Seventy five billion dollars. No, that number has nothing to do with the national debt-it’s the total of the 2006 sales for the Dairy 100. North America’s top 100 dairy processors make up an eclectic, fascinating group. From the giants like Dean and Schreiber to the independents like Schroeder Milk Co., and the artisan cheese group Sartori Foods, there are all different kinds of companies employing many different business models. For many of those companies, 2006 was a very good year. For others it was perhaps a transitional period, or a year that will be remembered for being on one end or the other of an acquisition.
The top echelon did not change a whole lot from when we published the 13th annual Dairy 100 last August, but the number of companies coming and going is up considerably. A couple more deals took place earlier this year, so there will be some more changes when we come back with the 15th annual installment in 2008.
There are three new billion dollar-plus companies this year (California Dairies, Dannon and Fonterra USA,) bringing the total to 25.
By the numbersThe combined sales figures for all of this year’s Dairy 100 is actually $75.52 billion. The combined totals for the 2006 group was $74.08 billion based on 2005 sales figures. That’s a difference of about $144 million or 1.9% growth. While it’s tempting to analyze that total as an indicator of how the industry is doing, it must be noted that these numbers are based on a sampling and results that are far from an exact science. Also, the total number is somewhat of a creature of the relative maturity of the industry in the given year. The top 100 of 1993 would have looked quite a bit different than the group now, and even from year-to-year it’s rarely exactly the same group.
Looking at the top 10 companies we can say a bit more about the numbers. In the 2005 fiscal year, the top 10 represented $35.63 billion in sales. In 2006 that number inched up to $35.78 billion. That’s not too surprising for a year when prices were fairly stable.
For the top full-line dairies in the United States-Dean Foods, HP Hood, Dairy Farmers of America, Kroger, Darigold, National Dairy Holdings, Prairie Farms and Foremost Farms-2006 amounted to a little over $22 billion. All of those are in the top 20 of the overall list.
There are lots of cheesemakers in North America and they stretch from one end of the list to the other. There are 10 to 12 companies in the top third of the list that are focused primarily on cheese, depending on whether you would include Saputo and California Dairies under that description. Even without those two, or Foremost Farms, the top ten pure cheesemakers account for about $15.5 billion in sales. There are three ice cream companies in the top 20. Dryers, Good Humor-Breyers and Wells Dairy had combined sales of about $4.8 billion. These numbers don’t capture the totality of each segment, there is also a lot of ice cream and cheese sold by the major full line dairy companies and cooperatives.
When it comes to yogurt, there are very few large players. Yoplait and Dannon each do over $1 billion a year now, and when you throw in Stonyfield and the Breyers Yogurt Company there was about $2.8 billion worth of yogurt sold by those four companies in 2006.
The top 10 and beyondThe first five companies in the Dairy 100 is nearly unchanged. There is one exception-Canada’s dairy leader Saputo slips past Land O’ Lakes into the No. 3 spot, and LOL settles in at No. 4. HP Hood moves up one into the No. 6 position. DFA had been in that spot last year, but slips back to No. 8 behind Hood and Leprino. The latter’s estimated cheese sales climbed a bit to $2.2 billion.
Kroger goes to No. 10 from No. 8 while Canada’s Agropur moves up to No. 8.
• Dean Foods remains the top cow in North America, and for the second year in a row, sales are over the $10 billion threshold. The Dallas-based company sounded warnings earlier this year, however, that earnings would be lower than expected, in part because of rising commodity costs and in part because of changes in the competitive landscape in organic dairy, where its Horizon Organic is the category leader, but faces tough competitors. In addition, Dean lost some key management this year with veteran executive Rick Beaman, leaving the company to take an ownership position down the street with National Dairy Holdings. But Dean never has trouble finding new talent, much of it coming from other multi-billion dollar companies in the food beverage and consumer goods sectors. Dean still sneaks in an acquisition here and there, the most recent being Friendship Dairies, which will bolster Dean’s position in cottage cheese.
• No. 2 Kraft Foods is probably the largest food manufacturer in the U.S., but for our purposes we focus on the company’s dairy business. Kraft has been undergoing a redefinition in the last couple years, with a new CEO, and most recently the spin-off from Altria, its former tobacco company parent. CEO Irene Rosenfeld has revealed plans that would make Kraft products more relevant to today’s consumer while still leveraging its massive brand power. It looks as if cheese will play an important role, so we can expect Kraft to stay near the top of the Dairy 100 for some time.
• No. 3 Saputo continues to grow, through a combination of organic sales and acquisitions. Lino Jr. and company only surpassed $3 billion a few years ago and now they seem to be reaching for $4 billion. After swapping positions with Land O’ Lakes, Saputo will likely stretch the distance a bit by next year after having bought some of LOL’s California business early this year.
• No. 4 Land O’ Lakes is still a major player in both butter and cheese, but has in recent years divested some of its manufacturing capabilities.
• Schreiber Foods is another huge cheesemaker that in recent years acquired a few more marbles for the collection. No acquisitions of late, and no movement in rank this year, holding at No. 5, but our estimate now puts Schreiber at $3.3 billion.
• HP Hood has its blimp back. The blimp was downed in a wooded area of the New England Coast last year, but this summer it’s taking to the skies again to promote Hood products for the No. 6 company. It’s been a few years since Hood put together the block buster acquisitions that catapulted it into the top 10. And like Dean, it’s not done yet. Earlier this year it acquired No. 66 California-based Crystal Cream and butter. Hood also lost some licensed business in the last year when Nestle USA decided to take much of the manufacturing of NesQuik in house and broke ground on a major facility in Indiana.
• Nobody does pizza cheese bigger than No. 7 Leprino Foods. Pizza sales around the world are growing and Leprino has grown right along with them. The Denver–based private company doesn’t post its results like a baseball score, but our sources in the big cheese sector tell us Leprino is worth $2.2 billion easily.
• No. 8 Dairy Farmers of America is the top farm cooperative in the United States and continues to be one of the top dairy processors. This is DFA’s second year under new Chief Executive Rick Smith. DFA continues to partner with National Dairy Holdings, and while we separate DFA’s joint-venture numbers for the Dairy 100, DFA also holds a major stake in No. 43 Hiland Dairy and No. 53 Roberts Dairy and Southwest Cheese LLC which is operated by Glanbia.
• For the second year in a row, Canada has two dairy companies in the top 10 and No. 9 Agropur, reports that it had a good year-record profits of more than $110 million, and in March it took first place in the World Championship Cheese Contest for one of its aged Cheddars.
• Kroger Co. Dairy Operations is thought to be the largest captive dairy operation in the U.S. but it’s hard to say, seeing as how most retail-owned dairy companies keep their financial info close the vest. We estimate Kroger at $2.1 billion.
Among other companies experiencing notable movement are Wells Dairy which goes from No. 21 to No. 19. Not a huge move, perhaps, but in six years, the company has gone from No. 28 to No. 19, growing its sales by something like 80% without having bought out a competitor. Foremost Farms had a difficult year and drops a few spots from No. 15 to No. 20. It was not alone. Several dairy commodity and ingredient manufacturers including Glanbia, Lactalis USA, and Agrimark, saw a drop in sales in 2006 compared to 2005.
Dannon grew its sales substantially in 2006 with the launch of Activia. Subsequently it jumps up from No. 26 to a tie for No. 24 with Fonterra. Butter maker Grassland Dairy Products leaps from No. 41 all the way up to No. 27. Organic Valley climbs from No. 59 to No. 52.
With the merger of Upstate Farms and Niagara Dairies, the new Upstate Niagara Cooperative is No 38 compared to Upstate’s spot last year at 60.
Winn-Dixie has sold off some of its facilities and it’s tough to get a figure, but we have them dropping from No. 38 to No. 50. Gossner Foods jumps from No. 77 to No. 65.
Finally, Dairy Foods started this calendar year with a news story about a company owned by Horizon Organic founder Chuck Marcy buying the Breyers Yogurt business from CoolBrands International. CoolBrands is now off our table, and Breyers Yogurt Company takes the place of YoFarm, which Marcy acquired last year. The combined company did $211 million last year and comes in at No. 59. It should continue to grow as Marcy has private equity investors and a goal of taking the YoCrunch and Breyers brands national.
New to the Dairy 100: Humboldt Creamery, Fortuna, Calif.Humboldt Creamery may be best known for its ice cream brand, but there’s more to the company than the ice cream.
“We are actually one of the largest organic dairy producers in the country,” says Rich Ghilarducci, Pres./CEO. With more than 60 farm families across northern California, the cooperative produces more than 250 million gals of milk a year. Much of that milk is converted into ice cream, milk powder, fluid milk, and butter at two company-owned processing facilities.
Founded in 1929, (with approximately $98 pooled by local farmers) Humboldt Creamery Association has a solid reputation for producing the freshest, most natural dairy products possible.
The cooperative members take advantage of the local climate and keep cows in pasture an average of 300 days a year. They have never used rBST, and during the last fifteen years many have converted to organic. In national surveys, the cooperative’s milk achieves some of the highest quality scores in the U.S.
Humboldt uses sustainable agriculture practices, and its animal welfare practices have received the American Humane Association’s Free Farmed certification, which means they provide the most humane care for farm animals.
With finished product sales of just over $110 million, Humboldt joined the Dairy 100 this year at No. 81.
While it is relatively small, the company has grown substantially, in part through three strategic acquisitions. The latest of those came in 2004 when it purchased the ice cream business of Darigold (Westfarm Foods), Seattle. That purchase included a novelties plant in Los Angeles, and the licensing rights to the Darigold brand for ice cream.
The company does a good deal of licensed manufacturing. If you can’t find the Humboldt Creamery brand near you, you can still enjoy the ice cream provided you are a member of Costco. Humboldt produces the Costco’s Premium Vanilla Ice Cream that is sold in stores across the country.