February 11, 2004

Vermont senators want milk on state menus .... Dreyer's plant ceases production .... Parmalat Brasil must give up joint venture, faces insolvency .... Dairy financials for Danone, Saputo, Agri-Mark and YoCream .... Spartan Stores restructures .... Ahold units to combine management .... Supermarket labor disputes heat up .... Ice Cream Technology Conference .... More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

In new legislation, a dozen Vermont state senators are pushing for a higher profile for milk, the official state drink, by making sure that milk is on the menu at state functions. As proposed to state Agriculture Committee members, the bill reads: "Milk, the state beverage pursuant to 1 VSA 503, shall be offered at every state function in which refreshments are served." Also in Vermont, there was a successful test of dairy products marketed at a local rest area; plans are in the works to add dairy products to vending areas at two other state rest areas this year. (Associated Press)

Ice cream manufacturing ceased at the Dreyer's Grand Ice Cream plant in Union City, Calif., last week. The facility's storage freezers and R&D departments will continue to operate; the plant will shut down in July when R&D offices are relocated. Tours at the 100,000-square-foot facility drew 15,000 visitors annually. The plant is expected to go up for sale next week. (The Daily Review-Hayward, Calif.)

A Brazilian judge has ruled the Brazilian subsidiary of Italy's Parmalat Finanziaria SpA must give up its 51% interest in milk producer BatAvia SA to the other shareholders, Cooperativa Central de LaticInios do ParanA and Agromilk SA. BatAvia makes up about 33% of Parmalat Brasil's annual revenue. Brazilian authorities are also setting up a congressional inquiry into allegations that Parmalat used its local units to launder money. Meanwhile, Parmalat Brasil reports that it is operating at 40% capacity and will soon be out of business unless it receives government assistance to re-establish bank credit lines. In Chile, failure to pay a Chilean milk producer group of 300 farms halted milk deliveries to the country's Parmalat unit last week. A deal to buy Parmalat Chile could be the first asset sale since the accounting scandal broke late last year. Investment group Bethia could spend $30 million on the purchase, which would include use of the brand name. Bethia currently owns Chile's tenth-largest milk processor; Parmalat is fifth in that nation. (Dow Jones, Associated Press, Daily Deal, The Miami Herald)

DAIRY FINANCIALS

France-based Danone SA reports that its earnings fell to $1.07 billion in 2003, compared to $2.03 billion in 2002, due to weak profits in its cookie division and the fact that the 2002 earnings had been boosted by the sale of a beer unit. The weak U.S. dollar and strong euro also played a role in the decline. Danone sales dropped 3% to $16.68 billion for the year. Danone's dairy products division accounts for about half of Danone sales and posted an 8.5% sales gain. (Associated Press)

Montreal-based Saputo Inc. reports a jump in net earnings to US$37.6 million during the third quarter of fiscal year 2004 (ending Dec. 31), compared to US$32 million in last year's third quarter. With the help of rising U.S. cheese prices, revenue for the third quarter rose 4% to US$671 million, from US$643.1 million in the same quarter in 2003. Saputo's U.S. Cheese Division sales for the third quarter totaled US$228.6 million, up nearly 3% over the US$222.6 million in sales during the same period in 2003. In addition to earnings, Saputo reports it is actively seeking to add cheese operations in the United States and both cheese and fluid milk facilities in Canada.

Mass.-based dairy cooperative Agri-Mark reports record profit of $11.4 million for its year ending Nov. 30, up 40% from profits of $6.8 million in fiscal 2003. The co-op posted $600 million in sales for the year, including fluid milk sales and Cabot and McCadam cheese sales. (The Burlington Free Press-Vermont)

Portland, Ore.-based YoCream International Inc. reports that sales during its fiscal 2003 (ending Oct. 31) increased about 5% to $20.5 million compared with sales of $19.4 million in 2002. Net income for the 12 months was $535,000, compared to $856,000 the previous year. YoCream's new products, including aseptic beverages and low-carb frozen yogurt products, are expected to boost the company's financials in 2004.

CUSTOMER CLIPS

Grand Rapids, Mich.-based Spartan Stores Inc. is restructuring in order to focus on its core wholesale grocery distribution and corporate retail units in Michigan and Ohio. Spartan will consolidate its five supermarket brands into its two most successful store banners, Family Fare Supermarkets and Glen's Markets. The name shift for six Ashcraft's Markets, three Great Day Food Centers and eight Prevo's Family Markets is designed to create a stronger retail store brand identity. Spartan currently operates 54 supermarkets total. Meanwhile, Spartan has divested the assets of its convenience store distribution operation, United Wholesale Grocery Co., to a privately held Michigan-based company.

Royal Ahold NV will shift local management of its Giant Food LLC division to executives at its Stop & Shop Supermarket Co. chain. Giant employs about 550 people at its Landover, Mass.-based headquarters. Quincy, Mass.-based Stop & Shop's top executives will take over for their Giant counterparts to create a single management team. Giant chief executive Richard Baird will step down in July, and Stop & Shop chief executive Marc Smith will head up both chains. Layoffs are expected, although no number was disclosed. Ahold purchased Giant Food six years ago and has since sold or closed its captive bakery, bottling and printing operations. Ahold previously combined the senior management at several of its other grocery chains, including Bi-Lo and Bruno's. (The Washington Post)

Labor action continues: Federally mediated negotiations between Safeway Inc. (Vons and Pavilions), The Kroger Co. (Ralphs) and Albertsons Inc. and union representatives are expected to resume today. United Food and Commercial Workers Union (UFCW) negotiators had rejected an offer by Albertsons Inc., Kroger Co. and Safeway Inc. during secretly held meetings in Denver in mid-January. In turn, the supermarkets rejected last week's UFCW proposal to end the strike in exchange for binding contract arbitration. (Associated Press, Director of the Federal Mediation and Conciliation Service report, supermarkets' report) .... Underway since July, negotiations have been unproductive so far between Stop & Shop Supermarkets and the Westport, Conn.-based UFCW local representing 42,000 store employees in Connecticut, Massachusetts and Rhode Island. The contract between Royal Ahold-owned Stop & Shop and union employees expires Feb. 14; employees are already wearing strike buttons. (Connecticut Post-Bridgeport, Conn.) .... A joint contract for 18,000 Washington, D.C.-area union employees and another 12,000 Maryland grocery employees will expire March 27. Formal negotiations for the joint labor contract with Safeway Inc. and Royal Ahold-owned Giant Food will begin in early March. The union has set up a strike fund, workers are wearing strike buttons and supermarkets have an agreement to lock out workers at both chains if a strike is called against either store. In 2000, employees were locked out of both stores during the negotiations' final stages. (The Washington Post) .... In Quebec, employees are fighting to unionize a Wal-Mart; more than half of the store's 200 employees have signed union cards. If the effort is successful, the Jonquiere store would become the first unionized Wal-Mart store in North America. (Canadian Press)

IDFA NEWS

Hotel Deadline is This Friday for IICA's Ice Cream Technology Conference
If you haven't already, be sure to reserve your spot today for the 2004 Ice Cream Technology Conference, set for March 3-5 in Phoenix, Ariz. The program will focus on the latest regulatory developments and product formulations, including a special half-day session on formulating, processing, freezing and labeling "low-carb" frozen desserts. Hotel reservations must be made directly with the Embassy Suites Phoenix (602-765-5800) by this Friday, February 13, to guarantee a room. Refer to the Ice Cream Technology Conference to receive a special room rate. Then, click here to register for this limited space meeting! http://www.idfa.org/meetings/icecreamtech04_agenda.cfm

ODDS-AND-ENDS

John Mueller has resigned as the leader of WestFarm Foods, effective March 31. Mueller joined Seattle-based WestFarm in 1998 as president and chief executive and also heads the parent cooperative, Northwest Dairy Association. WestFarm reports that Mueller resigned for personal reasons unconnected to the ongoing labor dispute with the Teamsters. John Underwood, senior vice president of the ingredients division and former senior vice president of operations with responsibility for WestFarm's 11 processing plants, will become interim chief executive if a new CEO is not in place by March 31. (The Seattle Times) .... Russia's Wimm-Bill-Dann Foods will install two new manufacturing lines, for fluid milk products and cheese desserts, in its two Ukranian dairy plants at a cost of $13.3 million. (Dow Jones) .... Separate nonfat dry milk (NFDM) donations by the U.S. Department of Agriculture to Indonesia (4,000 tons) and Vietnam (3,500 tons) announced last week will provide milk to schoolchildren there. The donated NFDM will be distributed via a nonprofit division of dairy cooperative Land O'Lakes Inc., with portions of the donations to be sold to fund various nutrition programs in the two countries. (USDA's Foreign Agriculture Service)

STOCK MARKET TICKER

As of 2/10/04, 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		26.11 32.98 78.30 45.06 35.28 78.38 24.00 10.62 33.02 18.90 20.00 21.90 29.90 24.98 40.24 33.25 17.58 06.76		+0.15 +0.35 +0.05 +0.14 -0.05 +0.28 +0.05 +0.09 -0.08 +0.16 +0.58 -0.06 -0.45 +0.29 +0.24 +0.05 +0.22 +0.42		+0.20 +0.69 +0.27 -0.59 +1.28 +0.64 +0.00 +0.01 -0.13 -0.13 +1.17 -1.05 -0.50 +0.08 +0.94 -0.13 +0.79 +0.95
Source: Yahoo! Finance

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