save Mart in 2006, Save Mart stopped selling most Model Dairy products (including the private label milk they had been filling for Albertsons) and switched to Sunnyside product. In 2006, Scolaris did stop selling most Sunnyside product and switched over to using all Model Dairy milk but it did not make up for the Albertsons loss since those were much higher volume stores.

Fast forward to today. The local Dean plant fills milk for Wal Mart and WinCo and not much else. Many convenience stores are using outside milk from CA, UT, or ID. Model Dairy doesn't make ice cream here or much else. They do fill the half pints for the local school district, but almost lost that contract to a Las Vegas dairy last time it was up for renewal.

I think the reason Dean lost the business it lost is due to a number of factors, some of which were not its fault.

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Re: Dean Foods declares bankruptcy amid decline in milk consumption

Post by buckguy » November 29th, 2019, 9:36 am

Dairies have been consolidating for decades. The decline in milk consumption has paralleled this. There's probably only so much you can do to increases the economies of scale, esp. if you're concentrating on the products that are declining in sales, which sounds like Dean's strategy. This may be why specialty dairies that focus on end products like cheese or butter or specialty milks are the one area doing well, but it's a small niche and not all are doing well---Trickling Springs, which supplies DC and other Mid-Atlantic markets closed in the midst of a securities fraud investigation. Dean also has done things like buy dairies with deep local ties and solid product reputations like Hillside in Cleveland, closed them down and basically lost the social capital and the product cred.

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