Hard to believe that 2006 has come and gone. And where has it left North America’s dairy industry? Well, in a slightly different place from a year ago, that much is certain.



Hard to believe that 2006 has come and gone. And where has it left North America’s dairy industry? Well, in a slightly different place from a year ago, that much is certain.

When dairy processors look back on 2006 some may remember it as the year they broke ground or cut the ribbon on a new or expanded facility. They might remember it as the year in which they bought another company or were bought out. No doubt many will remember 2006 as the year that milk marketers began to rethink their positions on what to tell consumers about the use of synthetic growth hormones.

Wal-Mart indicated it was jumping into the fast growing arena of organic foods in 2006, and Kraft Foods found a new woman to run the company.

Some major plant projects were in the works in 2006. Southwest Cheese LLC completed its massive New Mexico cheese plant in the summer; Dreyer’s Grand Ice Cream Holdings finished a major expansion to its huge plant in Laurel, Md., and The Dannon Co. announced expansion projects in Ohio and Utah.

Numbers and sales trends

Looking at sale numbers through Nov. 5 we can make some assumptions about what consumers were buying in 2006. Yogurt continued to be the growth category this year, with dollar sales up by more than 6%, and unit sales growing too. Looks like yogurt sales will be at or near $3 billion for the year. These numbers are from Information Resources Inc., and are for food, drugstore and mass merchandiser sales excluding Wal-Mart.

For that reason, the declining milk sales may be less of a concern. Ice cream sales were down slightly but may be on the rebound (see Dairy Market Trends, p. 42).

Natural cheese showed some growth, but more by unit than by dollar sales, and novelties were fairly flat.

Headlines by the month

As 2005 came to a close in December, two important construction projects were announced. Hilmar Cheese revealed plans to build a large cheese plant in the Texas Panhandle, saying that part of the attraction involved the Lone Star State’s “positive business climate.” Hilmar has had several run-ins with California regulators over waste water issues. In upstate New York, Steuben Foods announced that in cooperation with Horizon Organic, it was expanding its facilities to include raw milk processing and to add capacity for additional production of Horizon products.

Meanwhile, a group of artisan cheesemakers formed the California Artisan Cheese Guild.

Cheeses from Swiss Valley Farms and Tillamook Cheese were among the top winners at the National Milk Producers Federation meeting in San Francisco. Stacyville Cooperative Creamery was absorbed by Foremost Farms, and Brown’s Dairy of New Orleans completed repairs to its facility and was serving customers again by the end of the year. Dairy Foods honored Tillamook Cheese as Processor of the Year.

Some major plant projects were in the works in 2006. Southwest Cheese LLC completed its massive New Mexico cheese plant in the summer; Dreyer’s Grand Ice Cream Holdings finished a major expansion to its huge plant in Laurel, Md., and The Dannon Co. announced expansion projects in Ohio and Utah.

In January Swiss foods giant Nestle purchased more stock in Dreyer’s Ice Cream Holdings, boosting the company’s share to 90%. Nestle boasted that it had achieved “clear global leadership” in the ice cream category, with more than 17% market share. Another Swiss company, Emmi AG, entered a strategic partnership with Wisconsin-based Roth Käse Ltd., in which Emmi took a minority stake in the successful specialty cheesemaker.

The industry kicked off the year in La Quinta, Calif. with the 2006 Dairy Forum, and IDFA pres./CEO noted that three of the industry’s largest entities, Dairy Farmers of America, the Dean Dairy Group and Land O’ Lakes had new leaders at the helm. Meanwhile The Dannon Company introduced Activia to the U.S. market. The probiotic yogurt, designed to aid digestion had been one of the top performing products globally for Dannon’s parent company. It would find tremendous success in the U.S. throughout the year, helping Dannon to be selected as Dairy Foods 2006 Processor of the Year.

Ice Cream Guru Bruce Tharp was honored at IDFA’s February Ice Cream Technology Conference for a career that has spanned 40 years and counting. Groupe Danone reported that its profits nearly tripled in 2005. Pepsi inked a deal to market Ben & Jerry branded refrigerated milk shakes under its Quaker division, Bravo Foods signed on with a west coast co-packer, and Arla Foods announced it was to acquire U.S. based manufacturing partner White Clover Dairy, of Wisconsin.

Some major plant projects were in the works in 2006. Southwest Cheese LLC completed its massive New Mexico cheese plant in the summer; Dreyer’s Grand Ice Cream Holdings finished a major expansion to its huge plant in Laurel, Md., and The Dannon Co. announced expansion projects in Ohio and Utah.

Also in February, Dairy Foods annual Milk and Beverage Outlook noted that there was a new emphasis on reformulated milk and throughout the beverage industry, beneficial formulation was key. In an exclusive Dairy Foods plant feature SouthWest Foods of Tyler, Texas, unveiled its new yogurt line and the unique PIOx system that burns organic waste. Giant Food said it was selling its processing plant to Maryland and Va. Milk Producers.

March brought two more acquisitions as Prairie Farms bought Turner Dairy Holdings, and Mid-West Dairymen of Illinois announced that it would purchase cheesemaker Schullsburgh Creamery, of Wisconsin. At the World Cheese Championship in Madison, Wisconsin cheesemakers dominated competition, winning best of class in 18 of 47 categories. All Star Dairy Assn. met in Florida and recognized several of its members including the winners of its quality assurance awards.

Raw milk battle lines began to form in Ohio when the state’s agriculture department began investigating herd share arrangements, and ten farmers formed a raw milk producers association. Dairy Foods’ annual Ice Cream Outlook told readers in March that the trends for 2006 would include better light ice cream, and convenience forms and packaging.

In April, Saputo announced that it had completed acquisition of German cheesemaker Spezialitaten-Kaserei De Lucia, which produces Italian specialty cheese.

Yogurt was declared part of American Culture in the April Cultured Product Trends feature in Dairy Foods.

A May Dairy Foods plant feature, on the Smith Dairy ice cream facility in Ohio, spotlighted the company’s use of a new no-metal 3-gal bulk can.

Organizers of the Food Marketing Institute show said in May that they planned to scale back the show to every other year after the 2007 show and that it would be the last year that the show would be held in Chicago. Stonyfield Farm had little details to offer, but reports indicated that the company and its parent Groupe Danone planned to launch an organic yogurt line in Europe.

Meanwhile, some Whole Foods and Wild Oats stores said they planned to bump Horizon Organic milk in order to make way for their own private label. This came at the same time as reports indicating that Wal-Mart was hoping to take a bigger slice of the U.S. organic foods market. Dairy Foods visited Smith Dairy Farms, Orrville, Ohio, to report on new installations at its ice cream plant, including a new non-metal 3-gal can.

In June, just two-and-a-half years after Roger Deromedi was given full leadership control of the nation’s largest food company, Kraft Foods had a new CEO. Irene Rosenfeld, a former Kraft executive who had most recently served as CEO of the Frito-Lay division of PepsiCo Inc., was chosen to replace Deromedi as CEO. Sartori Foods and The Antigo Cheese Co. said Sartori would acquire Antigo and its Blackfoot Cheese Co. subsidiary. Antigo and Blackfoot are employee-owned manufacturers of aged Italian cheese, with plants located in Antigo, Wis., and Blackfoot, Idaho. Sartori is based in Plymouth, Wis.

Dallas-based Fairmont Food Group, acquired G&G Foods of Santa Rosa, Calif., as it continued to build its portfolio of specialty cheesemakers. Lifeway Foods, Inc., said its board of directors had approved a two-for-one split of its common stock. Twenty-three U.S. companies brought home medals from the prestigious World Cheese Competitions in London. Meanwhile, a Wisconsin-based organic milk marketer introduced Grass Point Farms a new line of milk, cheese and butter sourced from pasture-grazed cows on Wisconsin farms.

In July, WestFarm Foods, Seattle, the largest full-line dairy in the Pacific Northwest, went back to using its Darigold brand name as its company name. Cabot Clothbound Cheddar, a traditional British-style cheddar produced through a partnership of Vermont cheesemakers Cabot Creamery and Jasper Hill Farms, took the top prize at the American Cheese Society Conference in Portland, Ore. A record number of cheeses, 941, were entered in the contest. A half-dozen Washington lawmakers called for an investigation into cheese trading at the Chicago Mercantile Exchange, and Ben & Jerry’s said it would avoid using a new ingredient developed through gene modification of material from a deep-sea fish.

In August, country singer LeAnn Rimes helped promote Dairy Queen’s first ever Miracle Treat Day to help support the Children’s Miracle Network.

The 13th Annual Dairy 100 was published in the August issue of Dairy Foods, showing that North America’s top 22 dairy processors had each done more than a billion dollars in sales in their most recent fiscal year. A group of 100 production workers at a Sargento cheese plant in Wisconsin had the winning ticket for a $208 million Powerball Lottery jackpot. Horizon Organic was at the center of a debate over the importance of pasture access provision in the USDA Organic Standards.

Meanwhile a U.S. District Court dismissed a lawsuit filed by the Physician’s Committee for Responsible Medicine, that had asked for lactose intolerance warning labels for milk.

Country Singer LeAnn Rimes helped promote the Dairy Queen’s first ever Miracle Treat Day to help support the Children’s Miracle Network.

In September, news that two of the largest milk marketers in the U.S., Dean Foods and HP Hood were banning milk from rBST-treated cows in some of their facilities sent a rumble through the industry and found its way into the consumer press. September also brought word that the Dairy Distribution and Fleet Management conference would return in 2007. Stonyfield Europe announced the creation of a Stonyfield France division and the impending launch of its first line of products.

Meanwhile Dairy Foods unveiled a sleek new design and a fresh logo in its first major redesign in more than five years.

Lifeway Foods was recognized as Dairy Foods’ New Product Company of the Year in November.

Glanbia Foods and other partners held a housewarming party in October for the colossal Southwest Cheese LLC facility in Clovis, N.M. More dairy processors announced that they would refuse milk from cows treated with synthetic growth hormones, while FDA was said to be close to approving the consumption of milk and meat from cloned animals.

Dreyer’s Grand Ice Cream celebrated the completion of a massive expansion at its Laurel, Md., facility.

That same month, Roth Käse celebrated its 15th anniversary and unveiled several improvements to its Monroe, Wis., facilities. Dairy Farmers of America agreed to sell Southern Belle Dairy Co. to settle a three year fight with government regulators.

In November, eight new dairy products were showcased as Dairy Foods best new products of 2006 and Lifeway Foods was honored as our New Products Company of the year. Dean Foods told investors that its third quarter earnings had risen compared to the year prior, but profits were a bit short of analysts’ estimates.