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August 4, 2004

Dean Foods restructures, reports results ... Parmalat and SEC cut deal ... Parmalat sues Citigroup ... Germany faces censure for use of Parmesan name ... Sargento launches advertising effort ... Weight Watchers, Skinny Cow brands in the freezer case ... Union OK'd for Canadian Wal-Mart ... Kroger to buy three Omaha stores ... CVS tops 5,000 store units ... Odds-and-Ends ... Stock Market Ticker ... More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Dallas-based Dean Foods Co. is rolling its three branded businesses -- White Wave, Horizon Organic and Dean National Brand Group -- into one unit with expected 2004 sales of $1.1 billion and projected growth of 20% annually. This consolidation will bring all of the company's brands, including Marie's, Hershey's Milk, Jakata, International Delight and Silk -- under one roof. The combined group will be based in Boulder, Colo., with Steve Demos, founder and president of White Wave, serving as president. Chuck Marcy, president of Horizon Organic, will assist with the consolidation and will remain with the company through January 2005. Meanwhile, high raw material costs created double-digit sales growth for Dean in its second quarter 2004 but also damaged company profits. Dean's net income dropped 8% to $77.1 million in the second quarter ending June 30, compared to $83.8 million in the second quarter of 2003. Total sales jumped 26% to $2.8 billion for the quarter, due to increased retail prices as well as acquisitions and growth in Dean's branded products unit. The Dairy Group unit's net sales for the second quarter rose 25% to $2.3 billion, up from $1.8 billion in the second quarter last year. (Company reports)

Italian dairy company Parmalat has pledged to refrain from future fraud and will make corporate reforms under a fine-free settlement with the U.S. Securities and Exchange Commission (SEC). The deal must be approved by a federal court in Manhattan. The original SEC civil lawsuit against Parmalat sought civil fines and restitution to investors; investor restitution will be covered under the company's restructuring plan. The SEC will continue to investigate Parmalat's financial dealings. Meanwhile, Parmalat has filed suit against Citigroup Inc., seeking to recover up to $10 million from the bank and its subsidiaries for allegedly contributing to the dairy's financial downfall. In other news, the various operations of Parmalat in China halted operations. (Associated Press, AFX European Focus)

Germany faces a European Commission lawsuit over Parmesan cheese. The European Union's (EU) geographic indicators rules state that Parmesan is a protected name within the EU due to its geographic link with Parma, Italy; however, Germany treats Parmesan as a generic term. After Italy, Germany is Europe's second-largest producer of the cheese. The case will go to the European Court of Justice in Luxembourg; in June 2002, the same court ruled that the term "Parmesan" is a translation of "Parmigiano-Reggiano," but left the door open as to whether Parmesan is a generic word. (The Toronto Star)

Sargento Foods Inc. has launched a new "yellow Swiss cheese-motif" fleet advertising program that will be utilized on 25 tractors and 46 trailers. Plymouth, Wis.-based Sargento showcased the new design when it delivered a 550-pound cheese sculpture of the USS Ronald Reagan during the aircraft carrier's christening on July 23 in San Diego, Calif. The 56-inch long sculpture is a 1:235 scale model and was carved from a 640-pound block of cheese. Two 70-pound, 28-inch long cheese replicas of the ship were also sent for use as centerpieces at a gala dinner. Sargento additionally served cheeseburgers to 5,000 crewmen and their families during ceremonies attended by President George W. Bush, former first lady Nancy Reagan and California Gov. Arnold Schwarzennegger. (The Sheboygan Press, Wis.)

Weight Watchers frozen ice cream and novelty products will exclusively be marketed, produced and distributed by Wells' Dairy Inc., Le Mars, Iowa, under a new licensing agreement to start Oct. 1, 2004. (Company report)

CoolBrands International Inc. will co-pack Skinny Cow frozen dessert products through August 2011 as a result of the previously reported acquisition of brand owner Silhouette Brands Inc. by Dreyer's Grand Ice Cream. CoolBrands and Dreyer's are negotiating future licensing and co-packing plans that will include Skinny Cow and other Dreyer's brands in the "better-for-you" market segment. (Company report)

CUSTOMER CLIPS

Bentonville, Ark.-based Wal-Mart is expected to appeal a Canadian ruling that will allow worker unionization at a Wal-Mart store unit in Jonquiere, Quebec. On August 2, the Quebec Labor Relations Board accredited Local 503 of the United Food and Commercial Workers Union to begin representing the Wal-Mart workers. If the 170 workers at the store form a union, it will be the first in a North American Wal-Mart store; workers must first establish a bargaining unit before negotiations can begin on an initial contract. (The New York Times)

Cincinnati-based retailer The Kroger Co. reports plans to buy three Albertsons banner stores in the Omaha area by early September from No Frills Supermarkets Inc. Albertsons Inc. had previously agreed to sell the stores to No Frills. Terms of the new deal were not disclosed. The stores will become part of the Kroger Dillons division and will be converted to the Baker's supermarket banner. That division currently operates 112 stores in Kansas, Missouri, Arkansas, Oklahoma and Nebraska, primarily under the Dillons, Baker's and Gerbes names. (Company report)

Following its acquisition of 1,260 Eckerd stores this week, CVS Corp., Woonsocket, R.I., expands its drug store chain to more than 5,000 locations. The acquired units are located mainly in the southern United States. (Company report)

IDFA NEWS

Joseph Gallo Farms Program First to Receive IDFA HACCP Certification
The cheese plant of Joseph Gallo Farms, Atwater, Calif., recently became the first dairy plant to have its HACCP program certified under the IDFA HACCP Certification Program. Gallo's success started with the training of two of its quality assurance managers at an IDFA HACCP workshop, continued with a review of the plant's written HACCP programs, and was cemented by passing a rigorous on-site audit. "The key to Gallo's success was the extensive effort made by their staff and the commitment from management to safe, high-quality cheese products. Every step of the way, Gallo was ready to meet the rigorous criteria in the IDFA HACCP Certification Program," said IDFA Senior Director of Regulatory Affairs Allen Sayler, who leads IDFA's HACCP efforts. The three-level IDFA HACCP Certification Program is the only initiative of its kind that is targeted specifically for the dairy industry. For complete details, click here.

ODDS-AND-ENDS

A new refrigerated warehouse will be added to the Rutter's Dairy processing facility in Manchester Township, Pa. To make space for the addition, the 250-year-old farm operation on the property will cease. Rutter's 65-cow herd supplies about 2% of the dairy's own milk needs; Rutter's will seek additional producers to make up the shortfall. Rutter's also owns a chain of about 50 c-stores in Pennsylvania and Maryland. (Convenience Store News) .... Up to $22 million will go to Israeli families in a settlement related to an infant milk substitute manufacturing error last year. Vitamin B-1, or thiamin, a vitamin crucial to infant development, was lacking in the soy-based formula sold in Jerusalem by Israeli firm Remedia (partially owned by H.J. Heinz Co.), and co-packed by German company Humana Milchunion. The error resulted in the death of three infants and the illness of 13 other babies. Under the settlement between the two companies that is being finalized, Humana would pay the restitution to the families. (Associated Press) .... On July 24, the final cheddar cheese production run took place at Kraft Foods' Canton, N.Y., processing facility. The plant employed 60 and was closed as part of Kraft's global restructuring plan. Kraft and various local agencies are seeking a buyer for the facility, which was built in 1906 by McDermott-Bunger Co. and purchased by Kraft in 1951. (Watertown Daily Times, New York)

STOCK MARKET TICKER

As of 8/3/04, 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		26.25 36.30 79.45 44.92 16.43 47.68 11.07 30.15 15.85 20.16 20.78 31.65 27.90 35.38 31.92 12.80 06.07		-0.06 -0.35 +0.06 -0.44 -0.02 -0.46 -0.10 -0.09 -0.01 -0.16 -0.21 -0.39 -0.36 -0.22 -0.35 -0.16 -0.16		-0.19 -0.15 +0.17 -0.58 -0.07 +1.93 +0.22 -0.45 -0.10 -0.46 -0.42 -0.10 -1.19 -1.96 -0.39 -0.43 -0.33
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.

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