Dean Foods is the largest dairy company in the United States, after a 94-year history of mergers and takeovers of other dairy businesses, mostly in the Midwest. Along the course of a long and troubled legal history, the company has been fighting an anti-monopoly suit since January 2010. The company makes other foods, including soy milk, tofu, and packaged meals, but it makes 67 percent of its sales from fluid milk. And now, due to changing American diets, the company has declared bankruptcy.
“Despite our best efforts to make our business more agile and cost-efficient, we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption,” Dean Foods CEO Eric Berigause said in a statement.
Dean Foods supplies milk for its own brands, including Dairy Pure, Meadow Gold, and TrueMoo, and for store brands as well.
In 1996, according to government data, the average American drank over 24 gallons of milk a year. In 2018, that has dropped to 17 gallons. Milk is being increasingly replaced by non-dairy choices such as nut milks, or by drinks like soda and tea. Another large blow is that many Americans no longer eat cereal, opting for grab-and-go foods as commutes get longer and mornings get earlier.
Cheese and butter, interestingly, are both climbing in sales as fluid milk declines. Americans are choosing to take their dairy in culinary form, rather than a breakfast drink. But that’s not helping Dean Foods.
In eight of the past 10 quarters, Dean Food has run in the red, which means the company has made almost no profit in two and a half years. With 16,000 employees, 60 processing sites, and 8,000 refrigerated trucks, operating at a loss cannot continue for long.
Under Chapter 11 bankruptcy, Dean Foods intends to keep operating normally while it gets its books in order, with the help of nearly $1 trillion from lenders. Once that is done, Dean may sell itself to the Dairy Farmers of America, its chief rival in the dairy industry. Unlike Dean, DFA is a co-op owned by thousands of dairy farmers. The two companies already have a relationship: Dean sold 11 plants to DFA in 2001 to streamline its own holdings.
Wisconsin Farmers Union President Darin Von Ruden said he’s concerned about the potential sale of Dean Foods to Dairy Farmers of America. “That’s two of the five biggest companies in the country, and when you start looking at that kind of consolidation, is that good for producers? The answer is probably no,” he said.
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