Borden, whose mascot, Elsie the Cow, has smiled out at consumers from milk, cheese and butter cartons for more than 80 years, has filed for bankruptcy protection, becoming the second major U.S. dairy company to seek help as milk prices soar and more Americans turn to milk alternatives.
Borden Dairy Co., which is based in Dallas, reported losses of $42.4 million in 2019. In a filing Sunday in U.S. Bankruptcy Court in Delaware, it listed debts between $100 million and $500 million to more than 5,000 creditors.
The company filed under Chapter 11 of the bankruptcy code, allowing it to try to reorganize its debts and remain in business. That's less drastic than filing under Chapter 7, which would have required it to sell off its assets to pay its creditors and potentially go out of business.
Its largest creditors are two of its pension funds, which together are owed more than $33 million, Borden said.
Dean Foods, the country's biggest milk producer, similarly filed for Chapter 11 protection in November. Borden and Dean products made up a little more than one-eighth of all U.S. milk sales last year, according to industry data.
Unlike Dean, which said it intended to sell itself, Borden said it would seek to reorganize its finances to stay in business.
"Borden Dairy is a heritage American brand that has been in business since 1857," Chief Executive Tony Sarsam said in a statement. "We have a very tenured workforce of 3,300 people who live and breathe our values of teamwork and creative problem solving, and I am extremely confident and optimistic about our continued success in the future."
But the U.S. dairy industry has been churned by a double-whammy of economic and lifestyle factors.
Borden said that the price of raw milk has risen 27 percent in the past year and that it's expected to keep rising, partly because more than 2,700 dairy farms have gone out of business since mid-2018.
At the same time, dairy sales have fallen "in conjunction with the rise of oat, nut, soy, and other alternative 'milk' products," which are eating away at both sales of whole milk and its shelf space in stores, Jason Monaco, Borden's chief financial officer, said in an affidavit attached to the bankruptcy filing.
"While milk remains a household item in the United States, people are simply drinking less of it," said Monaco, who cited Agriculture Department data reporting that total U.S. consumption of dairy milk products has fallen by about 6 percent since 2015.
Borden has been known to generations of Americans since it introduced Elsie the Cow on its labels in 1936 — many of them on cartons of milk distributed with public school lunches.
Borden claimed that by the 1940s, research showed that more people recognized Elsie than they did the president.
Three other cows that were introduced in the same ad campaign — Mrs. Blossom, Bessie and Clara — didn't survive the test of time.