The largest dairy producer in the US asks for bankruptcy

US Dean Foods has just filed for bankruptcy because of debt and cannot pay a pension fund for all employees.

The 94-year-old business has struggled with difficulties because in recent years Americans have been drinking less cow’s milk. This year alone, Dean Foods’ revenue dropped 7% in the first 6 months and interest fell 14%. Its shares plunged 80%.

The largest dairy producer in the US is in debt and unable to pay pensions for workers. As a result, Dean Foods filed for bankruptcy to maintain the business, to help restructure debt and close pension funds while selling the company. As part of the bankruptcy process, Dean Foods has secured $ 850 million from existing lenders, including Rabobank to keep it running.

Dean Foods said it is working with the US Dairy Farmers Cooperative (DFA) on a potential deal, in which DFA can buy almost the entire company.

Dean Foods produces some famous milk and dairy in the US such as Dairy Pure, Organic Valley and Land O’Lakes. These used to be indispensable items in an American fridge, but Dean Foods’ milk has gradually lost interest in finding low-sugar or plant-based products instead. The company thinks that it is facing difficulties due to the rapid decline of normal white milk demand.

According to Euromonitor, the global market for alternative milk products is expected to reach US $ 18 billion this year, up 3.8% from last year. However, this is only a fraction of the traditional milk market – which could reach nearly $ 120 billion this year.

Over the past 4 years, cow’s milk sales have decreased. In the 52 weeks to the end of October, Nielsen said that cow’s milk sales reached about $ 12 billion, down $ 3 billion from the same period in 2015.

This is a problem not only Dean Foods faces. Walmart – one of Dean Foods’ biggest customers also experienced a decline in sales last year after setting up its own dairy factory.
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