To view D-brief online, visit www.dbrief.org

April 13, 2005

San Miguel the final bidder for National Foods ... Regional organic milk launch in Texas ... Organic milk processors find supply tight ... Nestle CEO to take over as chairman, focus on growth in fitness market ... State Dairy News ... Starbucks to add artisan cheeses to menu .... Peapod launches service in Milwaukee market ... Plant Operations Conference ... Odds-and-Ends...Stock Market Ticker...More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Pending stockholder approval, Philippines' food and beverage giant San Miguel will become owner of Australia's National Foods in a stock purchase deal totaling nearly US$1.5 billion. National Foods' board has unanimously recommended that shareholders approve the offer. The deal would include National Foods' brands Pura Milk, Big M, Yoplait, YoGo, King Island Dairy and Fruche, which make up 37 percent of all fresh milk sales in Australia and about a third of the cheese and dairy dessert case sales. New Zealand dairy cooperative Fonterra dropped out of the bidding for National Foods and reports that it plans to sell its 19 percent share of the company to San Miguel for an estimated US$155 million. Fonterra initially announced its National Foods takeover intentions on Oct. 25, and a bidding war has ensued since then. (Courier Mail-Queensland, Australia; The Daily Telegraph-Sydney, Australia)

LaFarge, Wis.-based Organic Valley Family of Farms is expanding its line of regional organic milk offerings into Texas. Texas Pastures organic milk -- in whole, 2%, 1% and nonfat versions -- will roll out in such retailers as Brookshire Grocery, Central Market, Whole Foods Market and United Supermarkets. The SRP is $3.29 per half gallon and $4.99 per gallon. Milk will be sourced from a dedicated pool of organic dairy producers in the Sulphur Springs region of Texas and will be bottled at SouthWest Dairies in Tyler, Texas. Producers are part of the Texas Department of Agriculture's "Go Texan" program and will take part in introductory events including retail sampling throughout the state. Other products in Organic Valley Family of Farms' regional milks line include Northeast Pastures, New England Pastures, Rocky Mountain Pastures, California Pastures and Northwest Pastures. (Company report)

Meanwhile, the U.S. organic dairy industry is reportedly facing a tight organic milk supply. Processors including Horizon Organic, a subsidiary of Dallas-based Dean Foods Co., found it difficult to source enough raw organic milk to keep up with consumer demand earlier this year; some stores are still receiving only 70 to 80 percent of their organic dairy product orders. At Austin, Texas-based Whole Foods Market Inc., roughly 70 percent of milk sales are organic; the chain posted signs in its stores to alert consumers of the supply issue. Organic milk sales at health food and conventional supermarkets grew more than 15 percent last year to $834 million, according to ACNielsen LabelTrends. Horizon reports that it has signed up 95 new farms to make the three-year transition from traditional farming to organic, with ten farms to begin supplying milk to Horizon in coming months. The Organic Trade Association notes that it could take five years for the organic milk supply to meet demand, depending on such factors as pricing, availability of feed, and any federal rule changes. (The Dallas Morning News)

Nestle CEO Peter Brabeck-Letmathe will take on the additional role of chairman on Thursday, since current chairman Rainer Gut is retiring. Brabeck-Letmathe started with the company's ice cream division 30 years ago and became CEO in 1997. He has worked to improve the Vevey, Switzerland-based company's finances with a series of divestitures, cost-cutting measures and acquisitions to build growth areas. Brabeck-Letmathe stated that he plans to focus the company's future growth on nutritious and "fitness" foods. Nestle's new nutrition division, which focuses on foods for infants, athletes and people with medical conditions, accounts for about 5 percent of total sales, analysts say. New fitness offerings include yogurt fortified with such branded active ingredients as Calci-N, a milk-derived source of calcium, and LC1, a lactic acid bacteria for the immune system. (The International Herald Tribune)

STATE DAIRY NEWS

Vermont Gov. James Douglas has created a dairy task force in order to boost local dairy farming to help meet growing demand for milk in the Northeast. The task force will consider ways to preserve and encourage farming, to encourage value-added production and to help with greater per-farm production. Within the next six months, the task force is expected to determine the viability of such ideas as grants for farms to shift to pasture-based dairies; grants or tax credits to add cows; funding for nutrient management and to create business plans; and grants and loans for the development of new markets for cheese makers and processors. The panel includes former state Agriculture Commissioner Leon Graves, who is now a dairy marketing specialist, Agri-Mark economist Bob Wellington, and representatives from the St. Albans Co-op, Ben and Jerry's, Horizon Organic, Dairy Farmers of America, Cabot Cheese, Rock Bottom Farm and Star Hill Dairy. (Associated Press)

The success of the Real California Cheese marketing campaign is now a case study in advertising success. Known for its "Happy Cows" TV commercials, the campaign's longevity and strategy is cited as "top-rate marketing" by the Columbia University Graduate School of Business. The two-decade-long campaign was developed by the Modesto, Calif.-based California Milk Advisory Board to utilize the state's surplus milk production and to continue to grow the per capita cheese consumption in the state; the campaign has since expanded to a national level. University professor Michelle Greenwald has published a 34-page case study on the campaign and its positive impact on the state's cheese production reputation. The study will be used in Columbia business classes, with a two-page condensed version incorporated into a marketing textbook to be used in 70 percent of the country's business graduate schools. The campaign is largely credited with helping to grow California's cheese production from 281 million pounds in 1983 to the two billion-plus pounds expected this year. The study offers details on the advertising as well as other actions taken to grow the market, including offering cheese-making classes at Cal Poly San Luis Obispo, giving awards to cheese makers, and enticing cheese processors to open businesses in the state. The Real California Cheese marketing campaign has a $33 million annual budget, with $23 million earmarked for advertising. (The Fresno Bee)

CUSTOMER CLIPS

Seattle-based Starbucks will team with New York celebrity chef Terrance Brennan to add artisan cheeses to the menus of 340 stores in the New York area starting next Monday. As part of an expanded lunch menu, the $5.95 boxed offering will include aged gouda, Vermont cheddar and blue cheese as well as crackers, dried apricots, walnuts and advice on pairing the foods with Starbucks' drinks. Brennan runs Manhattan's Artisanal Cheese Center and owns a French bistro. He pitched the idea of adding artisan cheeses to the Starbucks' menu about a year ago and hopes the program will expand to Starbucks outlets nationwide. (Daily News-New York)

Online grocery service Peapod.com has arrived in the Milwaukee market, with service to Racine, Kenosha and Milwaukee counties as well as eastern Waukesha County. Chicago-based Peapod will deliver groceries for a service charge of $5.95 on orders of $100 or more and a service charge of $9.95 to deliver a $50 order, the minimum amount for an order. Groceries ordered from Wisconsin will come from Peapod's Lake Zurich, Ill., distribution center, which also serves Chicago. Service will initially be limited to Tuesday, Thursday and Sunday deliveries. Previous southeast Wisconsin attempts at online grocery services several years ago by Pick 'n Save and the independent grocery service Icanshoponline.com each met with limited success and were discontinued. (The Milwaukee Journal Sentinel)

IDFA NEWS

IDFA's Plant Operations Conference to Hit Chicago in Two Weeks
There is still time to register for IDFA's Plant Operations Conference, set for April 26-27 in Chicago! This two-day program is designed to keep dairy plant operators and managers informed about innovations in technology and management practices that can help improve plant effectiveness. In addition, attendees will receive a thorough review about recent regulatory changes, including new labeling rules and the revamping of the food Good Manufacturing Practices (GMPs). A highlight of the program will be the presentation of this year's Dairy Industry Safety Awards, which will recognize plant facilities and trucking operations with outstanding worker safety performances. For complete agenda information, including the latest speaker additions, click here.

ODDS-AND-ENDS

Mark Peterson has joined Baraboo, Wis.-based Foremost Farms USA as the director of operations for the cheese division; he will oversee operations at the cooperative's six Wisconsin cheese processing facilities. Peterson previously served as senior manager of food operations at The Swiss Colony Inc., Monroe, Wis., and has also worked for Ecolab Inc., as project manager for the food and beverage engineering division in South Beloit, Ill. (Company report) ... A study by the Center for Regenerative Biology at the University of Connecticut has found that cloned cows' milk and meat appears to be safe for human consumption, scientists reported earlier this week. Two beef clones created in Japan and four dairy clones created at UConn were used in the study, with meat and milk from the clones compared to the products derived from traditionally bred animals. Analysis of protein, fat, lactose, solids and other variables revealed no significant differences in milk from the cloned dairy cows, with similar results for beef. The Food and Drug Administration (FDA) has asked the food industry to keep products from cloned animals out of the food chain; the UConn study will be included in the FDA safety assessment on such foods that is expected to be released soon. (Associated Press) ... A successful U.S. Department of Agriculture (USDA) pilot project that converts government-provided dry milk into mozzarella cheese will be extended through fiscal year 2005; the cheese is used by Milwaukee food pantries and shelters. Sen. Herb Kohl (D-WI) made the request to USDA to extend the program, which began in March 2003. (Sen. Kohl press release)

STOCK MARKET TICKER

As of 4/12/05, market close.

Company/Symbol		Last Trade		Change over Previous Close		Change over Last Week's D-brief
Dean Foods/DF Dreyer's/DRYR General Mills/GIS Groupe Danone/DA Hershey Foods/HSY Ingles Markets/IMKTE 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*		35.33 80.81 49.56 19.51 61.18 13.16 32.88 15.75 23.87 20.71 35.98 34.20 40.13 37.69 19.13 N/A		+0.23 +0.03 +0.18 -0.04 +0.63 +0.33 -0.01 +0.03 +0.71 +0.24 +0.01 +0.30 -0.05 +0.86 -0.34 N/A		+0.49 +0.10 +0.23 +0.12 +1.00 -0.05 -0.14 -0.11 +0.69 +1.32 +0.25 +0.86 +0.25 -0.33 -0.68 N/A
*The New York Stock Exchange suspended trade of WIN as a result of the company's filing of its Chapter 11 petition on February 21, 2005. Source: Yahoo! Finance

Click here to view last week's edition of D-brief.
http://www.idfa.org/dbrief/archive.cfm

ABOUT D-BRIEF

D-brief is written by Dairy Field magazine, a Stagnito Communications Inc. publication, www.dairyfield.com. It is provided for the benefit of the industry by the International Dairy Foods Association (IDFA), www.idfa.org.

D-brief is sponsored by Polytainers and Curwood. Polytainers is a leader in the design, production and printing of thinwall rigid plastic containers for the dairy and food industries. Learn more about this sponsor at www.polytainersinc.com. Curwood develops and manufactures high-performance, high-barrier, polymer-based packaging materials. For more information about Curwood products, visit www.curwood.com.

For editorial content submissions, contact Cathy Sivak, D-brief editor, at editor@dbrief.org.

To subscribe or unsubscribe to this e-newsletter, send your request — along with your full name, title, company, phone and email address — to subscribe@dbrief.org.