Share on Google Plus Share on Twitter Share on Facebook Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend 1 (1 Shares)  
Printer Friendly Page Save As Favorite View Favorites View Stats   18 comments

OpEdNews Op Eds

COMMENTARY: A Shot Across the Bow Deconstructing Dean Foods: Spinning-off Organic/Namebrand Division

By Lynn Buske  Posted by Will Fantle (about the submitter)     Permalink       (Page 1 of 2 pages)
Related Topic(s): ; , Add Tags Add to My Group(s)

Funny 1   Supported 1   Interesting 1  
View Ratings | Rate It

- Advertisement -

Make no mistake about it.  As Calvin Coolidge put it, "The business of America, is business!"

Nowhere in the dairy industry has that philosophy been truer than the example of the dairy empire built by Suiza Foods Corporation CEO Greg Engels, now known as "Dean Foods."

Dean's was just one of the numerous acquisitions Engels put together to create the largest dairy empire (enterprise) in the United States.  Although accused of crushing competition, both on the retail level and at the farmgate (as evidenced in part by the recent $30 million settlement in favor of the Northeast dairy producers), my message today primarily concerns their investments in the organic industry.

Recent Dean history might prove the adage, "The bigger they are the harder they fall."

Dean Foods stock has been in freefall.  Their stock lost 84% of its value since its peak in 2007.  CEO Greg Engels was ranked 338th, out of 338 CEOs, in terms of wealth destruction, in a recent report by Chief Executive Magazine.

All this amounts to easy pickings for "bargain hunters" on Wall Street.  Rumors have been flying, as reported in the Milkweed, that major food and dairy conglomerates, including Groupe Danone, are eyeballing Dean Foods, or selected assets, as possible acquisitions.

- Advertisement -

And that leads this discussion to Dean's branded products division, at WhiteWave.

WhiteWave is a weird conglomeration of organic, and formerly organic brands, along with disparate offerings such as International Delight nondairy coffee creamer (what we refer to in Wisconsin as: White Death).  How can Dean executives look consumers square in the eye and profess their commitment to the environment and the healthy ideals of organic food while hawking a potion as damaging to human health as their imitation cream is beyond my imagination.  But I digress.

In the middle of the 2000s, when the value of Dean Foods stock was hurting, and dairy producers were receiving recent record-high prices (Dean seems to only be able to excel when farmers are being screwed by low farm gate prices), CEO Engles passionately hung his hat on the "future" of the company within the WhiteWave portfolio, principally Silk soy "milk" and Horizon.

In a flip-flop, as the market for organic milk became glutted (due in part to a factory farms that that Dean Foods invested in), and dragged down profit margins at WhiteWave, Engels was quick to tell stock analysts to quit focusing on Horizon, "organics are less than 3% of our business."

And in the next flip-flop, in what's beginning to look a bit schizophrenic, Dean Foods executives are now hyping the value of WhiteWave once again.  Their acquisition in 2010 of Alpro, with five manufacturing plants in Europe, makes Dean/WhiteWave the largest soy foods marketer in the world.

Executives no longer refer to Dean Foods as a "dairy" business but rather as a "consumer packaged goods company."  Maybe not surprising because few of them have any experience in dairy or organic industries.

For some time it had been rumored that Dean Foods was looking to either spin-off WhiteWave or sell the division outright.  A few years ago the company announced completion of an initiative to separate the manufacturing, marketing and distribution functions of WhiteWave from the rest of Dean Foods.  They named Joe Scalzo, formally with Gillette and Procter & Gamble, as the new operating unit's CEO.  Everything was ready to pull the trigger on cashing out the WhiteWave assets.

That is, everything except pending legal action at the USDA that could have shut down the large factory farms producing Dean's Horizon milk, including one corporate-owned dairy, managing at the time approximately 8000-head of cattle, in desert-like conditions in Idaho.

Instead of seeing the writing on the wall, and looking for additional family farm milk to potentially phase out their vertically integrated milk production (an aberration in the dairy industry), Dean Foods announced plans to spend an additional $10 million upgrading their Idaho facilities to accommodate grazing (according to Cornucopia research and related formal legal complaints they had been illegally operating a confinement feedlot dairy).

Current and former Dean/WhiteWave employees now estimate the investment in their Idaho "organic" dairy as being between 20 and 22 million dollars (over and above their original cost basis).  Even if consumers believe that operating an industrial dairy, with thousands of cows, isn't a betrayal to the values that the organic movement was founded upon, it's certainly questionable whether this facility can ever be operated profitably.

Next Page  1  |  2


The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Follow Me on Twitter

Contact Editor
Related Topic(s): ; , Add Tags
- Advertisement -

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Organic: Food Justice for the 99% (Response to Time Magazine/Dr. Oz denigration of organic consumers)

Not Good Enough for Pet Food: Chinese Organic Food Scrutinized at Congressional Hearing


The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
6 people are discussing this page, with 18 comments
To view all comments:
Expand Comments
(Or you can set your preferences to show all comments, always)

The bottom line. How nice to make your aquaintanc... by Ned Lud on Wednesday, Jan 26, 2011 at 11:34:38 AM
Dear Ned, This is the third time you posted on thi... by Will Fantle on Thursday, Jan 27, 2011 at 12:51:26 PM
If so, thank you. (If merely written by one of Kas... by Ned Lud on Friday, Jan 28, 2011 at 6:06:51 AM
bring your concerns to them privately on the condi... by Allen Oliver on Friday, Jan 28, 2011 at 7:38:01 AM
I'm well acquainted with Ned's story and have even... by Judy Palmer on Friday, Jan 28, 2011 at 8:03:30 AM
Ned and I also became friends through OEN. I have... by Allen Oliver on Friday, Jan 28, 2011 at 8:29:03 AM
Ned and I have been friends for several years now.... by Judy Palmer on Friday, Jan 28, 2011 at 10:30:14 AM
but strangely I seem to "get" Ned without having t... by Allen Oliver on Friday, Jan 28, 2011 at 10:58:46 AM
I got Ned right away too, and when I don't get him... by David Glenn Cox on Friday, Jan 28, 2011 at 11:52:09 AM
And I am now a fan of yours. Besides writing to Ms... by Allen Oliver on Friday, Jan 28, 2011 at 12:54:05 PM
players out of business. This eliminates competit... by Mark Adams JD/MBA on Saturday, Jan 29, 2011 at 1:47:44 PM
I was posting over at The Bovine and I ran into so... by Ned Lud on Saturday, Jan 29, 2011 at 3:17:12 PM
And I'll keep responding and fighting every time t... by Judy Palmer on Sunday, Jan 30, 2011 at 8:50:08 AM
Ned, (Yes, this is me. Although a staff member... by Will Fantle on Saturday, Jan 29, 2011 at 10:22:45 AM
Dear Mark~Yes, Mark, you are a polite and well-spo... by Ned Lud on Saturday, Jan 29, 2011 at 12:18:46 PM
I want to thank Op-Ed News (OEN) for this forum an... by Ned Lud on Saturday, Jan 29, 2011 at 12:26:17 PM
Ms. Christianson,Anyone in Neds position would fin... by Allen Oliver on Saturday, Jan 29, 2011 at 6:06:47 PM
Just does not ring true. Ned is someone that was ... by Allen Oliver on Saturday, Jan 29, 2011 at 11:11:29 PM