June 23, 2004

Parmalat to retain dairy products in reorganization plan...Yoplait leader in Canada to retire...Jelly company joins dairy marketers...General Mills to raise prices...Dairy Media Mentions...Albertsons exits Nebraska markets...Seattle grocery union rejects latest contract offer from major retailers...Odds-and-Ends...Stock Market Ticker...More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Milk, milk-related products and fruit juice will remain the core of a reorganized and potentially profitable Parmalat Finanziaria Spa in the restructuring plan unveiled to the Italian government by turnaround expert Enrico Bondi this week. Sale of non-core assets3slashing the number of the group's brands from 120 to 30—is the key to Bondi's goal of strong 2005 and 2006 profits. Italian Industry Minister Antonio Marzano is expected to approve the plan, which will be put in front of creditors at a late 2004 meeting. Meanwhile in Germany, Deutsche Parmalat Gmbh and Parmalat Molkerei Gmbh are under bankruptcy protection from creditors and will join Bondi's administration. Parmalat's debt was estimated at $18 billion during its accounting scandal which broke in late 2003; indictments have been requested for 29 people involved with the company. (Associated Press)

Pierre Gignac will retire as president and chief executive of Longueuil, Quebec-based yogurt maker Ultima Foods Inc./Yoplait at year-end. The company has announced its intention to begin its search for new leadership immediately. (The Vancouver Sun)

Its latest acquisition of International Multifoods Corp. makes The J. M. Smucker Co. a dairy marketer. The deal is valued at $840 million, including about $340 million in debt as well as Pet® evaporated milk and dry creamer products. The expanded portfolio of Orrville, Ohio, Smucker-owned brands now also includes Smucker's®; Jif®; Crisco®; Pillsbury® baking mixes and ready-to-spread frostings; Hungry Jack® pancake mixes, syrup and potato side dishes; and Martha White® baking mixes and ingredients. In Canada, Smucker's products include Robin Hood® flour and baking mixes; Bick's® pickles and condiments; and Golden Temple® flour and rice in the ethnic food category. (Company report)

To keep up with raw material expenses, General Mills Inc. will raise its wholesale prices 2% to 9% on its branded products including yogurt, Progresso soups, some frozen breakfast items, and Totino's snack foods. The Minneapolis-based company will hold prices on breakfast cereals and frozen dough products at current levels. (Reuters)

At last week's International Dairy Federation (IDF) meeting in Ireland, new leadership was elected for the IDF Standing Committee on Standards of Identity. A consultant to the Irish dairy industry, Michael Hickey, was elected as committee chairman. Saputo Vice President of Quality Assurance Bradley Wilson, for the Canadian dairy industry, was elected as deputy chairman. This committee develops dairy industry positions on the latest standards issues, which currently include draft standards for cheese, processed cheese, whey cheese, fermented milk additives, cream additives, dairy spreads and butter. IDFA joined other representatives of the U.S. and Canadian dairy industry in advocating for Wilson's election.

DAIRY MEDIA MENTIONS

Yesterday the Environmental Working Group (EWG), a Washington, D.C.-based environmental advocacy group, released a report on low levels of perchlorate found in milk in California. Perchlorate is a naturally occurring substance used in rocket and missile fuels. EWG tested 32 samples of milk from California retail stores and found traces of perchlorate in all but one. No federal or state agency—nor EWG itself—has called for changes in the diet. (Associated Press) IDFA has briefing materials on this issue available to members. To review them, click here. www.idfa.org/membonly/leg/alerts/2004/04-02.cfm

The Food and Drug Administration (FDA) confirmed on Tuesday that it is conducting a criminal investigation related to what appears to be a toxic substance that was sprayed or doused on 10 to 20 dairy cows on June 5th on a farm in Enumclaw, Wash., approximately 50 miles southeast of Seattle. At least three of the cows have died from exposure to the substance. No milk from the sick animals has entered the food supply. (Associated Press)

National Dairy Month was the topic of the June 16 "Profile America" daily media feature from the Public Information Office of the U.S. Census Bureau. The segment recognized "the importance of milk and other dairy products to a healthy diet." These ready-to-air segments are available for media at the U.S. Census Bureau's website, www.census.gov, or via CD.

Cottage cheese starred in a Knight Ridder/Tribune News Service article recently posted in food sections of various affiliate newspapers. Artisan cottage cheese made by Cowgirl Creamery, Point Reyes, Calif., and Bittersweet Plantation Dairy, Gonzales, La., were pinpointed as examples of creamy firm curds and sweet whey dressing essential to premium cottage cheese. Other informative tidbits: U.S. per capita cottage cheese consumption has declined from 4.4 pounds in 1980 to a projected 2.5 pounds for 2004. Uniquely American, cottage cheese was created in the early 1800s as a use for skim milk left from New Englanders' butter and cheese making. (Contra Costa Times, Walnut Creek, Calif.)

A six-week campaign to persuade Hawaiian families to drink lowfat milk was launched yesterday by Gov. Linda Lingle, the Department of Health and local dairy industry officials. While about 62.7 percent of the state's population drinks milk, a full two-thirds drink whole or 2% milk. Health officials are encouraging the islanders to switch to lowfat 1% or nonfat milk as a way to reduce saturated fat intake. A public service advertising campaign includes TV, radio and outdoor venues. The ads encourage people to drink lowfat milk and point out the negligible difference in taste. Meadow Gold and Foremost dairies will team up with the state for taste testing events. The dairy promo efforts will be funded by Hawaii's Start Living Healthy Initiative, which is funded by the state's share of tobacco settlement funds. (The Honolulu Advertiser)

CUSTOMER CLIPS

Boise, Idaho-based Albertsons cites a lack of profitability for its exit from the Nebraska markets of Omaha and Grand Island as part of a larger departure from its "Texas region," which also includes markets in Iowa, Kansas and Missouri.
     Albertsons first entered Omaha 23 years ago; transactions in Nebraska with several buyers are slated for August completion. Bag 'N Save will buy six stores, close three of its existing locations near larger Albertsons buildings, to grow from 11 to 14 stores. No Frills is expected to buy five Albertsons stores, growing from 10 to 15 stores. Nebraska-owned U-Save Pharmacy becomes the largest independent drugstore chain in the state by operating pharmacies inside nine of the former Albertsons-owned locations, growing from 20 to 29 locations. Freestanding drug stores (most of which sell a limited assortment of dairy products), will also be part of the deal: Hy-Vee Supermarkets will purchase one Osco unit and shift it to a Drug Town location; nine free-standing Osco locations will be closed and the buildings put up for sale; Walgreens Co. will buy prescription lists from the closed units. (Omaha World Herald)

The United Food and Commercial Workers union in Seattle rejected a contract offer from Safeway, Fred Meyer, QFC and Albertsons last week. The contract was said to address health care cost issues, with an 80/20 split between employer/employee costs. Negotiations are expected to continue through June 25. (The Seattle Post-Intelligencer)

IDFA NEWS

Get Prepared: Order IDFA's FMD Response Manual Today
An outbreak of Foot-and-Mouth Disease (FMD) in U.S. cattle could wreak havoc on the milk supply and create distribution and public relations headaches for dairy companies within just a few days. To help companies plan ahead, IDFA has prepared a new publication to serve as an off-the-shelf crisis manual, with specific instructions on how dairy corporate headquarters, plant operations and milk haulers will be forced by state and federal government regulations to respond if FMD hits. The manual also provides guidance on what dairy companies should be doing today to soften the blow of an outbreak and includes a crisis communications section, which may be helpful in any type of plant emergency. Each manual is just $95 for members, $145 for nonmembers; volume discounts are available! To order or for more information, click here. http://store.idfa.org/

ODDS-AND-ENDS

Appropriate for the 25th anniversary celebration, a dozen live cows starred in Cows on the Concourse held on the Capitol Square in Madison, Wis., for the first time since concerns about Foot-and-Mouth Disease led to the use of life-size fiberglass models in 2001. The annual celebration is sponsored by the Dane County Dairy Promotion Committee. Dairy vendors offered samples of ice cream, cream puffs, yogurt, cheese and flavored milk. Volunteers armed with buckets efficiently dealt with dairy waste. (Wisconsin State Journal, Madison, Wis.)...A tarnished, 5-foot diameter copper kettle used at a Wisconsin cheese processing facility has a new home at The Wisconsin Historical Society in Madison. The kettle was used at the Tuscobia Cheese Factory near Rice Lake, Wis., which Swiss immigrant couple Ernest and Hulda Hilfiker purchased in 1942 and ran until 1969. The 5-foot diameter kettle holds 2,000 pounds of milk, and can produce 200 pounds of Swiss cheese. Few of these types of pots are available to museums since they were often sold for scrap. The cheese company was established in 1902, and the kettle is either an original or one installed in the 1940s, placing its age between 65 and 102 years old. (Saint Paul Pioneer Press)...A giant ice cream cone mascot took a cold hit in front of a suburban Salt Lake City Dairy Queen restaurant unit earlier this month. Andrea Wilcox was wearing an inflatable "Curly Top" suit at an Oren, Utah, store as part of a promotion—when a boy jumped out of a pick-up truck, ran and tackled her. Unharmed, Wilcox returned to the sidewalks 15 minutes later. (Associated Press)

STOCK MARKET TICKER

As of 6/22/04, 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		27.70 36.82 79.05 45.86 35.30 45.42 11.21 30.94 17.84 21.62 24.99 32.15 31.40 39.56 33.17 15.04 06.64		+0.14 -0.04 +0.01 +0.05 +0.14 +0.27 +0.16 +0.09 +0.47 +0.09 +0.84 -0.10 +0.02 -0.10 +0.16 +0.00 +0.21		+0.21 +1.27 +0.05 -0.44 +0.47 N/A +0.13 +0.20 +0.61 +0.54 +0.99 +0.55 -0.55 +0.89 -0.44 -0.22 +0.23
*On June 16, 2004, Hershey Foods stock split 2:1. Source: Yahoo! Finance

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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, Curwood and TIC Gums. 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. TIC Gums is America's oldest supplier of hydrocolloids to food, pharmaceutical, cosmetic and industrial companies worldwide. To learn more about this sponsor, visit www.ticgums.com.

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