Dean Foods has been one of America’s largest dairy producers in the entire country. They’ve been around for 94 years, making a large supply of the milk we drink every day. Despite the company’s longevity, 2019 has been a particularly bad year for milk sales. Dean Foods has lost 7% of its sales in the first half of this year alone. Throughout the rest of the year, profits fell another 14% and their stock fell another 80%.
Surely, you’ve heard of several of the dairy brands under the Dean Foods banner. Land O’Lakes, Organic Valley, and Dairy Pure, make up its dairy industry. And where there’s milk, there’s also cheese and butter. The problem is, milk has been on a significant decline over the past few years. When that happens, companies often lose money and accumulate debt.
One of the biggest sources of their debt is their inability to keep up with their worker’s pensions. That’s why this move works for Dean Foods. Declaring Chapter 11 bankruptcy allows them to keep their doors open for the time being. It allows keeps their worker’s pensions up today for a time until they can sell the company.
A New Dairy Deal for Dean Farms
In a recent statement, Dean Foods has said they’re currently in the middle of negotiating a new deal with the Dairy Farmers of America. They are a cooperative that would most likely buy most of the company. By doing that, they would significantly extend their cooperative and their market. It’s unknown if they would keep their brand names.
By declaring bankruptcy, it allowed Dean Foods to safe $850 million in financing. This allows them to keep the doors open and paying their workers until this new deal is signed. This is just another sign of how health-conscience we’ve become. More Americans are ditching white milk for more plant-based and less-sugary substitutes.
The sales for milk alternatives continue to grow. In 2019, the sale of milk alternatives looks to reach the $18 billion mark. This number is up 3.5% from last year. While these sales are growing, traditional milk sales still dominate the market at $120 billion globally. This is a lot of money, but all types of milk have been on a decline for several years.
It also hurts that Walmart dumped Dean Foods milk last year. They decided to create their own farms instead.
