One year later...

Dairy Field, Jun 2003 by Smith, Pamela Accetta

Exactly what was revealed in this year's Top 100?

With the exception of a few companies that did well in 2002, overall sales for the most part stagnated, if not dwindled. While the obvious industry giants continued to gain momentum through acquisitions, new product development and advanced technology, several independent players remained quite strong. Some, however, vanished from the list entirely.

There was virtually no movement in DF's Top 10 this year. Of course, (like anyone doubted it), Dean Foods remains at the top of the list with more than $8 billion in sales, a significant increase over last year.

And while most everyone thought National Dairy Holdings (NDH) would jump to the top of the heap with its planned merger with East Coast leader HP Hood and give Dean Foods a run for its money, it didn't happen. Instead, anti-trust concerns led NDH and Hood to scale back their plans to mutual investments.

Despite a slow economy and weak milk prices, Kansas City, Mo.-based Dairy Farmers of America (DFA), ranked at No. 7 again this year, reported significant earnings to its members in 2002. While declining milk prices reduced revenues to $6.4 billion last year, the cooperative generated $85.9 million in earnings from joint ventures, $27.5 million more than in 2001. DFA decreased its long-term debt by $78 million, its selling and administrative expenses by $4.6 million and capital spending by $12.9 million. Meanwhile, DFA increased its member equity to $631 million, $8 million above 2001, the company reports. DFA marketed 47.8 billion pounds of milk in 2002, an increase of 5 percent, compared to a national overall increase of about 2.6 percent.

There were several factors that contributed to this year's rather lackluster list. The nation's milk supply, for example, far outweighed the demand in the past year. That, combined with an overall economic slump for U.S. business, yielded rather static sales figures.

Although there wasn't a lot of movement in this year's Top 100 economically, the industry remains strong. Milk consumption remains on the rise thanks to a nationwide effort to promote its healthful benefits. The cheese category continues to reveal a wealth of innovative products, keeping the dairy case competitive. And the ice cream category never fails to garner creative co-branding concepts and exciting new flavors.

As illustrated by last year's Top 100, many deals were huge, shaping dairy industry giants. Most notably of these was the much-anticipated merger of Suiza Foods Corp. and Dean Foods, creating the nation's leading processor and distributor of fresh milk and other dairy products.

It's apparent that Dean Foods is increasing its presence in the industry more than ever by way of acquisition and fresh new ideas in product development and brand leveraging.

The company is most definitely driving the industry forward. But how much is too much?

With an ever-weakening economy and the fact that mega companies continue to absorb small to mid-size dairies, will our Top 100 someday turn into the Top 75, or possibly even the Top 50?

Who knows what's in store for 2004.

Pamela Accetta Smith

(847) 205-5660 ext. 4069

paccetta@stagnito.com