Dean Foods is filing for bankruptcy as America’s largest dairy manufacturer.
The 94-year-old company has had difficulty with Americans drinking less cow’s milk in recent years. 2019 was particularly brutal: in the first half of the year, sales of the company fell 7%, and earnings declined by 14%. Dean Foods (DF) stock has lost 80 percent in this year’s fight for an “accelerated fall in the segment of organic white milk. The company that produces some of the most popular juice and dairy products in the world, including Dairy Plain, Organic Valley, and O’Lakes kinds of milk.
The business has a liability saddle and could not cover all of the salaries of its employees. Dean Foods then lodged bankruptcy protection under Chapter 11 on Tuesday to keep the business running, reorganize its liabilities and help fund benefits while it is selling the product.
Dean Foods said in a release that the Dairy Farmers of America cooperative was negotiating on a possible deal in which nearly the entire business would acquire.
The company secured $850 million of funding, including Rabobank (RSWLDD), as part of its bankruptcy process, to maintain its business functioning.
When the American fridge stapled, milk slowly fell in favor of consumers when they were seeking less suggestive or plant-based alternatives.
According to Euromonitor, the world market for milk alternatives is projected to reach 18 billion dollars this year, up 3.5% from 2018. That is still a fraction of the current dairy demand, which this year would hit just less than $120 billion worldwide.
Over the last four years, prices of cow’s milk have fallen. According to the CNN Business data provided by Nielsen, sales for the past 52 weeks, which ended on October 26, totaled around $12 billion. In a similar period for 2015, this is down from $15 billion. Cow’s milk has declined in all types, including 1%, 2%, skins, and fat-free dairy sales.
In the last year, by contrast, sales of oat milk were still significantly smaller and rose by 636% to $53 million.
It is not Dean Foods ‘ only issue. Despite having built their dairy plant last year, Walmart (WMT), who was one of Dean Food’s significant customers, abandoned them.
Tuesday for Chapter 11 Bankruptcy Protection, Dean Foods, America’s largest dairy producer, sued In recent years, the revenues of the business have declined amid a popularization of milk alternatives.
The Dallas company manages some of the most distinguished brands in the country, including DairyPure, Friendlies, and Land O’Lakes. In a press release, it said that it plans to continue running its business through the bankruptcy process, address debt and pay its employees unfunded pensions.
The firm, 94 years old, also said that it wants to look for a buyer. That is a nationwide dairy advertising partnership with tens of thousands of producers, which is under negotiation with Dairy Farmers of America, Inc., about possible sales.
Dean Foods said consumers would notice no difference because they expect to carry on as usual. It was funded by established creditors for about $850,000 debtor-in-owners to support its activities, including compensation to its staff, suppliers, and vendors.
“Dean Foods President, CEO Eric Beringause said that the measures that we today announce would allow us to continue to serve our customers and function as healthy as we sell our business.
Dean Foods has lost a critical Walmart partnership, which started its milk processing in 2017.
The business has experienced a boom in the milking industry and the growing popularity of herbal diets. Almond, oat, corn, flax, cocoon, cassava, and other substitute milk products in America also contributed to significant declines in total milk consumption. The dairy industry struggled as the trends have changed as customers become more conscious of the climate. Since 1975, per capita milk consumption has fallen over 40 percent in the United States, says The Associated Press.
U.S. sales of oat milk have risen 636% to over $52 million in the last year alone, according to Nielsen data. In comparison, the average annual production of cow’s milk in the previous four years fell by 6 percent. The United States destroyed 1 million dairy cows over the last half-century.
“There remains a challenging operational environment, characterized by the ongoing declines in consumption of milk,” Beringause said, despite our efforts to make our business more agile and cost-effective.
According to its annual report, two-thirds of the sales of Dean Foods were from fluid milk last year. In 8 of the previous ten quarters, it lost money.
The company employs about 16,000 workers and runs across the world more than 60 treatment plants.