America’s largest milk producer files for bankruptcy

Dean Foods, America’s biggest milk producer, filed for Chapter 11 bankruptcy protection Tuesday. Following the surge in popularity of milk alternatives in recent years, the company’s sales have plummeted.

The Dallas-based company is responsible for some of the country’s most recognizable brands, including DairyPure, Friendly’s, Tuscan and Land O’Lakes. It said in a press release that it plans to use the bankruptcy process to continue running its business, address debt, and pay currently unfunded pensions to its employees.

The 94-year-old company also announced that it plans to look for a buyer. It is in talks with Dairy Farmers of America, Inc., a national milk marketing cooperative owned by thousands of farmers, regarding a potential sale.

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Dean Foods said customers should not notice any difference as it plans to continue business as usual. It received about $850 million in debtor-in-possession financing from existing lenders to continue operations, including paying its employees, suppliers and vendors.

“The actions we are announcing today are designed to enable us to continue serving our customers and operating as normal as we work toward the sale of our business,” said Dean Foods president and CEO Eric Beringause.

Dean Foods lost a major partnership with Walmart, which began processing its own milk in 2017.

The company has also struggled with a boom in the nondairy milk industry and the growing popularity of plant-based diets. Almond, oat, soy, flax, coconut, cashew and other milk alternatives have led to steep declines in overall dairy milk consumption in the U.S.

As tastes have changed and consumers have become more conscious about the environment, health and animal welfare, the dairy industry has suffered. Milk consumption per capita in the U.S. has tumbled more than 40% since 1975, The Associated Press reports.

Milk sales drop as alternatives gain popularity. Associated Press

According to Nielsen data, U.S. sales of oat milk rose 636% to more than $52 million just in the last year. In contrast, cow’s milk sales have dropped an average of 6% per year for the last four years. Over the past half-century, the United States has lost one million dairy farms.

“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,” Beringause said.

Two-thirds of Dean Foods’ sales came from fluid milk last year, according to its annual report. It lost money in eight of the last 10 quarters.

The company employs around 16,000 people, operating more than 60 processing facilities across the country.

Categories: US & World News

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