May 1, 2004
Consumers are likely to see milk prices increase to record levels due to the decision by the U.S. Department of Agriculture (USDA) to raise the minimum price paid to farmers to $1.69 per gallon. In April, the USDA announced a base price of $19.65 per hundredweight for farm milk used in Class I products in the federal orders for May; the April price was $13.64. The $6.01 price difference translates to more than 51 cents per gallon of farm milk with 3.5 percent butterfat. The higher May price, according to the International Dairy Foods Association (IDFA), was caused by increases in wholesale prices for manufactured dairy products, primarily cheddar cheese and butter.
Milk is not the only product for which consumers will take a hit due to price hikes in the coming months. According to the National Ice Cream Retailers Association, ice cream prices will increase as well. Blamed are heightened prices for ice cream’s essential ingredients such as butter, milk, vanilla and chocolate, the association says. The average cost for the frozen treat is projected to increase 20 to 30 percent.
Kraft Foods Inc., Northfield, Ill., reported its first-quarter results on April 19, 2004 — the company’s first financial statement since Roger Deromedi took over as sole chief executive officer last December. Diluted earnings per share of 33 cents were in line with expectations and down 32.7 percent versus 2003 due largely to 12 cents per share in exit costs for the restructuring program announced in January and an intangible asset impairment charge. As expected, says chief financial officer Jim Dollive, first-quarter earnings were down versus prior year due to restructuring charges, increased marketing investment and higher benefit costs. In other company news, Kraft announced at its 2004 stockholders meeting in April that it is considering expanding its board of directors as a way to increase the board’s independence from the company.
Dallas-based Dean Foods is reported to be in talks to buy Spanish dairy companies Lauki and El-Prado Cervera from French dairy cooperative 3-A. According to an AFX News report, the move is believed to be part of a plan to create a large dairy group in Southern Europe, and the second largest dairy company in Spain. In other company news, Dean Foods of California closed its San Leandro milk processing facility at the end of April, merging the operation with its Berkeley Farms plant in Hayward.
Wells’ Dairy, Le Mars, Iowa, has announced it will keep its corporate headquarters in the company’s home town. This follows the company’s decision late last year to build a corporate campus facility that would consolidate the seven office buildings it currently occupies in Le Mars. Wells’ had been wooed with incentive packages by Iowa and neighboring states.
Milk and other beverage industry professionals have started signing up for BevExpo 2004, to be held September 29 to October 1 at the Tampa Convention Center in Florida. Attendees will include manufacturers, bottlers, marketers and distributors of milk, bottled water, soft drinks, juice and juice drinks, beer and other beverages, from companies throughout the Americas. A great networking event of experts from MilkPEP, IDFA and MIF, the International Bottled Water Association, the International Society of Beverage Technologists, Drinktec 2005 and other leaders in the global beverage industry, is expected.
Brigham’s Inc., Arlington, Mass., has been acquired by investment firm New England Capital Partners in Boston. The new owner plans to boost sales of the regional favorite by strengthening its position in the rest of New England and by expanding distribution to foodservice venues, such as sports arenas.
Winn-Dixie Stores’ dairy processing operations may be sold off to help the Jacksonville, Fla.-based retailer overcome a $79.5 million quarterly loss reported in January. Industry insiders speculate the sale of the five-plant dairy division could bring in up to $200 million for Winn-Dixie’s coffers, which could help as the company competes with Wal-Mart and Publix Super Markets.
As concerned parents and school boards across the country demand more healthful options for kids in schools, Nestlé USA announced in April the introduction of the first — and only — 100 percent real lowfat milk to schools nationwide through its new school vending machine program. The company says the new addition to its Nesquik brand of milk is its way of responding to current child obesity rates and health problems tied to poor diet and sedentary lifestyles.
In other vending news, the Center for Science in the Public Interest (CSPI) has added whole and 2% milk to the list of what the organization deems as “poor nutritional quality beverages.” According to a soon-to-be released report called “Dispensing Junk,” CSPI targets milk for elimination in school lunchrooms. The report is designed as an effort to have vending machines yanked from schools.$OMN_arttitle="News Wire";?>