May 12, 2004

Dreyer's reports quarterly loss...Parmalat USA union negotiation...Judge strikes down California dairy fees...Fire damages Velvet Ice Cream factory...Cheese Innovations...Safeway profits plunge...Papa John's sales remain flat in first quarter... Domino's reports slight rise in sales...Odds-and-Ends...Stock Market Ticker...More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Oakland, Calif.-based Dreyer's Grand Ice Cream recorded a first-quarter loss of $80.3 million, largely due to accounting charges related to its acquisition of Nestlé's ice cream business. Without the charge, the net loss would have been $18.7 million. The loss compares to a $9.3 million loss in the same period last year. However, quarterly revenues almost tripled, jumping to $338 million from $115 million in 2003. Sales exceeded expectations despite higher dairy costs. Sales of Dreyer's light ice creams were up 3.8 percent in the first four months of 2004. The Dreyer's/Nestlé merger used reverse acquisition accounting so the quarterly results are not directly comparable. (Alameda Times-Star, Alameda, Calif.)

Parmalat USA, Wallington, N.J., and the Retail Wholesale Department Store Union Local 339 stopped contract talks and extended the current contract through Sept. 19. Parmalat USA filed for bankruptcy protection in February and could potentially sell off dairy holdings including New Jersey's Farmland Dairies. Thus far, production remains steady and all 400 workers remain in place. (The Record, Bergen County, N.J.)

A federal judge ruled against fees imposed in California on milk produced in Nevada and Arizona, saying they discriminate against interstate commerce. The ruling encourages competition, possibly leading to lower milk prices. The fees were intended to help California dairy producers and were tacked on to the prices processors pay for all raw milk sold in California. The fees were then redistributed among the state's dairy farmers. The fees were extended in 1997 to milk sold into California from outside the state. California dairy producers said the fees encouraged manufacturers to buy in-state milk. Two federal courts had already dismissed the suits brought by Nevada and Arizona dairy producers. The U.S. Supreme Court sided with the non-California producers and returned the case to U.S. District Court in Sacramento. (San Francisco Chronicle)

A lightning strike may have started the fire that damaged an ice cream factory adjacent to the Velvet Ice Cream mill in Utica, Ohio, on May 10. The fire came nearly 18 years to the day after fire destroyed the original mill. The plant will shut down for a few days before resuming production. Also damaged were company offices and the viewing gallery where customers watch ice cream production. (Columbus Dispatch)

CHEESE CULTURE

Strong consumer interest in Italian specialty cheeses combined with opportunities in the organic cheese category has prompted Horizon Organic to offer deli-style slices of Provolone and Parmesan packaged in resealable bags. Longmont, Colo.-based Horizon Organic, a division of Dean Foods Co., reports that its Provolone is a new entry to the organic cheese category. The line extensions rolled out in Whole Foods and Wild Oats stores on May 5, joining Horizon's original Italian cheese offering of Mozzarella in bars, sticks and six-ounce bags of shreds. A total of seven new items were added to the line, including Swiss, Cheddar and Cheddar shreds in various sizes/cuts. (Company report)

Philadelphia-based Dietz & Watson, known for its deli meats such as Black Forest ham and smoked peppercorn turkey, has acquired a majority interest in Yancey's Fancy cheese to broaden its deli case offerings. Corfu, N.Y.-based Yancey's Fancy makes more than 25 varieties of cheese, which Dietz & Watson plans to use to complement its high-end deli meats and to help secure a stronger position in regional deli counters against competitors including Boar's Head Provision Co. (Associated Press)

Wisconsin cheese has a distinctly Latin flavor these days. With the nation's tastes trending toward Latin foods, cheddar is making way for such exotic fare as queso enchilado rolled in paprika. The Wisconsin Milk Marketing Board recently promoted the state's Latin cheeses in Miami, one of the nation's largest markets for Latin cheeses. White Clover Dairy, Hollandtown, Wis., featured a tangy Edam and Goudas flavored with chipotle as well as lime and jalapeno. Foremost Farms, Baraboo, Wis., featured an asadero grilling cheese. (Miami Herald)

CUSTOMER CLIPS

Safeway Inc., Pleasonton, Calif., suffered a first-quarter profit plunge of 73 percent over last year as the four-month Southern California supermarket labor action wiped out $122 million of first-quarter profit. Net income totaled $43.1 million for the quarter, down from $162 million in the same period last year. Quarterly sales dropped 5 percent to $7.64 billion, down from $8.04 billion during the same period in 2003.
     In general, shoppers retreated from stores impacted by the strike, including Safeway's Vons and Pavilion stores. Consumers sought alternatives including Wild Oats Markets, which saw a 64 percent increase in first-quarter profit over 2003. The Boulder, Colo.-based chain known for its natural/organic product mix reported earnings of $2.36 million on revenue of $263.8 million for the quarter. Last year, Wild Oats earned $1.44 million on revenue of $236 million in the first quarter. Wild Oats expects to open five new stores in the second quarter and another 13 over the next nine months. (Associated Press)

Papa John's International, Louisville, Ky., announced that first-quarter revenues totaled $236.9 million, an increase of 2 percent from the same period last year. Net income for the first quarter was $8.5 million, down from $11 million in the first quarter of 2003. The 2004 results include a $1 million net loss from the consolidation of the franchise's cheese purchasing company, BIBP Commodities, and reflect the rising price of cheese sold to franchises. Papa John's opened 34 restaurants in the quarter while 23 closed. Overall sales were flat, up just 0.5 percent in the quarter over last year. (Company report)

First-quarter sales for Domino's Inc., Ann Arbor, Mich., rose 6.8 percent over the same period last year. Retail sales at company-owned stores were $89.6 million in the quarter, and franchise-owned unit sales totaled $953.2 million. Income from operations was a record $43.5 million despite rising food costs, particularly cheese. The company reported a net increase of 220 units worldwide since the end of the first quarter 2003. Domino's now counts 7,473 stores in operation. (Company report)

IDFA NEWS

Former Snapple CEO to Deliver Keynote at BevExpo 2004
Mike Weinstein, the Snapple CEO who led the charge to rescue the foundering beverage brand, will kick off BevExpo 2004 by sharing his story in a fascinating and often humorous keynote address. His session, "Snap Judgments - The Snapple Story," will be held September 29 at 11:00 a.m. In the mid-1990s, Snapple plummeted from profitability to huge losses virtually overnight. Within six months of becoming CEO, Weinstein and his team returned the brand to its former growth trajectory and put it back in the black. "Snap Judgments" is a great lesson on how business momentum can shift dramatically and the steps that can be taken to ensure success or avoid disaster. Weinstein's session is among the many highlights of the extensive educational program at BevExpo 2004, set for September 29-October 1 in Tampa. IDFA is a primary sponsor of this event. For more information or to register, click here. http://www.bevexpo.com/news.asp#pr4.

ODDS-AND-ENDS

Galaxy Nutritional Foods Inc., Orlando, Fla., a producer of plant-based dairy alternatives, settled out of court with cheese manufacturer Schreiber Foods Inc., Green Bay, Wis. Schrieber accused Galaxy of patent infringement. As part of the settlement, Galaxy and Schrieber entered into a licensing agreement allowing Galaxy to continue using the manufacturing equipment named in the suit. (Company report)...Students at the University of Guelph, Ontario, placed second in a North American agri-marketing contest with an idea for powdered infant formula based on goat's milk. The contest was sponsored by the National Agri-Marketing Association. (Stratford Beacon Herald, Ontario)...President George W. Bush stopped by a dairy farm in Hazel Green, Wis., during his "Yes, America Can" bus tour. Dave Kuhle, owner of the farm, gave the president a tour and told him the Senate needs to pass the energy bill to lower the high energy prices hurting farm margins. (Telegraph Herald, Dubuque, Iowa)...Famed twins Mary-Kate and Ashley Olsen's ad for the National Milk Mustache "got milk?" Campaign debuted on May 7. (Company report)

STOCK MARKET TICKER

As of 5/11/04, 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		28.78 34.35 78.99 46.72 32.70 88.83 11.03 31.59 17.15 20.85 22.20 31.65 30.00 37.50 33.49 16.12 06.85		-0.04 +0.35 +0.07 -0.23 +0.12 -0.42 +0.05 -0.01 +0.12 +0.55 -0.29 +0.15 +0.25 +0.04 -0.49 +0.14 +0.17		-0.43 +0.20 +0.09 -1.86 -1.69 -0.96 -0.07 -1.27 -0.38 -0.15 -1.30 +0.00 -1.11 -2.00 -1.54 -1.08 -0.40
Source: Yahoo! Finance

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