For a complete listing of the Dairy 100 click here.
For an alphabetical index of the Dairy 100, click here.
The industry passes a milestone this year, as Dean Foods has realized its promise as the first $10 billion North American dairy processor. And it's not just the top cat that's getting bigger. There are a record number (22) billion-dollar companies in this year's Dairy 100,™ and the majority of them experienced considerable sales growth in 2004, thanks in part to higher prices. The top 10 companies now represent just under $38.5 billion, compared with just less than $30 billion last year.
As far as the rankings of the top 10 or 20 companies, there was much less movement than during the heat of the consolidation race in the late 90s. The top five companies are the same as last year. And compared to six or seven years ago, most of the movement in the upper echelon was organic. Acquisitions coming on the books this year did affect the rankings of HP Hood and National Dairy Holdings, with Hood entering the top 10 for the first time at No. 6, and NDH dropping out to No. 14. The ongoing integration of Dreyer's Grand Ice Cream and Nestlé USA led to some sales reporting requirements which ultimately resulted in Dreyer's dropping a few spots this year.
Again this year we have two Canadian companies in the top 10-Saputo at No. 4 and Parmalat Canada at No. 10.
This year we'll look at what's going on with some of the top 20 companies before moving for some highlights from the rest of the list.
Dean FoodsWhen Suiza Foods and the legacy Dean Foods merged in December 2001, some simple addition told you that the resulting company would have sales in the neighborhood of $10 billion. The Securities and Exchange Commission however required some divestiture during that merger, so for its first full fiscal year (2002) Dairy Foods had the new Dean Foods Co.'s dairy sales at about $8.1 billion. It should be noted that the figures used in the Dairy 100 represent products that are typically made in a dairy plant, so that for Dean Foods we do include soy milk sales, but not pickle sales.
Dean's sales were just a bit higher in 2003. This year, Dean is benefiting from its full acquisitions of both Horizon Organic and White Wave, two companies that it has had a stake in for some years. Dean's total sales for 2004 were $10.8 billion, which includes its pickle business. That makes Dean Foods one of the five largest dairy-focused companies in the world, including companies like Danone, Kraft and Nestlé, and Unilever, and each of those is much more diversified than Dean. With the demise of Parmalat, France's Lactalis may be the only other company with annual sales of more than $6 billion that is so focused on a full spectrum of dairy. Among U.S. food manufacturers, Dean is in the top 10.
While the Dean Suiza merger really consummated the acquisitions race, Dean still makes some small acquisitions here and there, and it continues to consolidate its facilities. Four plants were closed in the last year.
The culmination of the acquisitions of Horizon and White Wave makes Dean a dominant player in both the soymilk and organic dairy segments, but that hasn't happened without a hitch.
Horizon's chief executive left the company after the acquisitions took place, saying he was comfortable with Silk founder Steve Demos becoming the chief operator of the new White Wave division. Dean announced with some fanfare that the entire company had been realigned and the Boulder Colo.-based White Wave division would represent more than $1 billion of the corporation's value-added sales. But seven months later, Demos resigned. Dairy Foods sources say that Demos' departure was abrupt and stemmed from substantive differences about business matters.
Meanwhile one of the chief raw milk suppliers for Horizon is at the center of a debate over pasture access and the organic standards.
But the core of Dean's operation is still in the traditional full-line dairies like Meadow Gold Dairies, Ogden, Utah, which is a major part of the Dean Dairy Group's Southwest Region operations. Meadow Gold is currently in the process of building a greenfield dairy plant in Las Vegas to help maximize its presence in one of the fastest-growing markets in the U.S.
Dean Foods is far and away the largest full-line dairy processing company in North America, but it's a safe bet that the folks in Dallas have no intention of resting on their accomplishments.
Kraft Foods North AmericaThere have been a number of changes in the executive offices of Kraft Foods in the last couple of years, with the most recent being the announcement that Betsy Holden is leaving the company, but Kraft Foods continues to be the dominant player in the U.S. cheese market and it continues to hold the No. 2 spot in the Dairy 100.
Kraft's numbers are hard to pinpoint in that the closest thing it has to a reporting segment that reflects only its North American dairy business is Cheese, Dairy and U.S. and Canada Food Service. That segment had sales of $7.4 billion in 2004 compared to $6.7 billion in 2003. Kraft also reports that its worldwide cheese sales for 2004 totaled $6.2 billion.
Late last year, CoolBrands International, Ontario, announced that it planned to buy the Breyer's yogurt brand lines from Kraft. Kraft says the deal was recently completed.
Kraft also announced this year that it plans to curb advertising of sugary and high-fat foods to children 6 to 11 years old. Kraft said it will phase out all TV, radio and print ads targeted to the group for products such as Oreo Cookies, original Pebbles Cereal, and Kool-Aid and Capri Sun Drinks.
Saputo Inc.The Canadian cheese and dairy leader completed no new acquisitions during its latest fiscal year, which ended in March, but don't get the idea that it's done buying. In May Saputo spent $24 million to buy Schneider Cheese, Waldo, Wis.
A few weeks later, CEO Lino Saputo Jr. told a Canadian newspaper that the Montreal-based company still sees lots of opportunity for both acquiring other U.S. cheesemakers and for selling products on the world market through its Argentine operations.
Schreiber Foods Inc.Another big cheesemaker, Schreiber Foods, Green Bay, Wis., does have an acquisition coming on the books this year. In 2004 Schreiber announced that it was purchasing Level Valley Creamery, West Bend, Wis. Combine that with some plant expansion in Utah, and it's no surprise that Schreiber's estimated sales grew again in 2004 by about half a billion dollars.
Schreiber purchased Raskas Foods during fiscal year 2002, and its estimated sales have grown from $1.5 billion to $2.7 billion.
HP Hood LLCWith its acquisition of Kemps and Crowley coming on the books, HP Hood, Chelsea, Mass., moves up to No. 6. This same company was No. 29 just five years ago! Dairy Foods' Processor of the Year in 2004 operates in part as a joint venture with Dairy Farmers of America.
The company recently received a letter of non objection from FDA to run aseptic products from its Winchester, Va., plant. It has also forged a licensing agreement to manufacture cold-filled Arizona Tea, and last year it re-entered the organic milk business through a joint venture with Stonyfield Farm.
Good Humor-Breyers Ice Cream and Dreyers Grand IceThe battle for the top ice cream spot in the Dairy 100 is closer than ever, with Good Humor-Breyers just edging out Dreyer's Grand Ice Cream. Everybody loves ice cream, and GH-B is a master at staying on top of what flavors, formula's and sizes everyone's going to love next. This season GH-B responded to the success of Dreyer's Slow Churned Grand Light with its own low-temperature extruded line it called "Double Churned."
As part of Unilever's North American Ice Cream organization (which also includes Ben & Jerry's) Good Humor has a blockbuster line of products for North American customers.
Dreyer's Grand Ice Cream LLCDreyer's spent a record sum introducing its Slow Churned Grand Light last year and it seems to have paid off. Sales grew substantially in 2004, the first year of the fully integrated company.
Dreyer's is so happy with the results of the new Grand Light that this year it rolled out a line of Häagen Dazs Light, that's made using the same process. Dreyer's has been busy with two major construction projects this year as well, with major expansions underway at its Laurel, Md. and Bakersfield, Calif. plants.
Also in the top 20, Foremost Farms grew nicely in 2004 on the strength of its cheese and whey sales, and jumps two spots to No. 13. Great Lakes Cheese joins the billion-dollar club and climbs to No. 16.
Cheese and Whey sales seem to be contributing to bigger numbers for many of the top companies. Hilmar Cheese boosted sales by around 40% and jumped from No. 31 to No. 26. Agri-Mark is up by more than $200 million and moves from No.32 to No. 28.
Troubled Florida-based grocer Winn-Dixie has plans to sell its captive dairy operations, but so far no takers. We estimated sales down for Winn Dixie and they drop a few places to No. 31.
CoolBrands, International continues to grow on the strength of its acquisitions although it has endured a difficult year in many respects. With sales of more than $500 million, CoolBrands jumps to 37 from 43. Tillamook County Creamery Assn. crosses into the top 49 as it continues to push deeper into growth markets (see sidebar).
Sales of organic dairy products continue to grow, so no surprise that Organic Valley has reached No. 61 with sales of $191 million, or that Stonyfield Farm is in close pursuit at No. 64 with a 2004 total of $172 million. To think that a few years ago these companies' numbers wouldn't even get them in the top 100!
Oakhurst Dairy, which only recently began offering organic milk in addition to its non-RBST Oakhurst brand, went from No. 92 to 85 with $96 million in sales.
Sidebar: Where did they go?Just one company disappeared from the list in 2004-Level Valley Creamery, which was acquired by Schreiber Cheese. Parmalat USA emerged from the corporate bankruptcy as Farmland Dairies Inc., (while Parmalat Canada remains intact). Joining the Dairy 100 this year at No. 95 is a company that's no stranger to our readers-Perry's Ice Cream.
Sidebar: MethodologyFor the 12th annual Dairy 100, Dairy Foods solicited the top companies in the industry through emails, faxes, and phone calls. In cases where the company did not wish to divulge dairy-specific sales figures, estimates were made using financial report information, and industry experts. The sales figures are for dairy products or products dairies could make. That means juice and non-dairy creamers are counted, but pizzas, pickles and coffee are not.
Sales represent company revenues and are expressed in million of dollars, U.S. For Canadian companies, conversions were made at the time the information was reported in June or July of this year, for both ‘04 and ‘03 sales. Company descriptions reflect or note recent changes, including acquisitions, plant closures and personnel changes, but sales figures are for the most recently completed fiscal year available.
Sidebar: Tillamook Spreads a Slice of the Great NorthwestJay Allison, v.p. of sales and marketing for Tillamook County Creamery Assn. likes what he sees in slices and shreds.
"Statistics say that processed cheese is stagnant and the natural cheese slice segment is growing,"Allison says. "Natural shreds have been booming and continue to boom."
That might be good news for any company selling natural slices and shreds in nice packaging, but its especially good news for Tillamook as it grows its business in markets far from its Oregon coast base.
Once thought of as a western states-only company, Tillamook is still western-intensive, but it has grown with its grocery chain customers and is now selling a broader line of products in markets like Chicago, Dallas, and even parts of New England.
"In the east we're perceived as a specialty cheese, but in the west we are mainstream. In order to get the volume, we need to be on the dairy side as well as the deli side in the east and the Midwest. We used to have one or two SKUs that we squeezed into what we call the process cheese section, but now we have an entire shelf."
While two-pound and random weight chunks are successful staples for Tillamook, it has along with other cheesemakers, introduced slices and shreds in convenience packaging including shingle packs and zipper bags. But some consumers in the heartland and along the eastern seaboard are seeing these forms of Tillamook for the first time. And these product lines may be more visible thanks to a packaging makeover that features bright colors keyed to the grade of the cheese.
"We've been working for a couple years on upgrading and updating all of our packaging," says Allison, who's been with Tillamook for more than a decade. "Every package will have been updated and upgraded by the end of this year."
The co-op is also intensifying its marketing efforts in places like the Midwest, Southern California and Texas. Outdoor media, cable TV and print ads from three major campaigns are telling more consumers than ever about Tillamook Cheese.
"One example is the Escape From Beigeland campaign in the Midwest," Allison says. "It tells consumers that they should choose a more flavorful cheese, and break out of the ordinary-you don't have to have the ho-hum Cheddar."
All of these efforts seem to be paying off. Sales grew significantly in 2004 and the association climbed from No. 52 to No. 49 in the Dairy 100.
Tillamook has also had some difficulties in the past year. In June workers at its Tillamook plant walked off the job after a dispute over having to pay insurance premiums, but an agreement was reached and the strike ended after just 11 days.
On a national level, Tillamook sells only cheese, but in the Northwest it has a successful ice cream business and offers a line of yogurt. Ice cream packaging is also being made over to a 1.75 quart container. A yogurt smoothie line will be in stores in the fourth quarter, replacing the flavored milk line that was discontinued last year.
But cheese is the main driver of Tillamook's growth, and in less than two years from now it will have the ability to make and sell even more of it.
Beginning later this year, the Columbia River Processing facility, in Boardman will undergo a major expansion to double its capacity. The project is expected to cost about $50 million and Tillamook is looking to have it completed by late 2006.