Food Business News - August 22, 2017 - 13
Pivoting away from
commodity fluid milk
ecent acquisitions by Dean Foods are intended to refocus the
company on the manufacturing of higher-margin products.
Such acquisitions include:
ÎUncle Matt's Organic: Acquired this past
June, Uncle Matt's Organic is a manufacturer
of organic beverages, including probiotic-infused juices and fruit-infused waters. Terms
of the agreement were not disclosed.
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Í Dean Foods acquired Good Karma Foods in May. Good
Karma is a manufacturer of flaxseed-based milk alternatives
in such formats as yogurts and beverages. Terms were not
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Î In November 2016, Dean Foods entered into a joint
venture with CROPP, an organic farmer cooperative
and owner of the Organic Valley brand. The partnership is intended to bring organic milk to retailers
through Dean Foods' processing plants and refrigerated direct-store delivery distribution system.
Í Dean Foods acquired Friendly's Ice Cream
L.L.C. in May 2016 for $155 million. Friendly's
is a manufacturer of packaged ice cream and
frozen dessert products. FBN
to shift its production away from the
processing and selling of commodity fluid milk to such higher-margin,
branded products as Dairy Pure milk and
sour cream, and Friendly's Ice Cream.
Financial analysts on the conference call
questioned whether the company could
make such a pivot while at the same time
continuing to remain competitive in the
market for commodity fluid milk.
Mr. Scozzafava called the fluid milk
side of the business "core" to the company and necessary to run the company's
plants and cover overhead.
"We want to be able to feed our
plants," he said. "We want to be able to
win bid business that makes sense for us,
and we want to lower the bar on that, so
the business that we might have looked
at in a different way in years past, we're
August 22, 2017
going to look at in a positive way now. So
that's part of being aggressive, but that
leads to the transformation.
"And if you look at other companies,
food and beverage companies that have
gone through this process, it does take a
certain amount of time because you need
to do it with precision and care. So that's
where we are. We're pivoting, but I don't
expect this to be an overnight transition.
But we will get there."
For the first six months of fiscal 2017,
Dean Foods earned $7,888,000, equal to
9c per share, and a significant decline
compared to the same period of the
previous year when the company earned
$72,572,000, equal to 79c per share.
Sales for the period rose to
$3,922,408,000 from $3,727,616,000 the
previous year. FBN
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