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.
After selling a 20% stake in WhiteWave-Alpro to the public for $391 million in fall 2012, it spun off the rest in 2013. (The purchase of Alpro in 2009 and its combination with WhiteWave Foods gave Dean Foods a firm presence in Europe and furthered its ambition of becoming a global brand. WhiteWave's reconfiguration also separated the Dean Foods' more traditional, lower-margin businesses from the higher-margin organic and value-added businesses. Indeed, WhiteWave-Alpro was considered by many to be the most valuable part of Dean Foods. The company's standard dairy products and its large private-label business are more vulnerable to volatility in commodity prices and consumers' dwindling appetitive for milk and other dairy foods).
While Dean Foods has been focused intently on acquisitions, it has recently made some disposals. In the company 2013 sold its Morningstar Foods division to Canada's #1 dairy processor Saputo for $1.45 billion.