April 21, 2004

Kraft quarterly profits down .... Winn-Dixie may sell dairy operations .... Silk soy milk ads to go national .... Parmalat misreported earnings for 13 years .... SuperTarget adds milk drink line .... Cabot distribution facility built on schedule .... Vermont Senate hopes to spur in-state plant development .... On The Menu .... Kroger strikes deal with Indiana union .... Albertsons to close New Orleans stores .... Supervalu, Smart & Final report first quarter numbers .... Odds-and-Ends ... Stock Market Ticker .... More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Restructuring costs resulted in a 33% drop in Kraft Foods' first quarter profits for 2004, compared to the same quarter in 2003. Northfield, Ill.-based Kraft reports quarter net income fell to $560 million from the $848 million posted in last year's first quarter. Rising commodity costs, particularly record-high cheese prices, also contributed to the decline. Meanwhile, sales for the first quarter totaled $7.69 billion, up slightly from $7.36 million in 2003. Kraft is expected to achieve earnings in line with the low end of its forecast for the year and plans to proceed with its plan to increase marketing spending by up to $600 million. The earnings slide is also attributed to $279 million in costs related to closure of five plants and elimination of 2,000 jobs. (Chicago Tribune, Company report)

Winn-Dixie Stores' dairy processing operations may be sold off to help the Jacksonville, Fla.-based retailer overcome a $79.5 million quarterly loss reported in January. Industry insiders speculate that sale of the five-plant dairy division could bring in up to $200 million for Winn-Dixie's coffers, which could help as the company competes with Wal-Mart and Publix Super Markets. Winn-Dixie's processing unit generated $700 million in sales in 2002 with eight dairy facilities; three plants have since been closed. (The Daily Deal)

White Wave, owned by Dallas-based Dean Foods, is launching the first national advertising campaign for its Silk soy milk. The company will spend $22 million on print and television advertising over the next six months in an effort to promote the product's healthy image and encourage consumers to use Silk more often. The campaign's tagline is "Rise and Shine." The company reports that 97% of all U.S. supermarkets now carry Silk. (Wall Street Journal)

A new audit of Parmalat Finanziaria Sp has determined that founder Calisto Tanzi stole more than $1 billion from the company and that Parmalat misreported earnings for at least 13 years, totaling losses in the amount of $2.4 billion. An independent audit prepared for prosecutors showed that the Italian company had only one profitable year from 1990 to 2002. A separate audit by Parmalat's new accounting firm, PricewaterhouseCoopers, shows that the company also falsified 2003 earnings and actually amassed $17.1 billion in debt -- eight times higher than previously reported. In other news, Parmalat took a $4.9 million loss on the sale of its 89.8% stake in Parmalat Thailand. It sold the division to Campina International Holding Inc., a Dutch dairy group, for the symbolic price of $1. In February, Parmalat sold off its UK division to Dale Farm Ltd. (New York Times; The Daily Deal)

By May 1, SuperTarget will expand its dairy offerings in 119 store locations to include the Super Heroes Slammers single-serve milk line, distributed by Bravo! Foods International Corp., North Palm Beach, Fla. The vitamin-fortified flavored milk drink is branded by Marvel Enterprises, publisher of such Marvel comics as Spider-Man, Daredevil and The X-Men. The milk line is supplemented with vitamins and nutrients to reflect the superheroes' powers. For instance, the Dark Strawberry product contains vitamin E, lycopene and ginseng to heighten senses, similar to Daredevil's super senses. Minnesota-based Target Corp. is growing its mass merchandise/food retailing unit, with plans to open seven SuperTarget stores in July and eight more this fall. (Company Report)

The construction firm for a new Cabot Creamery distribution center in Montpelier, Vt., reports that it will put the "finishing touches" on the center by June 2004, despite the record low temperatures in the Northeast since the October 2003 groundbreaking. The $6 million, 62,000-sq.-ft. distribution facility includes 10 loading docks and a state-of-the-art ammonia refrigeration system. The firm, Food Tech Structures, is also involved in two other projects -- a manufacturing facility renovation and a cottage cheese production room addition -- at Cabot Creamery's headquarters in Cabot, Vt. (Company report)

In other Vermont news, the state senate's capital construction bill, if approved, would provide $500,000 for the state to invest in a Vermont dairy processing facility. Vermont lawmakers are promoting the project as a way to expand producer milk marketing opportunities in the state. Dairy Farmers of Vermont, a group of 315 producers, would like the money to go toward purchasing a plant in Springfield that is owned by Vermont Country Foods, which previously used the facility for its soup business. The producer group is hoping to work out a four-way partnership deal with Organic Valley in Wisconsin, and Pioneer Valley and Bart's Ice Cream, both based in Massachusetts. (Associated Press)

ON THE MENU

After being test-marketed in Indianapolis, McDonald's Go Active! Adult Happy Meals are rolling out nationally. The meal package consists of salad, water, a fitness brochure and a pedometer as the adult "toy." The grilled chicken Caesar salad with light dressing contains nine grams of fat and 240 calories. McDonald's has added several choices to its menu over the past year that are designed to fit in the "healthy" category. The chain is also offering consumer information on how to reduce fat and carbohydrate intake through various choices in its standard menu. The result could be reduced cheese use, as well as that of other dairy products such as shake and ice cream mixes. (Washington Post)

Marsh Supermarkets, Indianapolis, Ind., is getting into the restaurant business as part of its new Life Style supermarket concept, which is debuting in Noblesville, Ind. The in-store restaurant, Trios Di Tuscanos, is meant to provide shoppers with an alternative to fast food. Modeled after a Tuscany-style kitchen, the venture will offer custom gourmet pizzas, sandwiches, soup, salads and rotisserie foods. (Company report)

CUSTOMER CLIPS

After more than five months of stalled negotiations, the United Food and Commercial Workers Union has ratified a new contract with Cincinnati-based retailer Kroger Co. The union represents 4,000 workers at 58 Kroger stores in Indiana. The contract runs through May 24, 2008. Issues dividing the sides had been future health insurance increases, pay for new hires and pension coverage. (Associated Press)

Albertsons Inc., Boise, Idaho, will close or sell its seven stores in New Orleans, La. Great Atlantic & Pacific Tea Co., Montvale, N.J., has expressed interest in four of the stores. Albertsons said the New Orleans market no longer fits its strategy to be the No. 1 or No. 2 operator in all its markets. The supermarket chain is the market leader in Baton Rouge and other parts of Louisiana. (New York Times)

Earnings report: Supervalu Inc., Minneapolis, Minn., reported a 50% gain in quarterly earnings for its retailing and wholesale distribution businesses. Net income for the three month period (ending Feb. 28) was $95.6 million, up from $63.9 million in 2003. Sales rose 9% to just over $5 billion. (St. Paul Pioneer Press) .... City of Commerce, Calif.-based Smart & Final also reported robust first quarter numbers. Income for the first quarter (ending March 21) jumped 141% to $6.6 million. Sales totaled $423.5 million in the first quarter, up 19.4% over the previous year. The retailer benefited from the southern California supermarket strike against Albertsons and Kroger stores. (Company report)

IDFA NEWS

Washington Conference Registration Now Open; No Fee This Year
Meet with members of Congress, hear from political analyst Stu Rothenberg on the upcoming election, and network in the stately beauty of the nation's capital city -- all at this year's IDFA Washington Conference on June 23-24, 2004, at the Washington Court Hotel in Washington, D.C. The program will include informative briefings on the latest dairy policy issues and several opportunities to meet and network with federal lawmakers, plus special events for PAC contributors. For more details, click here.

ODDS-AND-ENDS

Counterfeit milk formula in China supplied by domestic processors has been linked to the deaths of dozens of infants there; the fake formula products held virtually no nutritional value. (United Press International) .... The union at Wells' Dairy Inc., Le Mars, Iowa, has withdrawn a complaint that was filed in February with the National Labor Relations Board over changes in hours, overtime pay and time off. (Daily Sentinel, Le Mars, Iowa) .... The 1904 St. Louis World's Fair began April 30, 1904, which is now the most widely recognized date for the creation of the ice cream cone. There are several conflicting anecdotes regarding the cone's official debut, and the debate over which was first is likely to continue for another century. For more on the history of the ice cream cone, visit IDFA's website by clicking here. (Columbia News Service, IDFA) ... In Passing: John A. "Johnnie" Hofer, 88, died April 11. He worked in the dairy industry for 70+ years and was a recipient of the Meritorious Service Award from the Missouri Dairy Hall of Honors at the University of Missouri. (Chicago Tribune)

STOCK MARKET TICKER

As of 4/20/04, 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 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		28.93 34.25 78.89 47.12 33.28 84.55 11.44 31.27 16.96 20.41 21.95 32.70 30.38 39.95 34.93 19.42 08.00		-0.06 +0.30 +0.08 -0.25 -0.45 -0.53 -0.09 -0.12 -0.01 -0.11 -0.19 -0.41 -0.14 -0.40 +0.23 -0.08 +0.05		+0.70 +1.49 +0.04 +1.16 +0.94 +2.76 -0.16 +0.43 -0.16 -0.22 +0.87 -1.30 +0.63 +0.38 +1.34 +0.27 +0.21
Source: Yahoo! Finance

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