Dean Foods, one of the country’s largest milk processors, filed for bankruptcy and is exploring a sale to leading dairy cooperative, Dairy Farmers of America.
The company has reported losses for eight of its last ten quarters, including five consecutive quarters. Dean attributes its weak financial position to declining consumption of fluid milk and consumer preferences for alternative non-dairy milks, like almond and oat. According to Neilsen, sales of cow’s milk have dropped 6 percent each of the last four years. Dean has also been affected by retailers like Walmart, Albertson’s, and Kroger opening their own dairy plants to supply in-house fluid milk brands.
“Despite our best efforts to make our business more agile and cost-efficient, we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption,” said Eric Beringause, CEO of Dean Foods, in a statement.
The company’s decline has at times affected its producers. Last March, the company dropped its contracts with 100 independent dairy farmers. Many of those farmers attempted to join Dairy Farmers of America, the country’s biggest dairy cooperative, but were turned away.
Dean said on Tuesday that it is in “advanced discussions” with Dairy Farmers of America to buy its assets. Dairy Farmers of America has over 14,000 farmer members across the country. The cooperative’s relationship with Dean has come under scrutiny from farmers and regulators over the years. The two entities have held exclusive supply agreements that some producers have alleged, including in an ongoing lawsuit that is headed to trial, are anti-competitive.
In 2004, the Department of Justice opened an investigation into the relationship between Dean and Dairy Farmers of America. The investigation was closed in 2006.