Owner of brands like Land O’Lakes, Tuscan and Lehigh Valley Dairy Farm is planning to make an efficient sale of these.
Dean Foods reported that it already filed bankruptcy and would soon be selling the rest of it. This dairy company employs 15,000 people and is said to be the country’s largest daily processor.
Are they really going to purchase Dean Foods?
Dairy Farmers of America is going to acquire Dean Foods assets. According to reports, they have already made some reviews on the operation of Dean’s sale. They are figuring out if a stand-alone strategic plan is feasible.
Dean Foods president and CEO since July, Eric Beringause made a statement on Tuesday “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.” To keep the business going, they commit $850 million in debtor-in-possession financing.
This scheme is suitable for companies under distress financially. Dean Foods’ financial loss didn’t just start. Since the last ten quarters, they have reported that sales have gone down. He claimed furthermore, “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.”
What happened?
One of its losses is due to Walmart’s opening of a milk bottling plant in Indiana and now provides dairy and milk products to 5 states. According to Mark Stephenson, a director of dairy policy at the University of Wisconsin-Madison, “I think that certainly was a blow for them, but it was only one of many they have had.”
Dean Foods canceled its quarterly earnings call on Tuesday due to the filing of bankruptcy. In their statement, they said that customers shouldn’t be alarmed because there will be a continuous supply of dairy products to their retailers.
Dean was founded in 1925 and was received openly by the public in1961. The company is the largest direct-to-store milk distributor in the country. But since 1985, sales of milk have only little increase. Beverage companies are experimenting with the different taste palates of the market. There are sports drinks, energy drinks, and plant-based drinks.
While milk may be the less drank by the consumers. 94% of the household in the nation would always keep this beverage in their refrigerators. Dairy categories such as cheese and butter have high consumptions and are doing well in the industry.
Americans ate 2.5% dairy this year than last year. The retail value of this is more than $100 billion.
Dean Foods stock rose 2.3% as of the latest trading.
Dairy Farmers of America in Kansan was founded in 1998 and had 4 dairy cooperatives. As of today, it has 14,000 dairy farm members and 47 plants all over the country.
They produce cheese, butter, ice-cream, milk, and other dairy ingredients. To name some of their brands – Borden’s Breakstone’s, Hotel Bar, a lot more. Dairy Farmers buys milk from the farmers of Wisconsin and sells them, including Dean Foods.
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