Dean Foods is the nation's largest milk bottler. The company's Fresh Dairy Direct business markets fluid milk, ice cream, cultured dairy products, and beverages (juices, teas, and bottled water) under more than 50 local, regional, and private-label brands, including Borden, Pet, Country Fresh,Meadow Gold, and TruMoo, a leading national flavored milk brand. Following the spinoff of most of its WhiteWave Foods business, Dean Foods still holds about 20% of WhiteWave, which makes coffee creamers (International Delight), dips, ice cream, butter, cottage cheese, and specialty dairy products. Dean Foods owns and operates a number of smaller dairy companies, including Berkeley Farms, and Garelick Farms.
Dallas-based Dean Foods rings up 99% of its sales in the US, where it operates more 68 manufacturing facilities. Overseas, the dairy giant has operations in Europe (Belgium, France, the Netherlands, and the UK).
Following the sale of its Morningstar Foods division and the spinoff of WhiteWave in 2013, Dean Foods was left with Fresh Dairy Direct. The company manufactures, markets and distributes a wide variety of branded and private label dairy case products, including milk, ice cream, cultured dairy products, creamers, ice cream mix and other dairy products to retailers, distributors, foodservice outlets, educational institutions, and governmental entities across the US.
Sales and Marketing
Dean Foods markets its products through advertising and other promotions, including media, coupons, trade shows, and other promotional activities. The company spent about $27.5 million on advertising in 2014, about $22 million in 2013, and $28.6 million in 2012. Dean's customers include food retailers, distributors, foodservice operators, educational institutions, and governmental entities throughout the US. Wal-Mart and its subsidiaries, including Sam's Club, is Dean Foods' largest customer.
The company’s products are sold primarily on a local or regional basis through local and regional sales forces, although some national customer relationships are coordinated by a centralized corporate sales department.
In 2014 Dean Foods' net sales increased by 5% due to higher pricing as a result of the pass-through of higher dairy commodity costs. On average, the Class I price was 24% above prior-year levels.
The company incurred a net loss of $20.2 million (compared to net income of $813.2 million in 2013). The primary reason was due to increased cost of sales, absence of gain on disposition of White Wave common stock, loss from discontinued operations and decreased gain on sale of discontinued operations, net of tax partially offset by higher revenues. Cost of sales increased due to higher dairy commodity costs.
In 2014 Dean Foods' net cash provided by the operating activities was 152.9 million (compared to cash outflow of $316.6 million in 2013) due to a change in accounts payables and accrued expenses and income taxes receivables/payables.
After diversifying into higher-margin businesses (and piling on debt in the process), Dean Foods has reversed course to get on a sounder financial footing and has become essentially a pure-play in low-margin fluid milk and traditional diary products. Its current strategy is to build on its unique capabilities and cost reduction opportunities to create a leading positions as a low-cost fluid milk producer.
Dean Foods is also growing its daily products business through acquisitions. In 2016 the company bolstered its ice cream product line up after it acquired Friendly's Ice Cream's retail and manufacturing ice cream business. Prior to the acquisition, Friendly's made and distributed a variety of ice cream products; it also operates a restaurant chain in the northeastern US that was not part of the acquisition. The Friendly's brand complements Dean's line-up of ice cream brands, including Mayfield and Dean's Country Fresh.
Mergers and Acquisitions
The company bolstered its ice cream product line up in 2016 after acquiring Friendly's Ice Cream's retail and manufacturing business for $155 million in cash. The Friendly's brand complements the company's Mayfield and Dean's Country Fresh ice cream brands. Prior to Dean Foods' acquisition, Friendly's made and distributed a variety of ice cream products; it also operates a restaurant chain in the northeastern US that was not part of the sale.