May 5, 2004

DairyAmerica sells milk powder to Cuba.... Wells' will stay in Iowa.... Hong Kong reports run on infant formula.... Dairy Queen shifts marketing focus.... Yoplait to introduce frozen yogurt bar.... Dairy Financials for Dean, Land O'Lakes, Unilever.... McDonald's posts huge growth.... Winn-Dixie to close or sell 156 stores.... Publix increases Alabama presence .... Odds-and-Ends... Stock Market Ticker.... More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

DairyAmerica Inc., Fresno, Calif., secured two sales of nonfat dry milk to Cuba that totaled 8.8 million pounds, marking the first significant sale of U.S. dairy products to Cuba in more than 40 years. A trade embargo in place since 1962 restricts U.S. business dealings with Cuba, though U.S. companies manage to sell about $325 million worth of goods to Cuba each year. Alimport, Cuba's import agency, claims that it could buy up to 110 million pounds of U.S. milk powder annually if restrictions were relaxed. (Company report)

Thanks to more than $10 million in incentives from Iowa state and local officials, Wells' Dairy's new corporate headquarters will be located in Le Mars, Iowa. The company was founded in the town in 1913, but company officials have noted that sentiment was not the driver of the decision to remain in Iowa over locations in Nebraska and South Dakota. Incentives include $7 million for tax credits, capital investment and equipment purchases, job training, and research and development; a $2.6 million Iowa Values Fund grant; and $600,000 from local officials. Additionally, the $30 million headquarters campus will be constructed by the Le Mars Business Initiative Corp., a local nonprofit economic development group; Wells' will then lease the facility for 20 years. Two possible sites are now being reviewed. Construction is expected to begin later this year with a goal of mid-2006 completion. (Des Moines Register)

Chinese visitors to Hong Kong are reportedly creating a run on infant formula following deaths of at least 50 babies and the malnourishment of 171 others due to fake baby formula in China. One Hong Kong drugstore reports a 60% increase in formula sales, and a supermarket claims a 20% increase in one weekend. Five wholesalers suspected of selling the bogus formula have been detained in Anhui, the eastern province where the deaths occurred. Reports of formula inadequacies had been made for nearly a year, without any action taken prior to the deaths. In addition, incidents of mass food poisoning in China's school cafeterias and restaurants are on the rise. Chinese Premier Wen Jiabao has announced that the government plans to increase overall food safety measures. (Associated Press; New York Times)

Dairy Queen has shifted some of its marketing focus to the expanded hot food items available via its new "Grill & Chill" concept. This quick-service restaurant concept calls for menus to offer more than the traditional soft-serve ice cream and hamburgers, plus a move to earth-toned dining rooms. Dairy Queen's revamped marketing approach includes the chain's first national ad campaign, under the slogan "Something Different." While franchise owners are reporting strong sales, some owners oppose the new strategy, saying that the cost of upgrades is prohibitive for franchise owners in smaller, rural markets. A group of store owners protested during the annual meeting of Omaha, Neb.-based Berkshire Hathaway Inc., owner of Minneapolis-based Dairy Queen. The group bought billboard space to scold Berkshire Hathaway and its owner, billionaire investor Warren Buffett. (Company report)

After test-marketing in Baltimore and Washington, D.C., showed positive results, CoolBrands International, Markham, Ontario, has decided to introduce Yoplait Frozen Breakfast Bars in the U.S. market this September. The U.S. Department of Agriculture recently qualified the bars for the Child Nutrition Program for public schools. The frozen yogurt bars come in three flavors -- vanilla, strawberry and vanilla-orange swirl -- and are topped with fortified cereal. (Company report)

DAIRY FINANCIALS

First-quarter profits for Dallas-based Dean Foods rose 9.5% over 2003, but the company said that it still needs to shutter eight to 10 plants because of increasing commodity prices. Recent acquisitions, such as Horizon Organic and Ross-Swiss dairies in 2004, contributed to the profit rise. Net income totaled $69.2 million in the first quarter, up from $63.2 million for the same period last year. Sales jumped 14% for the quarter to $2.45 billion, up from $2.14 billion in 2003. Dairy group net sales rose 11% for the quarter to $1.95 billion, up from $1.77 billion in the same period last year. (Company report)

A recovery in dairy foods sales helped push Land O'Lakes net earnings up to $46.5 million in the first quarter, after a loss of $400,000 one year ago. The Arden Hills, Minn.-based co-op generated $2.01 billion in net sales, up from $1.45 billion in 2003. Price improvements helped earnings, as did a 17% increase in butter volume, a 25% increase in cheese volume and a 38% increase in foodservice volume over 2003. Commodity cheese sales also rose 3% from the same period last year. (St. Paul Pioneer Press)

London-based Unilever saw its net income drop 17% in the first quarter as compared to 2003, though the company insists that it is on track to deliver double-digit earnings growth for the year. Unilever reported net profit of $630 million, down from $754 million last year. Quarterly sales dropped to $12.05 billion from $12.15 billion a year ago. (Associated Press)

CUSTOMER CLIPS

The recovery plan implemented by late CEO Jim Cantalupo has led to a resurgence for McDonald's. The Oak Brook, Ill.-based fast-food chain reported a 56% jump in first-quarter profits as compared to the same period in 2003. McDonald's earned $511.5 million in the quarter, up from $327.4 million one year ago. Revenues were up 16% over last year, reaching $4.4 billion. Cantalupo, who died April 19 of a heart attack, focused on generating profit from existing stores. New "Healthy Lifestyles" products aided in the existing-store growth. With the launch of Go Active! Happy Meal for adults underway, McDonald's is also testing such menu items as Premium Fiesta Salad with seasoned beef, crispy tortilla strips, cheddar jack cheese and salsa, and the Fruit and Walnut Salad served with lowfat yogurt dressing. Meanwhile, children's Happy Meal offerings are expanding to offer the option of lowfat white or chocolate "Milk Jugs" as a substitute for soda. The half-pint milk is packaged by Dean Foods in a custom version of its "Milk Chug" line. (Company report; TheStreet.com)

Winn-Dixie will close 45 stores, sell 111 others and lay off roughly 10,000 workers as part of a massive restructuring that is designed to save up to $100 million a year. The plan also calls for the Jacksonville, Fla.-based supermarket chain to consolidate its Greenville Ice Cream and Miami Dairy plants with its other dairies; close three distribution centers; and sell off its Dixie Packers, Crackin' Good Bakery/Snacks and Montgomery Pizza operations. News of the plan was coupled with a dismal earnings report. Winn-Dixie recorded earnings of just $600,000 in its third quarter (ending March 31), down from $50.6 million in 2003. Quarterly sales slumped to $2.67 billion, down from $2.82 billion a year ago. (Washington Post; Associated Press)

Lakeland, Fla.-based Publix Super Markets will add four new stores to increase its presence in the Montgomery, Ala., market. All four should open by the end of next year. The new stores will up the Publix total to 24 Alabama units, twice as many as the company had in 2003. (The Ledger, Lakeland, Fla.)

IDFA NEWS

New Milk and Ice Cream Labeling Manuals Now Available
The 2004 versions of IDFA's milk and ice cream labeling manuals are now available, in both print and CD-ROM formats. These valuable publications include updated labeling information on carbohydrates, trans fat, and organic products and ingredients. The milk labeling manual also covers dairy and weight loss claims. These comprehensive guides outline the labeling requirements for fluid milk products, juice, ice cream and frozen desserts, including a database of nutritional values, label illustrations, nutrient content claims and much more! For more information, click here.

ODDS-AND-ENDS

The Dannon Co. and Disney Channel are partnering for a "Win and Chill with the Stars" promotion tied to Danimal XL, a drinkable lowfat yogurt designed to appeal to 'tweens.' The product is offered in a larger bottle than the current Danimals line. The promotion's grand prize is time on the set with Disney Channel sitcom stars. (Company report) .... Cloverleaf Farms, a Dean Foods distributor, will consolidate its Hobart, Ind., and Crestwood, Ill., operations into a new facility in Lansing, Ill. The city of Lansing will donate 5 acres to CloverLeaf for the facility. (Post-Tribune, Gary, Ind.) .... In July, Parmalat's Hungarian dairy operation will cut 129 jobs, almost a third of its workforce. At the same time, Parmalat Hungaria plans to boost production to 130,000 liters a day. (Hungarian News Agency Corp.)

STOCK MARKET TICKER

As of 5/4/04, 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		29.21 34.15 78.90 48.58 34.39 89.79 11.10 32.86 17.53 21.00 23.50 31.65 31.11 39.50 35.03 17.20 07.25		-0.05 +1.14 -0.06 -0.55 +0.62 -0.13 -0.05 -0.22 +0.13 -0.19 +0.72 +0.14 -0.04 +0.71 +0.06 -0.15 -0.03		-0.10 +0.55 -0.01 +0.30 +0.24 +0.49 -0.46 -0.20 +0.03 -0.22 +0.25 -0.85 -0.14 -1.36 -0.47 -0.81 -0.62
Source: Yahoo! Finance

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