The state of North America’s dairy industry is constantly in motion. Since our last report, dairies have been on an acquisition spree. And the deals kept happening even after we finished tabulating the 2016 revenues of the 100 largest dairy processing companies based in Canada, the United States and Mexico.
The biggest deal in the last year was Danone’s purchase of WhiteWave. The new company, called DanoneWave, combines yogurt maker Dannon (last year ranked No. 15) with the organic milk and plant-based drinks maker WhiteWave (No. 14). The new company jumps to No. 4 on this year’s list.
The top three spots in the Dairy 100 remained unchanged from last year. In order, they belong to Nestle USA, Dean Foods and Saputo. No. 5 is Kraft Heinz Co. (last year No. 13), No. 6 Schreiber Foods (No. 4), No. 7 Agropur (No. 5), No. 8 Dairy Farmers of America (No. 7), No. 9 Lactalis American Group (not listed) and No. 10 Land O’Lakes Inc. (No. 6).
Half of the top 10 are U.S. companies, the others are owned by Canadians or have French or Swiss parents. One could make the case that Kraft Heinz is under foreign control because of the investment by 3G Capital, which has ties to Brazil.
When Danone purchased WhiteWave, the yogurt maker acquired a portfolio of nondairy beverages, positioning the dairy processor for long-term success as sales of plant-based “milks” continue to climb. As part of an agreement with the U.S. Department of Justice, Danone had to sell its interest in Stonyfield organic yogurt (with $370 million in sales in 2016). Lactalis bought the business for $875 million in July.
Dean Foods acquired an organic juice company called Uncle Matt’s Organic in late June. That deal came with two benefits: it gives the milk processor access to customers for nondairy beverages, and it allows the dairy company to play in the growing organic foods space. It’s a move other fluid milk processors might want to emulate.
No. 15 Prairie Farms, the Midwest dairy cooperative known for its milk and ice cream brands, positioned itself for growth by acquiring Swiss Valley Farms, a co-op based in Iowa (and ranked No. 60 last year). The deal gives Prairie Farms access to cheese, a dairy category it was lacking. Swiss Valley Farms brings to the table a wide variety of cheese products and dairy ingredients, not to mention an established list of export customers. (Swiss Valley Farms was the 2016 Tom Camerlo Exporter of the Year. Chris Hoeger, former CEO of Swiss Valley, is now president of the newly formed Prairie Farms Cheese Division.)
Prairie Farms CEO Ed Mullins said in a statement, “Consumption of fluid milk, our core product, has been declining for years, while cheese consumption has increased nearly 150% since 1975. The complementary nature of Swiss Valley’s product line will help counter this major shift. At the same time, Swiss Valley is looking to grow their export business, and with the merger, they will gain access to many Prairie Farms products, such as extended shelf life milk and cream,” he added.
This year Parmalat, an Italian firm controlled by French giant Lactalis (parent to a New York-based subsidiary), acquired Karoun Dairies, a maker of ethnic cheeses and cultured dairy products based in the Los Angeles area, along with its processing plant in Turlock, Calif. (See our March 2014 and March 2015 issues.)
Hochland, another European-based dairy, acquired cream cheese maker Franklin Foods. Franklin, with processing plants in Arizona and Vermont, fell just outside the Dairy 100.
How we compiled the list
Dairy Foods compiled the list by soliciting information from company officers. For some publicly held companies, we turned to their annual reports and filings with the U.S. Securities and Exchange Commission. We drew upon a number of other sources, including the U.S. Department of Agriculture’s National Agricultural Statistics Service, the Federal Drug Administration’s Interstate Milk Shippers list, the AtoZ Databases, ReferenceUSA, Forbes and other published reports.
Some companies provided estimates of their annual revenues. Dairy Foods estimated revenues for other dairy processors if we believed they were large enough. An asterisk next to a revenue figure denotes an estimate.
The online version of this report includes links to company websites and, for publicly held corporations, links to annual reports and other financial data. Go to www.dairyfoods.com to find links to previous Dairy 100 rankings.
Partnerships among the Dairy 100
The past year saw a penchant for partnering. Dairy Farmers of America is teaming up with No. 86 Arla Foods USA. DFA will make Cheddar cheese in a plant it’s building in western New York and Arla will be responsible for selling it under its own brands.
In January, No. 23 Irish dairy giant Glanbia plc said it is in “advanced discussions” to create a stand-alone joint venture to build and operate a cheese and whey production facility in Michigan. Glanbia would own 50% of the joint venture, with the remainder held by Dairy Farmers of America, No. 28 Foremost Farms USA and No. 68 Michigan Milk Producers Association. The plant is projected to process 8 million pounds (3.6 million liters) of milk daily. DFA, MMPA and Foremost Farms would supply all milk.
Though based in North America, some of the Dairy 100 work abroad, and their investments in property, plant and equipment continued unabated. Last year Schreiber opened a new facility in Mexico and Schreiber Dynamix launched the second aseptic food processing and packaging manufacturing facility in Fazilka, India. The facility will help consolidate the company’s position further in the fast growing aseptic beverages and cheese market.
Back in the United States, Foremost Farms expanded its cheese-shredding operations and drying capacities to serve its human and animal feed customers. In June, No. 22 HP Hood bought a yogurt plant in New York from DFA, which had acquired it from Muller-Quaker, the original owners. Hood plans to outfit the facility to make beverages. No. 47 Milk Specialties Global acquired a whey protein manufacturing facility in Monroe, Wis.
No. 55 Winona Foods is building a re-distribution and cheese converting facility with direct rail access. The company said the facility will help it grow foodservice, chain account and specialty cheese business. Construction is estimated at $30 million and projected to generate 120 jobs. The facility will be built on a 22-acre site in Howard, Wis.
Sustainability is built-in
The Dairy 100’s construction projects incorporate features supporting sustainable buildings and dairy processing. For example, Schreiber’s plant in Mexico has solar panels and there is the potential to harness wind energy.
No. 21 Darigold is making more drinking water available in Lynden, Wash., where it has a plant. Water left over from Darigold’s powdered milk production process is piped to a point where Lynden draws in water from the Nooksack River. The city sends the water to a treatment plant to produce water for domestic use. The project is funded by a grant from the Washington state legislature.
In April, Dairy Farmers of America joined Walmart in the retailer’s Project Gigaton, which aims to reduce greenhouse gas emissions by one gigaton by 2030.
Awards and anniversaries
North America’s top dairies were recognized for their product quality. For example, No. 41 Emmi Roth took home all three awards in the Smear Ripened Hard Cheese category at the 2017 United States Championship Cheese Contest. At the World Cheese Awards in Spain the cheesemaker earned 14 awards.
Seattle-based Darigold moved its corporate headquarters to the city’s Georgetown neighborhood. Nestle USA made a big move, relocating its headquarters from Glendale, Calif., to Arlington, Va.
No. 84 Clover Sonoma is the new name for the former Clover Stornetta. The dairy wanted to play up its association with Sonoma County, known for its vineyards and high-quality foods.
Finally, No. 94 Schwan’s Co. is celebrating its 65th anniversary this year. The company was founded on March 18, 1952, when 23-year-old Marvin Schwan loaded up 14 gallons of ice cream from the family dairy into a Dodge panel van and began selling it to customers in rural Minnesota. Today, Schwan’s has national distribution of its pizzas (including Red Baron, Tony’s, Bon Appétit and Freschetta pizza), desserts (Mrs. Smith’s and Edwards) and other frozen foods.
No doubt there will be more mergers and acquisitions before the year is out. But for now, this 24th annual report of North America’s largest dairy processors renders the best image of the dairy processing industry.