March 28, 2016


Wal-Mart to build dairy processing plant in Indiana, US



Wal-Mart will construct a dairy processing facility in Indiana, US, which will produce private-label milk to about 600 stores.


The retail corporation's move could affect businesses of some of its suppliers. It also induced a 12% drop in the shares of Dean Foods which supplies to Walmart stores.


According to Dean Foods, the establishment of the new plant could lead to a 100 million gallons loss of "very low-margin private-label fluid milk volume" from late 2017.


However, Dean Food does not expect any impact on the supply of its own national brands. Wal-Mart has, in fact, stated that Dean Foods will still be supplying milk for its Great Value and Member's Mark private-label white and chocolate milk to other Walmart supermarkets as well as Sam's Club Membership-based wholesale stores.


The new facility, expected to be ready in summer 2017, will be set on more than 250,000 square foot of site space in Fort Wayne, Indiana. Its establishment could create more than 200 jobs and will supply milk to stores in Indiana, Illinois, Michigan, Ohio and northern Kentucky.


The site serves to reduce Wal-Mart's dependence on intermediary suppliers and confer the corporation with more control on input expenses. It will also benefit Wal-Mart's plan to boost its private-brand offerings as a way of improving its product's competitive pricings.

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