July 16, 2018

Decline in US dairy sales impacts dairy giant

A renowned Texas-based milk chain, Dean Foods, announced the closing of another dairy facility in the Midwest last week.

Citing an overall decrease in national dairy consumption and a highly competitive industry, the Huntley, III. is among several other dairy plants that are down for closure this year.

Officials stated in its 2017 annual investors report: "The challenges faced in 2017 served as a catalyst to drive a sense of urgency around programmatic and structural changes in the second half of the year and into 2018."

Operations are set to cease in September, severing more contracts with dozens of independent dairy suppliers.

Huntley Village Manager, Dave Johnson added, "First and foremost, there is the unfortunate impact that they losing their positions at the local facility. From an economic development standpoint, we never like to see that."

Declining milk sales

Not only is the dairy giant facing gruelling competition (for e.g. Walmart built a 23,000-square-metre milk processing plant), the plant-based sector has also played a pivotal role in Dean's downsizing.

Recently, the US Department of Agriculture (USDA) also noted a 9.7% decline in dairy milk sales in the past five years as well as low consumption in even dairy-based ice cream.

In contrast, the plant-based (an alternative to dairy) market has since skyrocketed. In the US alone, non-dairy milk sales have increased by 61% in the last five years as reported by Mintel. Sales of vegan ice cream, yoghurt and cheese are also on an upward trend.
 

A plant-based future

Taking its cue from Elmhurst which successfully transitioned from its family dairy business into a plant-based milk company, Dean Foods sets the 92-year-old company as an example.

As the plant-based industry is expected to grow to more than US$34 billion by 2024, Dean Foods has since directed its future plans towards the flourishing market.

Earlier, they became a small investor in Good Karma Foods, a flaxmilk-based producer of dairy-free milk and yoghurt while revealing that they may soon choose to become a major stakeholder.