Profit over Organics: Nation's Largest Dairy Marketer Sets Up Competing Market Category

Dean Foods Creates "Natural" Dairy Products Using Conventional Milk

BOULDER, CO: A division of Dean Foods, the organic
industry's largest namebrand manufacturer, rocked the organic world
this week when it was reported that the agribusiness giant intended to
create an entirely new, lower-priced, product category, "natural
dairy," aimed squarely at pirating away organic customers. If
successful Dean, the largest milk processor in the United States, will
add to the pain many organic farmers are feeling due to slowing sales
caused by the economic downturn.

For the first time the Horizon namebrand will market products that
are not certified organic. Horizon has had the highest dollar volume of
any organic industry brand.

Dean's WhiteWave-Morningstar division, which controls the Horizon,
Organic Cow, Silk, and other specialty brands and is based in Longmont,
Colorado, has launched their "alternative to the organic label" at a
time when sales in the industry have flattened after averaging 20% per
year growth rates for more than a decade. Recent articles in the New
York Times, Boston Globe, and the Associated Press have profiled
falling prices and production caps now being placed on farms producing
organic milk-with many of these family farmers now facing financial
ruin.

"This move by Dean Foods comes at a time when organic dairy farmers
around the country are in financial crisis due to a glut of milk," said
Mark A. Kastel, Senior Farm Policy Analyst at The Cornucopia Institute.
"Responsible participants in this industry are using their marketing
strength to ramp up organic demand. Dean has instead chosen to
profiteer at the expense of the hard-working family farmers who have
built this industry."

This move comes on the heels of the recent decision by
Dean/WhiteWave to switch almost the entire product offerings of their
Silk soymilk line to "natural" (conventional) soybeans. Many consumers
and retailers have expressed outrage when the switch to conventional
soybeans was quietly made in Silk products without lowering the price.
Industry critics have referred to the move as "sheer profiteering."

"They are handling the introduction of natural products under the
Horizon label a little bit differently than they handled their switch
to conventional soybeans sourcing in Silk," Kastel stated. "With their
soy products the appearance of their packaging and UPC product codes
remained the same."

Many retailers and consumers around the country, who had been
longtime loyal customers, were outraged to find that their favorite
organic brand had been switched to conventional, somewhat
clandestinely. This has caused some retailers to now drop the Silk
products.

Sara Loveday, a marketing communications manager at WhiteWave told
the Natural Foods Merchandiser, an industry trade publication: "We've
only been organic in the past and the majority of our business will
remain organic. These are our first natural offerings in the
marketplace, and Horizon always tries to provide great-tasting products
for moms and for families."

The Dean/WhiteWave spokesperson continued by saying the natural Horizon products would be "easier on the pocketbook."

"Many consumers do not understand green terminology," said Suzanne
Shelton, whose firm, the Shelton Group, just released a national survey
examining consumer perception about food labeling. "They prefer the
word 'natural' over the term 'organic,' thinking organic is more of an
unregulated marketing buzzword that means the product is more
expensive. In reality, the opposite is true: 'Natural' is the
unregulated word. Organic foods must meet government standards to be
certified as such," Shelton concluded.

"It is apparent to us that moves toward "natural" dairy products
offerings will have a negative impact on the organic category," said
Jack Lazor a certified organic dairy farmer from Westfield, Vermont.
"It is now more important than ever that consumers of organic dairy
products understand the benefits of organic foods and farming. We need
to cultivate meaningful relationships with our customers so that we can
cut through the veil of corporate greed where natural is easily
mistaken for organic."

Lazor and his wife, Anne, widely respected as one of the first
organic dairy farmers in the United States, founded Butterworks Yogurt
in 1984, a leading organic brand in the Northeast.

Organic food has grown from a small niche to a successful $24
billion market category fueled by consumers desire for a safer and more
nutritious food supply.

"When the first Horizon natural products are introduced-a yogurt
aimed at children and single-serve milk-they will promote them as being
without growth hormones. But Dean Foods will not be able to mention
that the products are produced without pesticides, herbicides,
antibiotics and other drugs, and genetically modified feed crops, or
that the cows are required to graze in pastures rather than confined to
factory farm feedlots. These are all factors that truly differentiate
organic production from natural/conventional agricultural and livestock
production," explained Kastel.

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