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January 5, 2005

DFA's cheese purchases questioned by media ... Kraft Foods promotion on South Beach Diet ... American Casein Co. to add third production facility ... Global Marketwatch ... Food community helps Asian tsunami relief efforts ... Kroger division president to retire ... Odds-and-Ends ... Stock Market Ticker ... More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Reported efforts of Dairy Farmers of America (DFA) to prop up milk prices via well-timed cheese purchases at the Chicago Mercantile Exchange (CME) are under fire by the Chicago Tribune. A Dec. 30 article questioned the ethics of such purchases, since the dairy industry uses the CME cheese price to set raw milk prices. While CME trades are confidential, insiders told the newspaper that DFA conducts more than half of all cheese purchases made. The Kansas City, Mo.-based co-op refused to comment for the article, but in an October speech, DFA CEO Gary Hanman outlined the co-op's cheese purchase practices and claimed that such purchases increased dairy farmers' milk checks by an estimated $1.3 billion. "Since that market (CME) is the basis on which all people sell cheese -- if you can have a positive influence on that market, you can have a positive influence on price," he told farmers. He further noted that the co-op's Borden Cheese subsidiary plans its production with an eye on CME purchases. The legality of such actions is a gray area. While the Commodity Futures Trading Commission regulates futures, CME cheese trades are not regulated as such, since the CME is a cash market that operates much like a live auction with actual products bought and sold. (Chicago Tribune)

Northfield, Ill.-based Kraft Foods is tapping into New Year's resolutions and the success of The South Beach Diet with new promotion efforts of ''South Beach Diet Recommended'' Kraft products. A new Kraft South Beach Diet booklet debuts this month, offering consumers recipes, tips and coupons for Kraft products; the 14-page booklet will be distributed for free with purchase of two Kraft products at participating retailers. A variety of Kraft products now carry a "South Beach Diet Recommended" tag, including Kraft 2% Milk and Fat Free Singles as well as Light n' Lively Cottage Cheese. In addition, Kraft will offer the "Life is Better on the Beach" Sweepstakes, with a grand prize of a trip for two to South Beach, Miami. The South Beach Diet is a popular low-carb diet that encourages people to eat a variety of foods, including reduced-fat cheeses and other dairy products. (Company report)

American Casein Co. signed a 20-year lease on an idled dairy plant in Arpin, Wis., last week. The company has an option to purchase the facility during the first year of the lease. The former Arpin Dairy/Sorrento Lactalis building has been closed for three years. Initial casein production will require about 30 employees, but the plant could employ up to 250 by 2007, a company official said. American Casein also has processing facilities at its headquarters of Burlington, N.J., as well as in Delmar, Md. (Marshfield News-Herald, Marshfield, Wis.)

GLOBAL MARKETWATCH

In 2004, Groupe Danone bought 1.09% (481,000) of shares in Russia's Wimm-Bill-Dann Foods (WBD), increasing its total interest in the company from 7.228% to 8.32%. The shares were bought on the open market at a cost of about $6.5 million. Depending on market conditions, Danone reports that it may continue to increase its interest in WBD, but notes that its increased stake does not mean negotiations have resumed on Danone's possible acquisition of controlling interest in WBD; those negotiations ended in late 2003. The French company initially purchased WBD shares during the Russian company's IPO at the New York Stock Exchange in February 2002. (The Russian Business Monitor, Russia) ... In other news, Danone Asia is expected to become the third-largest stockholder in Beijing's Shanghai Bright Dairy and Food Co. Ltd. following the completion of the Danone unit's late December purchase of 40,094,627 state-owned shares. The stock transfer will give Danone Asia a total of 80,189,254 shares in the company, which is China's largest dairy processor. (Jingua Times via Sinocast)

China's first cow cloned from frozen somatic cells is expected to give birth soon. The cow, named Wei Wa, was cloned two years ago and reportedly has had a healthy pregnancy so far. Wei Wa was cloned from frozen epidermal cells extracted from the ears of a top-producing dairy cow at the farm of Kelong Animal Husbandry Industrial Co. Ltd. in Liangshan County, China. The company has cloned 26 more cattle over the past two years; three of Wei Wa's 'younger sisters' are expected to give birth in February. (Xinhua Economic News Service).

Meanwhile, New Zealand researchers have bred cows that are genetically modified to produce high-protein milk (up to 20% more beta-casein and twice the amount of kappa-casein as milk from ordinary cows). Milk from the cows could eventually be a boon to cheese production, as more cheese could be produced from the same amount of milk. Production would also be faster, as quicker clotting times are linked to higher protein levels. (New Scientist)

CUSTOMER CLIPS

Food companies are getting involved in the massive Asian tsunami relief efforts by contributing to the American Red Cross International Response Fund and other organizations at the corporate and store level. The Wal-Mart & Sam's Club Foundation is making a $2 million contribution to the Red Cross, and the retailer will establish collection points at all of its stores and distribution centers as well as online. The Kroger Co. will accept customer donations at the store level, and its various foundations will offer contributions up to $300,000 to match those from employees. Safeway stores will likewise serve as collection points; the retailer will also make a cash contribution and will match employee donations. Ahold's Stop & Shop/Giant Landover will make a $50,000 donation to relief efforts. PT Nestle Indonesia, a subsidiary of Nestle SA, made an initial donation of more than 12,000 boxes of food aid that include a variety of milk products. (Company reports, Asia Pulse)

Robert J. Hodge, president of The Kroger Co.'s Cincinnati-Dayton Division, will retire this month after 40 years in the grocery industry. Hodge, 67, began his career with Kroger in 1964 as a management trainee in St. Louis. He served as a meat buyer and merchandiser for Kroger marketing areas in St. Louis and Cleveland until 1974, when he went to work for Ralph's Grocery Company. He returned to Kroger in 1977, holding various positions throughout the company. In 1992, he became president of the Cincinnati-Dayton marketing area; Geoffrey Covert will succeed him as president of this region. Covert joined Kroger in 1996 after 22 years with The Procter & Gamble Co., and has held several positions with Kroger, including vice president of grocery products, group vice president and president of Kroger manufacturing, and senior vice president. (Cincinnati Post)

IDFA NEWS

Register Today for IDFA's Labeling Workshop on January 25
Reserve your spot now at IDFA's newest workshop, "Dairy Labeling -- Making the Change," which will be held January 25 at the Grand Hyatt in Washington, D.C. By January 1, 2006, dairy manufacturers must comply with new Food and Drug Administration (FDA) regulations regarding food allergens and trans fat content. In addition, many processors are looking to update their labels in order to promote appropriate health and nutrition claims, including the dairy/weight-loss connection. "For a variety of reasons, dairy processors will be changing their labels in the coming year. This workshop is aimed at making that transition as smooth and beneficial as possible," said Cary Frye, IDFA vice president of regulatory affairs. For details or to register, click here. For complete details or to register, click here.

ODDS-AND-ENDS

A new health study by the Boston University School of Medicine concludes that a diet rich in dairy products as well as fruits and vegetables could shield children from high blood pressure later in life. The study is the first to examine the effect of diet on blood pressure change in children. (The Boston Herald) ... Cheeseheads hope to prevail in this weekend's NFL playoff game between two long-standing rivals, the Green Bay Packers and the Minnesota Vikings. The states' governors have a bet riding on Sunday's game, with the winning governor enjoying a special meal courtesy of the other. If the Vikings beat the Packers, Minnesota Govenor Tim Pawlenty will dine on sausage and cheese. If the Packers win, Wisconsin Govenor Jim Doyle will be served up some walleye Wellington and wild rice soup. (The Capital Times, Madison, Wis.) ... The California Milk Advisory Board (CMAB) has created its second annual ''Milk and Cookies Calendar.'' The 2005 edition features 12 California firefighters, who were winners of a CMAB cookie contest, along with their cookie recipes. The $15 calendar can be ordered online by clicking here. All proceeds will benefit the California Fire Foundation, a charity that honors fallen firefighters and provides family- and victim-assistance programs. Last year's calendar raised nearly $10,000. (San Jose Mercury News, Calif.) ###

STOCK MARKET TICKER

As of 1/4/05, market close.

Company/Symbol		Last Trade		Change over Previous Close		Change over Most Recent D-brief*
Dean Foods/DF Dreyer's/DRYR General Mills/GIS Groupe Danone/DA Hershey Foods/HSY Ingles Markets/IMKTA Kraft Foods/KFT Kroger/KR Ruddick Corp./RDK Safeway/SWY Saputo/SAP.TO SuperValu/SVU Unilever PLC/UL Weis Markets/WMK Wimm Bill Dann/WBD Winn-Dixie/WIN		32.31 80.41 48.75 18.23 54.94 13.05 34.74 16.69 21.40 18.87 36.20 33.26 39.01 38.30 14.42 04.45		-0.04 +0.03 -0.15 -0.27 +0.58 +0.00 -0.14 -0.46 -0.08 -0.71 -0.07 -0.39 -0.27 -0.35 -0.04 -0.28		-0.11 +0.11 -0.16 +0.51 +0.02 -0.17 -0.56 -0.31 +0.05 -0.63 -0.40 -1.62 +0.43 -0.45 +0.67 -0.13
Source: Yahoo! Finance * Due to last week's holiday break, this column reports changes compared to the Dec. 22 issue.

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ABOUT D-BRIEF

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