High fuel costs weigh heavy on dairy business.
In many cases, fuel costs have replaced raw milk costs as the current leading financial challenge of doing business in the dairy industry. And in light of the Hurricane Katrina disaster, things are slow to get better.
As crude oil prices set records practically every day, the effects are soaking through the U.S. economy. Specific to dairy, rising oil prices have taken a toll on Dallas-based Dean Foods Co. With more than 6,500 store-delivery routes nationwide, serviced by more than 7,000 vehicles, fuel costs alone were up $7.6 million between April and June over the year before, according to company officials. The cost of resin for petroleum-based plastic bottles rose by $6.5 million.
Due to Dean’s coast-to-coast manufacturing and distribution, fuel cost hikes have hit the company hard. According to www.dailyitem.com, Dean Foods so far has been managing the hit by passing on most of the cost to it customers — U.S. retailers.
Hurricane Katrina is expected to cost Dean Foods up to $10 million, largely from increased costs for the petroleum-based resin used for its plastic milk bottles and for diesel fuel, the company’s chief executive told analysts in September, reports The Dallas Morning News. The company has seen its costs for diesel fuel jump more than 30 cents a gallon at the same time that a sizable New Orleans plant has been knocked out of commission.
Dean Foods’ plans to de-emphasize smaller, slower-selling items will continue as it steps up its reliance on key brands such as Silk soymilk and Horizon organic milk. The company says it is getting focused on the areas where it makes money and brands are growing.
Read more about how the industry is contributing to the hurricane relief effort in this month’s Udder End, page 100.
Product and promotion news
The International Dairy Foods Association (IDFA), Washington, D.C., is renewing its commitment to support organ donation through a national program called “Workplace for Life,” created four years ago by the U.S. Department of Health and Human Services (HHS). As the association did in 2002, IDFA is encouraging its member companies to participate in the program and promote organ donation to employees. Through this program, many dairy companies downloaded donor cards and related information for employees three years ago, and IDFA is hoping to stimulate interest again among the industry about this important national issue. “About 89,000 people are in need of life-saving organs, and 17 people die every day waiting for a transplant,” says Connie Tipton, IDFA president and chief executive officer. “Last year was the highest year ever for organ donations, at nearly 27,000. I believe that the dairy industry’s participation in this program can help move that number higher.” Companies can sign up for the program at a comprehensive and easy-to-use HHS Web site — www.organdonor.gov — where employers can find assistance with identifying specific activities and strategies for organ donation promotion that they would like to implement.
What is the only thing louder than Niagara Falls? The Mini Melts Dragster. With more than 3,000 horsepower, this promotional vehicle is one of the fastest cars on the planet. Perhaps the only thing faster, company officials say, is the growth of Deerfield Beach, Fla.-based Mini Melts Inc. Now, with the company’s latest plant in Quito, Ecuador, Mini Melts are available all over the world with plants in Canada, South Africa, The United Arab Emirates, Pakistan, Indonesia, Korea, China and two plants in the United States. Mini Melts has one of the largest global networks of cryogenically frozen ice cream in the world. With new plants opening in India, Eastern Europe and Australia over the next few months, the ice cream continues its expansion.
Heluva Good Cheese has teamed up with the Cleveland Browns and Giant Eagle for the Heluva Good 100,000 Kickoff for the 2005 football season. This is the third consecutive year that the Sodus, N.Y.-based division of HP Hood LLC has sponsored the promotion, which includes point-of-sale displays at Giant Eagle stores in Ohio and in-stadium coverage at Browns home games. Any Giant Eagle shopper who uses a Giant Eagle Advantage Card at a participating store during the promotion is automatically registered to win two free tickets to the next Cleveland Browns home game. During that game, if the Browns return their first-half or second-half kickoff for a touchdown, the Heluva Good ticket winner will take home a check for $50,000, and Heluva Good and Giant Eagle will donate $50,000 to the Cleveland Browns Foundation, a philanthropic arm of the Browns that provides charitable outreach to the Northeast Ohio community. The promotion, which began in September, will run throughout the regular football season.
On October 16, hundreds of HP Hood employees, friends, families and acquaintances will lace up their walking shoes in an effort to help in the fight against breast cancer. As a flagship sponsor of this year’s American Cancer Society Making Strides Against Breast Cancer® Walk in Boston, Hood will assist in pre-event promotion and will lead a charge of walkers on the 5-mile route along Boston’s Charles River. Hood is helping to make a difference the fight against breast cancer by sponsoring this even and launching a marketing and public relations campaign to educate consumers about this important cause. To help generate awareness and participants for the walk, Hood began promoting the event on the back labels and caps of its LightBlock Bottles® beginning in August. For more information, visit www.hphood.com.
Last year, Canada-based Neilson Dairy’s Dairy Oh! became the first milk in the world to offer health-enhancing, naturally occurring DHA Omega-3 fatty acids. And in June, it became the first in North America to use the Pure-Pak® Curve carton from New Hudson, Mich.-based Elopak Inc. The dairy says the new carton differentiates its product on store shelves and offers a unique look that communicates the distinctiveness of its product. The Curve carton’s distinguishing feature is an innovative curved fifth panel that makes it stand out from traditional gabletop cartons.
Tapping into the cultural phenomenon of Apple’s iPod, Northfield Ill.-based Kraft Foods has created a download of more than 100 recipes users can store on the hard drives of the digital audio players. The company says it likes the idea of being able to provide consumers with food ideas and resources wherever they might need them. The download is available on Kraft’s Web site www.kraftfoods.com.$OMN_arttitle="Industry Impact";?>