A new report shows that Dean Foods Company is struggling amid slowing milk sales and rising costs. The news comes as Dean’s largest customer, Wal-Mart Stores, is preparing to open its own milk processing plant, reducing its reliance on Dean. The Texas-based milk supplier this week cut its per-share profit expectations nearly in half. Shares of Dean Foods are down 45 percent this year, and the company’s CEO has pledged to reduce annual expenses by up to $50 million by 2018. The Wall Street Journal says Dean’s recent struggles, however, raised broader questions among some analysts on payoffs from the milk company’s long-term strategy to focus investment on branded milk products. Meanwhile, retailers have added to the price pressure by aggressively pushing for cheaper milk for their own store brands. Wal-Mart’s soon-to-open milk plant in Indiana will cost Dean about 90 million to 95 million gallons’ worth of sales annually. Though Dean has been preparing for the shift.
From the National Association of Farm Broadcasting News Service.
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