No. 1 U.S. milk company files for bankruptcy
Dramatic drop in consumption since 1975
Got milk? Increasingly, Americans don’t, and that led the nation’s biggest milk producer to file for bankruptcy Tuesday.
Dallas-based Dean Foods blamed a decadeslong drop in milk consumption that has seen people turn to alternatives like soda, juice and almond milk.
The company said it may sell itself to the Dairy Farmers of America, a marketing cooperative owned by thousands of farmers.
“Despite our best efforts to make our business more agile and cost-efficient, we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption,” CEO Eric Berigause said in a statement.
Since 1975, the amount of liquid milk consumed per capita in the U.S. has tumbled more than 40%. Americans drank around 24 gallons a year in 1996, according to government data. That dropped to 17 gallons in 2018.
An increasing variety of beverages, including teas and sodas, has hurt milk consumption. So have protein bars, yogurts and other on-the-go breakfasts, which take the place of a morning bowl of cereal.
More recently, health and animal-welfare concerns have also contributed, as more shoppers seek out non-dairy alternatives.
Oat milk, for example, saw U.S. sales rise 636% to more than $52 million over the past year, according to Nielsen data. Sales of cow’s milk dropped 2.4% in that same time frame.
Not all dairy products have been affected. U.S. butter and cheese consumption is up since 1996, for example.
“We’re eating our dairy, not drinking it,” said Mark Stephenson, director of dairy policy analysis at the University of Wisconsin-Madison.
The downturn has had an outsize effect on Dean Foods, which derived 67% of its sales from fluid milk last year, according to its annual report. The company has lost money in eight of its last 10 quarters and posted declining sales in seven of the last eight.
Dean employs 16,000 people and operates 60 processing facilities across the country. On any given day, it is running 8,000 refrigerated delivery trucks on U.S. roads. It supplies milk for its own brands, like Dairy Pure, Meadow Gold and TruMoo, as well as store brands.