USA – Dean Foods, America’s leading milk producer, has filed for bankruptcy protection citing struggles in staying afloat in a market that is experiencing accelerating decline in the conventional white milk category.
The DairyPure, TruMoo and Alta Dena brands owner said that it plans to use the Chapter 11 proceedings to keep running the business, and address debt and unfunded debt obligations as it seeks to sell the company.
The Company has received a commitment of approximately US$850 million in debtor-in-possession (DIP) financing from certain of its existing lenders, led by Rabobank.
Dean Foods also announced that it is engaged in advanced discussions with Dairy Farmers of America (DFA) regarding a potential sale of substantially all assets of the company.
“The actions we are designed to enable us to continue serving our customers and operating as normal as we work toward the sale of our business,” said Eric Beringause, who recently joined Dean Foods as President and Chief Executive Officer.
“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.
The company said that it will, however, continue to provide customers with an uninterrupted supply of high-quality dairy products, as well as supporting dairy suppliers and other partners.
Mr. Beringause, who was appointed as the company’s CEO this year added: “Since joining the company just over three months ago, I’ve taken a hard look at our challenges, as well as our opportunities, and truly believe we are taking the best path forward.
“In recent months, we have put in place a new senior management team that not only has considerable experience in the dairy and consumer product industries, but also in executing major turnarounds. I am confident we have the right people in place to lead us through this process.”
The announcement comes few months after the company announced that it was looking to match forward as a standalone unit following a comprehensive review of strategic alternatives.
The 94-year-old company has struggled in recent years as American consumers continue to take in less milk as they seek less-sugary or plant-based alternatives.
Sales for cow’s milk has been declining for the past four years. Sales for the past 52 weeks, ending on October 26, were around US$12 billion down from US$15 billion during a similar time period in 2015, according to data Nielsen provided to CNN Business.
On the other hand, the global market for milk alternatives is expected to top US$18 billion this year, up 3.5% from 2018, though a small fraction of the traditional milk market is expected to slightly be under $120 billion globally this year.
