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A Milk Giant Goes Broke as Americans Reject Old Staples

Those brands, Silk and Horizon Organic, are now owned by Danone, the French food company.

Dean Foods and Kraft Heinz “both carry a lot of debt,” said Matt Gould, a dairy industry analyst. “And that constrains your ability to try radically different things.”

The two struggling companies have also faced competition from private-label brands developed by retail chains like Walmart and Kroger. Once one of Dean Foods’ most important customers, Walmart opened its own milk-processing plant in 2018.

Dean Foods and Kraft Heinz are not the only food companies facing competition from private-label products, which are often available at steep discounts. In August, Target announced plans for its own line of grocery products, which it expects will include more than 2,000 items and become a multibillion-dollar brand by the end of next year.

“Consumers over all in packaged food are becoming more and more receptive to private-label products,” said Simon Gunzburg, an analyst at the research firm Euromonitor. “They’re seeing them as great value.”

Before its bankruptcy filing, Dean Foods had reported losses for five straight quarters and closed some of its plants, laying off hundreds of workers. The company’s senior leadership has been in a state of flux, with three chief executives in three years. (The Dean family no longer holds a large stake in the company, which was sold in 2001 to a rival, Suiza Foods, which took on its name.)

And across the country, milk consumption is steadily declining. Americans drank 37 percent less milk in 2017 than they did in 1970, according to the Agriculture Department.

This year, the Dairy Farmers of America reported that its milk sales had dropped to $13.6 billion in 2018, from $14.7 billion in 2017. One reason for the decline is a decrease in cereal consumption: More and more Americans are switching to power bars and other breakfast options that can be consumed on the go.


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