The Biggest Dairy Producer in America Has Filed Bankruptcy

Dean Foods may be the largest dairy producer in America but sheer size is not enough to save them from filing bankruptcy. Indeed, the Dallas-based company has filed for Chapter 11 bankruptcy and announced a plan to find a buyer.  

Specifically, the company said it was in “advanced discussions” with the Dairy Farmers of America to handle this potential sale. Of course, the DFA is a co-op of local dairy farms across the country who market and sell their members’ raw milk and other products.  They also represent approximately twenty percent of all milk production in the United States. 

In a statement, Dean Foods President and CEO Eric Beringause admits, “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.”

At 94-years old, Dean Foods certainly has a strong history, so the fact it is struggling today certainly speaks to the shifting tastes of the average American consumer.  Indeed, Americans are drinking less and less milk from cows: In 2019, alone, sales at Dean Foods slipped 7 percent through the first half of the year, with profit also falling 14 percent. This has dragged the stock down 80 percent on the year. 

Beringause goes on to say, “Importantly, we are continuing to provide customers with an uninterrupted supply of high-quality dairy products, as well as supporting our dairy suppliers and other partners.”

In case you are not aware, Dean Foods makes and sells some of America’s most recognized and beloved dairy products. This includes brands like Dairy Pure, Land O’Lakes, and Organic Valley.  

On the other hand, the global market for milk alternatives is on its way to surpass $18 billion this year.  That is up 3.5 percent since last year.  While that is only a fraction of the $120 billion USD that the global milk market does every year, the growth is certainly something to heed. Perhaps more importantly, sales for cow’s milk has been in steady decline for the past four years.  Over the past 52 weeks, alone (ending October 26), traditional milk sales came in at $12 billion, down from $15 billion in 2015.