A high tide lifts all ships. Conversely, the 2009 dairy pricing low tide found processors paddling hard to shore flagging sales. Overall, our 17th annual Dairy 100 reflects relatively minor ranking boat-rocking.
Mega processor Dean Foods Co. once again checked in as the captain of the fleet, posting $11 billion-plus in annual sales. On the strength of a major sales boost attributed to acquisitions and ongoing production efficiency efforts, Saputo Inc. moves up to No. 2 from its previous No. 3 slot. As a result, Kraft Foods North America slips to No. 3 from its No. 2 position on last year’s ranking. Schreiber Foods moves up to No. 4 (from No. 5) and Agropur Cooperative checks in as No. 5 (from No. 7). Pricing challenges impacted sales at Land O’Lakes Inc., which drops to No. 8 from its previous No. 4 slot.
The numbers behind the Dairy 100 reflect the ripple effect of dairy pricing. Companies are ranked according to sales results for the most recently completed fiscal year. Since all dairy companies faced the same rocky shoal of low 2009 pricing, sales results generally had minimal impact on previously-listed companies’ rankings. However, it’s worth noting a year-on-year comparison of FY2009 sales (record low pricing) with FY2008 sales (record high pricing) created tidal waves of reduced sales, with some companies reporting drops of up to 30 percent.
The traditional industry solution to low dairy pricing is to “make it up in volume.” And that’s exactly how many of this year’s ranked companies proceeded. In cases where 2009 sales grew or remained stable, it was inevitably the result of volume increases brought about by ongoing consolidation, operational efficiency improvements or increased customer bases. “We actually had a record year in terms of volume,” multiple company representatives noted during Dairy 100 research.
Despite pricing challenges, membership in the Dairy 100’s “billion or more” sales club remained largely the same, with 27 companies hitting the mark as opposed to 29 companies last year.
Shifting Tides & Ties
In 2010, Dean Foods Co. re-aligned its divisions to streamline operations and incorporate acquisitions. The Fresh Direct Dairy division renames the Dean Dairy Group and covers regional/national brands in the fresh fluid dairy segment, including previously announced acquisitions such as the fluid milk operations of Heartland Farms (No. 57 last year) and Foremost Farms USA (Golden Guernsey and Morning Glory facilities). The WhiteWave-Morningstar division handles nationally branded organic dairy, creamers, soymilk and other premium non-dairy alternatives as well as private label and refrigerated extended shelf life products. A third division, Alpro, becomes the new international unit. Alpro, along with five soy-based food and beverage production facilities, was acquired by Dean Foods from Belgium’s largest food company in a deal finalized in late 2009.
Lala USA checks in as No. 10, the highest-ranked of the “new” Dairy 100 companies. A freshly-minted subsidiary of Mexico’s Grupo Lala, company officials including new CEO Steve McCormick continue to sort out corporate structure and operations following the purchase of National Dairy LLC (No. 18 in 2009) from Dairy Farmers of America (No. 12) as well as New Jersey’s Farmland Dairies Inc. (No. 50 in 2009). Smaller entities including Promised Land Dairies of Texas (2009 purchase) and Gilsa Dairy of Nebraska (purchased from Wells’ Dairy in 2008) are also integrated; Farmland’s aseptic fluid facility in Grand Rapids, MI, was divested.
California’s Foster Dairy Farms (No. 45) acquired Humboldt Creamery (No. 78 last year) following the latter’s bankruptcy in a deal finalized in August 2009. Foster gained Humboldt’s brand name and its Fortuna, CA, milk and ice cream production facilities, but the deal did not include the Los Angeles Humboldt ice cream plant.
Numerous other individual dairy facilities changed hands since last year’s Dairy 100. Kraft Foods divested a cheese facility in Rupert, ID, to Brewster Dairies (No. 73), and a Visalia, CA, sour cream/cottage cheese facility California Dairies Inc. (No. 18), which adds the production capabilities to its existing plant in the same city. No. 4 Schreiber Foods divested two Wisconsin facilities; a Green Bay butter plant and a Wisconsin Rapids cheese plant. DFA shed its Portales, NM, whey powder facility. Grassland Dairies (No. 22) added a milk/cheese facility in Greenwood, WI, and a butter/cream plant in Zachow, WI. Ohio’s Smith Dairy (No. 60) added capacity with the purchase of a Missouri UHT ice cream and soft serve mix facility. Iowa’s Swiss Valley Farms continued streamlining operations to focus on the cheese business, closing a milk plant in Chicago and a Spring Valley, MN, cheese facility (part of its Rochester Cheese division).
As dairy companies realign, reposition and reinvent, the name game is in play. Fonterra USA Inc. is now Fonterra North America (No. 20). The Illinois ice cream novelty creator formerly known as Masterfoods is now Mars Ice Cream US (No. 47), headed up by new GM Craig Hall; the one-plant operation remains in the Mars Inc. family as a subsidiary of the Mars Chocolate NA division. TCBY Systems is under new ownership (formerly Capricorn Investors) following a buyout by multiple private investors; it also has new leadership, with Tim Casey taking over as CEO. Wisconsin’s Roth Käse has added its parent company name as part of the structured acquisition, officially becoming Emmi-Roth Käse Ltd USA (No. 86) this summer (watch for in-depth coverage in the September Dairy Field Reports).
Minnesota’s Bongards’ Creameries Inc. reappears on the Dairy 100 (No. 51) after it mistakenly dropped off last year’s Dairy 100 (reported 2008 sales of $375 million would have placed as No. 40). Since it last appeared as No. 60 on the 2007 Dairy 100, Bongards’ Creameries management has added a Humboldt, Tenn., processed cheese plant. The deal with ACH Food Companies Inc. was finalized in March 2010; newly-expanded operations have shifted the role of longtime top dairy executive Keith Grove from GM to president/CEO.
Beyond the ‘new’ listings for Lala USA and Bongards’ Creameries, ongoing industry consolidation freed up slots for seven Dairy 100 additions: Clover Stornetta Farms (93); Yarnell Ice Cream Co. (94); Berner Foods Inc. (95); Lifeway Foods (96); Oregon Ice Cream Co. LLC (97); Thiel Cheese & Ingredients (99) and Kleinpeter Farms Dairy, LLC (100).
How It Works: Dairy 100 Methodology
The Dairy 100 annually ranks dairy processors according to finished dairy product sales for the most recently completed fiscal year. Listed North American businesses sell finished dairy products in the United States and elsewhere, and utilize U. S. and Canadian dairy processing facilities.
The 2009 sales represent the listed fiscal year end date (or an estimate), presented in millions of U.S. dollars. Prior fiscal year sales are also included for previously ranked companies (adjusted FY2008 sales figures appear in italics). Some Dairy 100 businesses are subsidiaries, divisions or operating units of larger entities such as cooperatives, supermarkets, global food corporations and investor groups. In the case of cooperatives, raw milk sales to other entities are not included in sales figures.
Each ranking also offers a dairy operation snapshot. Each listing includes the processor’s headquarters location, the name and title of its top dairy executive, the type of company as well as applicable details on parent operations, dairy-related subsidiaries and joint ventures as well as North American brands, products and plant locations. Listings also include international brands and plant locations. Depending on the complexity of the business, plant details may be broken out by subsidiary name.
The Dairy 100 is used industry-wide as a reference guide throughout the year. As a result, while sales figures determine rankings, descriptions reflect changes to company names, facilities, brands and personnel through mid-2010. Some entries include specifics on recent mergers, acquisitions, divestments, joint ventures, brands and other applicable information. Dairy 100 listings are based on researched details provided/verified by ranked companies and/or based on editorial research.
Where Are They Now?
Does it seem this year’s Dairy 100 is missing some companies? Look more closely. The following operations are no longer independently ranked due to acquisition or business realignments/reporting changes: Dietrich’s Milk Products Inc. (folded into DFA listing as part of DFA business realignment); Farmland Dairies LLC (Lala USA); Heartland Farms (Dean Foods Co.); Hiland Dairy (Prairie Farms); Humboldt Creamery (Foster Farms Dairy); Mid States Dairy (Prairie Farms); National Dairy LLC (Lala USA); and Roberts Dairy (Prairie Farms).
