USA – The American multinational retail corporation, Walmart has inaugurated a new dairy processing plant in Fort Wayne, Indiana, its first food production facility in the United States.
The facility will produce liquid milk sourced from 30 dairy farms in Indiana and Michigan, serving some 500 Walmart stores in Illinois, Indiana, Ohio, Michigan and Northern Kentucky.
Speaking to The Street, Walmart spokeswoman Molly Blakeman said the plant once fully operational, will be the largest for fluid milk or drinking milk in the country.
The investment will see Walmart sell the milk in five different forms that is, whole, 2%, 1% and skim plain and 1% chocolate milk.
Though the spokesperson declined to reveal the amount spent on setting up the facility, Fort Wayne newspaper reported the investment as US$165 million
Walmart noted that the plant which had already began processing, filtering and packaging milk products will help realise production efficiencies.
In one way to reduce transportation costs which are reported to have sky-rocketed, some food and beverage companies are resolving to own processing plants.
Kroger and Albertsons have both opened such facilities to enhance efficiencies, offer flexibility depending on demand and prices for liquid milk products as well as more control over supply.
The supermarket giant announced plans to build a dairy processing plant to supply its own store-brand milks back in March 2016.
According to them, the facility would leverage the latest technologies to process white and chocolate milk sold under the Great Value and Member’s Mark labels.
Declining fluid milk consumption in the US
This comes even as dairy companies are stocking low due to a decline in consumption of fluid milk in America in addition to a surging demand for dairy alternatives in the market.
Milk although has a declining market share, the sector remains prospective with annual refrigerated fluid whole milk and skim/low fat milk sales of US$8 billion in 2016, according to Forbes.
Big retailers such as Aldi, Lidl and Kroger have embarked on various strategies including ramping up price wars on milk to gain a better part of the declining market share.
After Walmart tabled intentions to open the plant, one of its primary dairy suppliers, Dean Foods of Texas cancelled more than a hundred contracts with farmers across eight states, something that heavily impacted farmers in the already ailing industry.
Low milk prices resulting from oversupply have driven a number of Indiana dairy farms out of business in several states.
