On Tuesday, Dean Foods, the largest processor and distributor of fresh milk in the U.S., announced that it had filed for Chapter 11 bankruptcy.
The company, which owns national and regional brands like Dairy Pure, Oak Farms, TruMoo, Land O’ Lakes and more, plans to remain in operation as it restructures and attempts to sell off its operations.
The Dallas-based company, which employs 15,000 people across the country, has struggled to stay afloat as more and more consumers turn to nondairy milk options. Dean Foods has reported profit losses for nearly two years, which is in stark contrast to the soaring popularity of beverages like almond milk, coconut milk and oat milk. According to the U.S. Department of Agriculture, American consumption of liquid milk per capita has fallen by about 25% in the last 20 years.
In addition to facing changing consumer habits, Dean Foods has also struggled with two grocery giants over the last few years. When Walmart began processing its own milk in 2017, Dean Foods was forced to cancel more than 100 milk contracts with dairy farmers across eight states. In 2018, the grocery chain Food Lion cut ties with the producer as well.
While grocers such as Kroger and Albertsons are following suit in expanding their own milk processing and bottling facilities, shoppers will still be able to find Dean Foods' products on store shelves — for now.
Eric Beringause, Dean Foods' CEO and president, reiterated that, despite the announcement, the company plans to continue operating its facilities nationwide. However, he acknowledged that the company faces more struggles amid increasing competition in the marketplace.
"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," Beringause said in a statement released Tuesday. "Importantly, we are continuing to provide customers with an uninterrupted supply of high-quality dairy products, as well as supporting our dairy suppliers and other partners."
So are your favorite milk brands really not going anywhere? For time being, it will be business as usual, though farmers will likely feel the effects of the bankruptcy filing before consumers.
“A number of [the National Milk Producers Federation’s] member cooperatives provide milk to Dean Foods and could be impacted by today’s bankruptcy filing,” Alan Bjerga, senior vice president of communications for the lobbying group, said in a statement to CNBC. “We are gathering information to better assess the situation and will work closely with our members to provide whatever support we are able to through this process.”
Dean Foods, which also manufactures and sells other dairy products like butter, cream and ice cream, currently purchases 10% of all milk produced by cows in the U.S. According to a statement released Tuesday, the company has previously been in talks with the Dairy Farmers of America — a network of about 14,000 family-owned dairy farms — about potentially selling off "all assets of the company."