When Dean Foods was founded in the 1920s, milkmen still delivered pints to homes across the country and a glass of milk was considered a nourishing part of any meal. Nearly a century later, milk is quickly falling out of fashion, and Dean Foods has found itself unable to compete
A milk giant goes broke as Americans quit old staples
"Long ago, the public figured out that diets do just fine without milk and no, we don't have to drink three glasses a day," said Marion Nestle, a food studies professor at New York University. "Maybe plant-based milks are the coup de grâce, but this industry just can't seem to keep up with changing tastes."
It isn't just Dean Foods that's struggling. Outside of the dairy industry, Kraft Heinz also found itself flat-footed as consumer tastes shifted.
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In 2015, the merger between Kraft and Heinz, owners of some of the biggest brands in packaged foods, created a giant with $28 billion in annual revenue and dozens of products that are common in US households.
But as the public turned to healthier foods or organic alternatives, the company's sales and profits plummeted. Kraft Heinz also made steep budget cuts at a time when research and development should have increased, analysts say, with startups increasingly taking shelf space away from food giants.
Like Kraft Heinz, Dean Foods watched from the sidelines as smaller rivals dominated the growing market for trendy alternatives, like almond milk and plant-based milk products. In fact, in 2012, the company spun off units of the company that made such alternatives — a move that now looks like a strategic error, analysts said.
It also faced competition from private-label brands developed by supermarket chains like Walmart and Kroger, and did not invest aggressively enough in research and development to keep pace with consumer trends, said Matt Gould, a dairy industry analyst.
Dean Foods and Kraft Heinz "both carry a lot of debt," Gould said. "And that constrains your ability to try radically different things."
Written by: David Yaffe-Bellany
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