January 21, 2004

Guilty pleas and SEC charges in Suprema securities fraud case...BSE update; USDA tracks Canadian herd members and more...Permits cause issue for Davisco project...Parmalat scandal unravels...Kash N' Karry closes 34 Florida stores...Farmer Jack to shift format in Detroit...Supermarket labor dispute hits 103rd day today...New Product Scanner...Odds-and-Ends...Stock Market Ticker...More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

A former Suprema Specialties operations manager John Van Sickell and three customers pleaded guilty to conspiracy to commit securities fraud last week. The pleas granted in U.S. District Court in Trenton, N.J., are the first criminal admissions since the Paterson, N.J.-based cheese company collapsed in 2001. Van Sickell faces up to three years in prison for the conspiracy, and the three customers face up to 10 years in prison for securities fraud. The guilty pleas relate to the scam, which created millions in fictitious sales and revenue. The Securities and Exchange Commission additionally settled charges against Van Sickell and the three customers (two from California and one from New Jersey). The SEC also charged and settled with Suprema's former controller, Arthur Christensen; he coordinated false invoices that helped bolster the company's claim of $1.2 billion in reported revenue from 1996 through 2002 and its subsequent public stock offering. Up to 58 percent ($700 million) of sales were non-existent. SEC fines are expected. (The Record-Bergen County, N.J.)

BSE update: Four more Washington state cows were connected Monday to the Canadian Holstein infected with BSE (bovine spongiform encephalopathy or mad cow disease). The U.S. Department of Agriculture reports that three of the cows were located at a dairy farm in Tenino, Wash., and an additional cow was found in Connell, Wash; USDA has traced 23 of the 81 cows from the Nisku, Alberta, herd. USDA and Canadian authorities are also tracing 17 heifers later sold from the same farm; so far, three have been traced. A hold has been placed on the Tenino farm; it joins four other operations previously quarantined (milk production is not subject to quarantine). USDA also reports negative test results for 30 samples taken from cows destroyed for having a connection to the infected Holstein. About 600 cows have been killed in Washington as a precaution. The quarantined Mattawa operation had 20 cows destroyed and sampled beginning on Saturday. (Associated Press, USDA press release)...The USDA's chief veterinarian denied a petition to ban milk products from the Mabton, Wash, farm where the BSE-infected cow lived. The request was made by the union representing locked-out WestFarm Foods workers. USDA reports there is no scientific basis to ban distribution of milk associated with the case. The International Brotherhood of Teamsters union argued that the ban was needed to protect the dairy industry from public concerns. WestFarm Foods responded that it was saddened and disappointed that the union is attempting to link its "totally unrelated labor dispute" with BSE; 194 union workers in contract negotiations with WestFarm have been locked out since Aug. 31, 2003. (Associated Press, WestFarm press release)...Washington Gov. Gary Locke has declared Jan. 17-24 Beef and Dairy Week to underscore the quality and economic significance of Washington's dairy and beef products; dairy production generates more than $600 million in annual ag revenue. The event is being promoted under the "From the Heart of Washington" campaign administered by the Washington State Department of Agriculture. (Governor's press release)

A wastewater treatment plan for a $40 million Davisco Foods cheese plant in the City of Lake Norden, S.D., has gained state Department of Environment and Natural Resources approval conditional on the county's agreement. Construction on the $10 million wastewater facility was halted last month after it was determined that the Le Sueur, Minn.-based company lacked both state and county approval. The company believed the facility was under city, not county, zoning. (Associated Press)

Fluid packaging company Tetra Pak AB has been pulled into "Europe's Enron," the potentially $16 billion Parmalat Finanziaria SpA scandal. Calisto Tanzi, founder of now-bankrupt Parmalat, was paid $89 million in Tetra Pak kickbacks to secure packaging contracts, according to ex-Parmalat CFO Fausto Tonna. The payments to Tanzi started in 1996 and apparently continued through 2001. Tanzi remains in police custody in Italy, along with eight others. This week, company director Franco Gorreri became the ninth person arrested; he was charged with criminal conspiracy, fraudulent bankruptcy and falsification of documents. Tetra Pak, a major unit of Swiss-based Tetra Laval S.A., has launched an internal investigation into the cash payment allegations. It acknowledges that discounts were given to Parmalat, but reports that the practice is in-line with treatment of other major customers. Parmalat is widely known for its use of Tetra Pak's long-life milk processing and packaging; Tetra Pak does business with Parmalat in 23 countries. (New York Times; Dow Jones Newswires, Agence France Presse)

CUSTOMER CLIPS

Tampa-based Kash n' Karry will close 34 Florida supermarkets to better compete with Wal-Mart Stores and Publix Super Markets. The chain will leave one store each in the Orlando and Lakeland markets, and plans to wage its battle from its Tampa Bay area home turf; the 1,500 employees impacted by the closings will be offered severance packages or positions at remaining stores. Delhaize Group-owned Kash n' Karry is the No. 2 supermarket chain in the Tampa/St. Petersburg market behind Publix. As part of its competitive strategy, Kash n' Karry plans to reposition itself as a more upscale grocer; it is building six new stores in the Tampa Bay area and renovating 14 more. (Tampa Tribune-Florida)

Detroit-based Farmer Jack Food Market, the 106-store division of Montvale, N.J.-based Great Atlantic & Pacific Tea Co., has retreated from a plan to close 13 Detroit-area stores. The chain will instead close three stores and convert the remaining 10 to Food Basics stores by early April. Farmer Jack received wage concessions from 10,000 union workers to help trim the numbers of stores closed. The limited selection Food Basics format is an A&P concept with 105 stores in New York, New Jersey, Philadelphia and Ontario, Canada. An additional six Farmer Jack stores in the Toledo, Ohio, market, will either close, be sold or converted to Food Basics units. The city of Toledo will provide unspecified economic development incentives to keep the stores open. (The Blade-Toledo, Ohio; Farmer Jack press release)

The Southern California strike/lockout involving 70,000 California workers at Safeway Inc. (Vons and Pavilions), The Kroger Co. (Ralphs) and Albertsons Inc. hits the 103-day mark today. Fifteen people were arrested for blocking a door during a labor rally that drew 1,200 people in front of a Vons supermarket on Saturday. Those arrested on a misdemeanor charge of failing to disperse included an Anaheim City councilman and union leaders. Pickets at Ralphs stores, dropped on Oct. 31 to benefit shoppers, resumed last week. (Los Angeles Times)

NEW PRODUCT SCANNER

The Dannon Co. Inc. reports the national launch of Dannon Light 'n Fit Carb Control. The reduced carbohydrate cultured yogurt is available in Strawberries n' Cream, Peaches n' Cream, Raspberries n' Cream and Vanilla Cream flavors. Each 60-calorie, 4 oz. serving carries 3 grams of carbohydrates, 80% less sugar than regular lowfat yogurt, 5 grams of protein and 15% of the recommended daily value of calcium. The Splenda-sweetened product is also marketed as an alternative for diabetics. Tarrytown, N.Y.-based Dannon offers the line in 4-packs with an SRP of $2.49.

The Hood Carb Countdown milk line is also entering the low-carb product craze. Chelsea, Mass.-based HP Hood Inc. offers the 3g carbs per serving, Splenda-sweetened line in a resealable UHT half-gallon carton priced at $2.63. The fat-free variety is flagged with "75 percent less carbs & 50 percent more protein than whole milk" and "Atkins approved." Varieties also include whole, 2% reduced-fat and 2% reduced-fat chocolate. (Product Alert-Naples, N.Y.)

The new Anderson Erickson Icy Cold To Go! Milk line is sold in refrigerated, single-serve, 12 fl. oz. resealable plastic bottles. Des Moines-based Anderson Erickson Dairy Co. offers the line in whole, 2% reduced-fat white, chocolate, chocolate malt and strawberry flavors. The 2% reduced-fat milks are tagged "a great alternative to soda." (Product Alert-Naples, N.Y.)

IDFA NEWS

Dairy Processors: Licenses Now Available for Calcium/Weight Loss Claims
Processors can now apply for the necessary license to make weight loss claims in marketing their branded dairy products, thanks to a new agreement between IDFA and Dairy Management Inc. (DMI) that was announced at this week's Dairy Forum. For more information or an application, click here http://www.http://www.idfa.org/news/stories/2004/01/license.cfm

ODDS-AND-ENDS

A Feb. 6 groundbreaking is slated for the Southwest Cheese Company LLC's $190 million Clovis, N.M., cheese and whey processing facility. The plant is a 50-50 joint venture between Glanbia and U.S. cooperatives Dairy Farmers of America Inc., Select Milk Producers Inc., and several other smaller dairy cooperatives that are members of the Greater Southwest Agency Inc. co-op. The facility is to open in the fourth quarter of 2005, and is expected to generate $350 million via annual production of more than 2.4 billion lbs. of milk into 250 million lbs. of cheese and 16.5 million pounds of high value-added whey proteins...A contest to give away a 50-year supply of Obeweis Dairy ice cream is creating waves with political opponents of Republican U.S. Senate candidate and dairy owner Jim Oberweis. The drawing, sponsored and paid for by the Oberweis campaign, enters voting age Illinois residents who complete a survey ranking political issues in order of importance. The winner will be selected at random and will receive one quart of Oberweis ice cream monthly for a maximum of 50 years. Oberweis is also making campaign appearances at the Chicagoland-based company's ice cream stores, which will offer free scoops of ice cream (paid for by the campaign). Opponents question whether the senate candidate is mixing his business with his campaign. Last year, he starred in Oberweis TV ads that drew similar ire from political foes. (Associated Press)...P.K. Curtin, 52, the man featured as a quick-witted pitchman in McCadam Cheese's new ad campaign, died unexpectedly Jan. 6. The Chateaugay, N.Y., resident worked for McCadam for 30 years and never missed a day; he most recently was a shift supervisor. He also served as a volunteer firefighter for 26 years; the McCadam campaign featuring Curtin is tagged "New York's finest." (Associated Press)

STOCK MARKET TICKER

As of 1/20/04, market close.

Company/Symbol		Last Trade		Change over Previous Close		Change over Last Week's D-brief
ConAgra Foods/CAG Dean Foods/DF Dreyer's/DRYR General Mills/GIS Groupe Danone/DA Hershey Foods/HSY Horizon Organic/HCOW 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		26.10 32.07 77.83 45.93 33.37 75.00 24.00 11.70 31.83 18.81 18.80 22.86 30.50 29.29 39.38 37.09 16.65 09.40		-0.08 +0.75 +0.03 +0.49 +0.55 -0.04 +0.05 -0.04 +0.21 -0.16 +0.09 -0.15 -0.50 +0.21 +0.88 +0.51 +0.27 -0.11		-0.09 +0.90 +0.03 +0.85 -0.08 -1.35 +0.00 +0.80 +0.53 +0.21 +0.40 +0.47 +0.45 +0.96 +0.38 +1.83 -0.35 -0.06

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