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Food by VICE

America's Largest Milk Company Just Filed for Bankruptcy

Milk? Never heard of her.

by Bettina Makalintal
Nov 13 2019, 10:16pm

Photo by Gaia Squarci/Bloomberg via Getty Images

Dean Foods, the largest milk company in the United States, announced its Chapter 11 bankruptcy filing yesterday, the Associated Press reported. If the Dean name is unfamiliar to shoppers, the company's many brands definitely aren't, including Friendly's, Garelick Farms, Land o' Lakes, Lehigh Valley, Meadow Brook, and Oak Farms. As Americans continue to drink less cow's milk, however, those brands are seemingly being shafted in favor of dairy-free options.

"We continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption," Chief Executive Officer Eric Beringause said in a statement. The demand for cow's milk has certainly dropped over the past few decades, with per capita consumption having fallen over 40 percent since 1975, per the AP. And for Dean Foods—for whom fluid milk made up 67 percent of sales last year—the drop in milk drinking has hit hard.

The dairy processing company, which has 16,000 employees and 60 processing plants nationwide, has lost money in eight of the last 10 quarters, per the AP. The loss of business after Walmart opened its own milk processing facility last year didn't help the situation. Despite the company's valuation of $74 million, Reuters reported, Dean had approximately $968 million of debt as of this June.

For now, Dean Foods has received $850 million from existing lenders to continue operating, but the company is reportedly considering a sale to the Dairy Farmers of America, a national milk cooperative made up of over 14,000 dairy farmers and whose brands include Borden, Oakhurst, and Plugra. A potential consolidation of the two companies makes sense: According to Bloomberg, the cooperative's focus is on securing markets for the milk of its members, and Dean is currently DFA's biggest customer.

While there might be shake-ups in the back-end of getting cow's milk to the average American's fridge, Mark Stephenson, director of dairy policy analysis at the University of Wisconsin-Madison, told VICE that it's unlikely to have a huge impact on the broader industry or on consumers. "Certainly it has a big impact for Dean Foods, depending on what their resolution is and what they do," he said, but a potential sale of Dean to DFA could even be good by ensuring that there's a place for DFA's milk to go. "This doesn't necessarily shut other farmers out from sale of milk, because DFA is supplying a lot of milk to Dean Foods currently," he added.

Stephenson doesn't predict changes in price or availability as a result of the two companies' potential consolidation. "We would certainly not expect that, you know, all of a sudden, all these plants would shut down because even though beverage milk consumption has been in decline for several years, there's still a pretty big demand for the product. It's not that that product wouldn't be made available to consumers," he said. "I don't think that consumers are really going to notice anything different, you know, in their stores. That's what I meant by it's not a real big impact on the industry. Consumers won't know, and I don't think that for dairy farmers, it's a very big impact either."

Consumers might not notice the effects of Big Milk's business dealings, but the Dean Foods' filing is proof of just how much the American milk landscape is changing. One person's morning coffee order alone isn't toppling the industry, but as more and more people opt for almond or oat in their lattes, the dairy industry is definitely feeling the heat.

Tagged:
dairy
dairy industry
milk
dean foods
dairy farmers of america