March 31, 2004

Kraft buys Veryfine .... United Dairy acquires Fike's Dairy .... Lifeway posts record sales .... Parmalat reorganizes .... Brighter outlook for vanilla crop .... USDA renews milk powder-for-cheese plan .... Dairy people news .... Albertsons acquires New England stores .... Stater Bros. relocates .... Labor deals approved .... Marketing Mix .... Odds-and-Ends .... Stock Market Ticker .... More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Northfield, Ill.-based Kraft Foods Inc. has acquired the beverage company Veryfine Products, Littleton, Mass. The deal includes three distribution and processing facilities in New England. Veryfine recorded sales of $150 million in 2003; its top seller is flavored water Fruit2O. Terms of the deal were not disclosed. (Chicago Tribune)

Martins Ferry, Ohio-based United Dairy has purchased Uniontown, Pa.-based Fike's Dairy. United has annual sales of $113 million and holds dairy facilities in Ohio, Pennsylvania and West Virginia. Sold by parent company Protein Holdings Inc., Fike's had $85 million in 2003 sales of fluid milk, beverage and frozen dessert products in the Mid-Atlantic region. (Matrix Capital Markets Group report)

The trend toward healthier foods boosted the performance of Lifeway Foods Inc., which posted record sales and income in 2003. Morton Grove, Ill.-based Lifeway reported net income of $2.2 million for 2003, a 45% jump from 2002. Sales increased 22% to $14.8 million, up from the previous record of $12.2 million in 2002. Lifeway manufactures probiotic and kefir products. (Company report)

As part of its global restructuring plan, Parmalat Finanziaria SpA will focus on operations in about 10 countries and scale back the number of its brands from 120 to 30. Operations in Italy, Canada, Australia, South Africa, Spain, Portugal, Russia and Romania appear to be at the top of the list. Parmalat's U.S. operations are up for sale. Farmland Dairies LLC, Wallington, N.J.; its controlling company, Parmalat USA Corp.; and subsidiary Milk Products of Alabama LLC all filed for bankruptcy on Feb. 24. Operations in Argentina, Ecuador, Dominican Republic and Uruguay will also be put on the market. Along with a reduction in the company's food brands, emphasis will shift to "healthy lifestyle" products. In other news, Parmalat held its first official meeting with creditors on March 26 in Milan. Between 30 and 40 creditor groups were represented at the meeting. Enrico Bondi, appointed by the Italian government to restructure Parmalat, will present his formal plan to the government in September; his plan could be implemented early next year. (Reuters; Toronto Star)

Initial reports, including the article summarized in last week's D-brief, appear to have overestimated the amount of damage done to Madagascar's vanilla crop during a recent cyclone. The storm's impact on vanilla may have been relatively modest, and a bumper crop is still being anticipated by industry analysts. Having learned from previous experiences, some vanilla exporters say they took additional precautions before the cyclone hit, resulting in minimal losses.

After initially declining an extension of a pilot program that uses surplus nonfat dry milk to produce mozzarella cheese for a Wisconsin food assistance program, the U.S. Department of Agriculture (USDA) has ruled that the program may continue for another year. USDA based its previous decision on concerns that cheese processors might be less likely to buy nonfat dry milk on the market, which would depress prices and result in even more surplus dry milk. The Milwaukee Hunger Task Force coordinates the program, which last August delivered 43,000 pounds of dry milk to Alto Dairy Cooperative in Waupun, Wis. Alto Dairy converted the product into 20,000 pounds of mozzarella for the program and kept an additional 12,000 pounds as compensation for overhead costs. The task force distributed the cheese to about 40 Milwaukee food pantries and shelters. (Milwaukee Journal Sentinel)

Dairy People in the News: As previously planned, Montreal-based Saputo Inc. named Lino Saputo Jr. as president and chief executive officer. He had served as president and chief operating officer of Saputo's cheese division. (Company report) .... Kraft Inc., Northfield, Ill., announced that CEO Roger Deromedi was hospitalized this week with an undisclosed ailment. His staff has been told to report to Chairman Louis Camilleri. (Associated Press)

CUSTOMER CLIPS

Marking Albertsons Inc.'s first venture into New England, the retailer has acquired 202 Shaw's and Star Market stores from British-owned J. Sainsbury PLC for $2.7 billion. Stores will continue to operate under the Shaw's and Star Markets banners; sales under both banners totaled $4.6 billion in 2003. Boise, Idaho-based Albertsons now owns more than 2,500 stores in 37 states; its sales are expected to top $42 billion in 2004. (New York Times)

Colton, Calif.-based Stater Bros. Markets will refurbish a former Air Force base in San Bernardino, Calif., and relocate its headquarters there. The company will invest about $200 million in the purchase and redevelopment of former military buildings. The planned 2.2 million-sq.-ft. warehouse would be the largest distribution center in southern California. (Los Angeles Times; Company report)

Supermarket Labor Report: Washington, D.C.-area workers at Giant Food LLC, Landover, Md., and Safeway Inc., Pleasanton, Calif., ratified a new four-year deal with the supermarket chains on March 30, the day that the current labor contract was to expire. Stores were closed while workers voted on the contract. (Washington Post) .... Employees of the 18 Gelson's Markets in southern California approved a new labor contract with Compton, Calif.-based Arden Group Inc., the parent company of Gelson's. The new contract expires in March 2007. (Company report)

MARKETING MIX

Ben & Jerry's popular Chunky Monkey flavor is celebrating its 15th birthday. At the same time, the Chunky Monkey cartoon character that was created by Pauline Comanor celebrates its 30th birthday. To celebrate the anniversaries, Ben & Jerry's will donate ice cream to the Bristol-Myers Squibb Children's Hospital in New Brunswick, N.J. Introduced in 1988, the banana ice cream with chocolate chunks and walnuts has been a perennial favorite for the Burlington, Vt.-based company. (Company report)

Lactaid plans to increase its efforts to reach the Hispanic market. La Agencia de Orci advertising agency was selected to implement TV, radio and magazine ads. New ads will break this month and run throughout the year. The new campaign will specifically target Latino mothers. Lactose-free Lactaid is a brand from McNeil Nutritionals, a division of Fort Washington, Pa.-based McNeil-PPC Inc. (Company report)

"The Dakota," a sandwich creation by Bob Durant of Laytonsville, Md., was named the winner of Finlandia Cheese's National Sandwich Recipe Contest. The winning sandwich combines chicken salad with raisins, almonds and dried cranberries and is then grilled with Finlandia Swiss cheese. One of 3,000 contest entries, Durant's sandwich earned a spot on the menu of the famed Carnegie Deli in New York City. (Company report)

IDFA NEWS

IDFA Schedules New HACCP Short Course for Dairy and Juice
Just added to IDFA's education schedule, the Advanced HACCP Short Course for the Dairy and Juice Industries will be held on May 25-26 in Nashville, Tenn. This workshop is the first step in IDFA's HACCP Certification Program, an overall training initiative that guides participants through the latest HACCP food safety information. Registration is now open! For complete details, click here. http://www.idfa.org/meetings/2004haccpcourse.cfm

ODDS-AND-ENDS

Dairy pundits are predicting that farm milk prices could reach "stratospheric levels" in coming weeks. The price could reach $18.59/cwt by April, which would break the record of $17.00/cwt set in 1998. (Associated Press) .... A Sorrento cheese manufacturing facility in Goshen, N.Y., will shut down on May 28, affecting 68 workers. Operations will move to a Sorrento plant in Buffalo. (Times Herald-Record, Middletown, N.Y.) .... Engineers in Scotland have developed a robot that allows cows to milk themselves whenever they like. During testing, most cows took a liking to the rubber-tube device and visited it several times a day. (United Press International) .... A highly prized local treat, ice cream produced by students and faculty of South Dakota State University's Dairy Science Department will soon be distributed beyond the bounds of Brookings, S.D. A partnership between the university and The South Dakota Made Store, owned by Robbyn Conlon, will allow Conlon to distribute the Dairy Bar ice cream, starting with grocery stores in the northeast portion of the state. (Argus Leader, Sioux Falls, S.D.) .... A Dutch man received a 10-year prison sentence for injecting potentially lethal doses of a pesticide into yogurts and puddings in European markets in an effort to extort more than $300,000 from Campina, Ahold and Sara Lee/DE. (Associated Press)

STOCK MARKET TICKER

As of 3/30/04, 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 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		26.84 33.44 78.98 46.55 32.99 82.80 10.52 31.71 16.43 20.47 20.48 32.30 29.37 39.88 33.21 18.87 07.51		-0.08 -1.16 -0.10 +0.05 +0.09 +0.05 -0.12 -0.15 +0.10 +0.16 +0.49 +0.45 +0.73 +0.40 -0.13 -0.62 +0.01		+0.81 -1.63 -0.03 +0.20 +0.24 +0.37 -0.38 -0.45 +0.24 +1.29 +0.46 +0.60 +1.04 +0.31 +0.36 +0.72 -0.57
Source: Yahoo! Finance

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