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September 8, 2004

Dean Foods revises earnings forecast, authorizes stock buyback ... School lawsuit against DFA dropped ... Cornell studying organic dairying ... PBDEs in animal products ... Dairy Marketing Mix ... Florida retailers fight hurricanes ... Cub Foods in Madison settles contract ... Odds-and-Ends ... Stock Market Ticker ... More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Dallas-based Dean Foods Co. has revised its 2004 earnings forecast in light of "unprecedented volatility in raw milk prices, a difficult retail grocery environment and record-high fuel, resin and other commodity costs." These and other factors are contributing to weaker than expected performance of all Dean businesses. For the full year 2004, the company now expects to achieve adjusted earnings per share in the range of $2.00 to $2.05, instead of last month's forecast of between $2.21 and $2.26 per share. Third-quarter earnings are now being forecast to be 44 cents to 46 cents a share. Previously, Dean had forecast earnings of 54 cents to 57 cents a share. The company's Branded Products Group segment -- which includes Silk and Horizon Organic brands -- continues to be a bright spot and is expected to remain so for the foreseeable future. In separate Dean Foods news, its board of directors has increased the company's open market share repurchase program for common stock by $200 million. In the third quarter, Dean repurchased a total of $78.6 million in stock. With the increase announced this week, Dean now has a total of $231 million available for share repurchases. (Company reports, Reuters)

A federal judge dismissed an antitrust lawsuit against Dairy Farmers of America last week, finding no evidence that DFA has a milk sales monopoly in Kentucky and Tennessee school districts. The suit, filed in U.S. District Court in London, Ky., sought to force Kansas City, Mo.-based DFA to divest Southern Belle Dairy, Somerset, Ky. The judge cited DFA's lack of business control over Southern Belle as part of his decision. The Kentucky attorney general's office may appeal; it and the U.S. Department of Justice accused DFA of setting up a monopoly in 47 school districts in Kentucky and Tennessee via its 2002 acquisition of Southern Belle. (Associated Press)

A study of New York organic dairy farms is underway at Cornell University's Quality Milk Production Services, Ithaca, N.Y. Researchers will study the challenges of converting from conventional to organic farming, including any changes in animal health and milk quality, in an effort to develop strategies for producers looking to make the switch. Funded by a $1 million grant, the study will be conducted over a three-year period, which is about the time it takes for a typical farm to make the full transition to organic. New York, the nation's third-largest milk producing state, has 275 certified organic dairy farms, with approximately 60 more currently working toward certification. (Associated Press)

Nonfat milk was the only product out of 32 grocery store samples tested in a Dallas study that did not contain trace amounts of a common manmade flame retardant, called polybrominated diphenyl ethers (PBDEs). The chemicals have been found in a variety of food items including fish, eggs, meat and other dairy products, but have unknown implications for human health, according to an article in the peer-reviewed journal Environmental Science & Technology. The chemicals -- used in carpeting, electronics and furniture -- remain in the body for several years when ingested with food. The Environmental Protection Agency (EPA) has not determined the levels at which PBDEs are harmful to humans, though one expert suggested it would take consumption of 80 tons of cheese daily to ingest enough PBDEs to create harm. The two largest U.S. manufacturers of PBDEs have agreed to phase out two of three types of PBDEs by January 1, 2005, in a voluntary accord with EPA. (Knight Ridder News Service, MSNBC)

DAIRY MARKETING MIX

The "got milk?" trademark gains new exposure in a national marketing deal with Kraft Foods' Nabisco brand, in a move that re-teams the "got milk?" icon with Oreo cookies. The "got milk?" logo will be found not only on Oreo packages, but also will be embossed directly into the cookies. Milk and Oreos have been partners for years; Nabisco's classic Oreo commercial, "Dilemma," was re-released in 2002 with the "got milk?" tagline. (California Milk Processor Board)

Wendt's Dairy, the Niagara Falls, N.Y., processing facility of Niagara Milk Cooperative, received positive press from The Buffalo News for its exemplary performance in a statewide milk competition. Wendt's became the first dairy processor ever to record a perfect score of 100 in the competition, which judges milk quality and flavor. The contest is sponsored by the New York Milk Promotion Order, with analytical testing done by Cornell University, with an emphasis on flavor and stability during the product's shelf life. Cornell collected more than 400 milk samples since July 2003 for this year's judging, and ran about 4,000 tests. Twenty-two processing plants competed. Wendt's plans to use the perfect score honor in its advertising programs. (The Buffalo News)

Minnesota-based Dairy Queen International will host its second annual Free Cone Day on Sept. 21 to benefit the Children's Miracle Network. Free five-ounce vanilla ice cream cones will be served at participating Dairy Queen and DQ Grill & Chill stores nationwide. (restaurantbiz.com)

CUSTOMER CLIPS

Multiple hurricanes in Florida are creating stocking problems for the state's retailers. In addition to the bad weather conditions, travel curfews and power and gasoline losses are creating a logistical nightmare for re-stocking. Store units -- including those owned by Publix Super Markets, Wal-Mart and Winn-Dixie Stores Inc. -- are struggling to re-open this week and to serve storm-battered consumers; perishables including milk and dairy products were expected to be restocked by today. To help meet demand for bottled water, Winn-Dixie temporarily converted its Florida milk processing operations into water facilities. (Orlando Sentinel, Fla.)

Workers at three Cub Foods grocery stores in Madison, Wis., approved a new three-year contract that provides pay increases for both new and existing employees. United Food and Commercial Workers had rejected the first offer by Eden Prairie, Minn.-based SuperValu Inc., which has owned the Cub Foods chain since 1980. In October 2003, SuperValu was involved in difficult negotiations with UFCW workers at its 21 Shop n Save stores in St. Louis, Mo. About 10,000 workers approved a contract there following a bitter four-week strike. (Capital Times, Madison, Wis.)

IDFA NEWS

Register Now for BevExpo 2004!
Pre-registration has been strong for BevExpo 2004 in Tampa, September 29-October 1, and thousands of milk and other beverage industry executives are expected at the show in three weeks. Registration is still open online at www bevexpo.com; online hotel reservations are closed, but hotel numbers are provided to call directly. BevExpo will provide state-of-the-art exhibits on processing, quality control, packaging, ingredients and formulation systems, sales and marketing, distribution and merchandising. A comprehensive conference program will cover global and domestic trends in bottled water, milk drinks, juice and juice drinks, soft drinks and enhanced beverages. For more information and to register, click here.

ODDS-AND-ENDS

Tapping into Spider-Man merchandising mania, Woodbury, N.Y.-based ESE Dairies is adding the action hero to packaging of the new caramel flavor in its Shake 'n Sip line, the company's lowfat, low-sugar milk products marketed to school foodservice operations. Shake 'n Sip is now offered in four flavors: vanilla, chocolate, strawberry and the new dulce de leche (caramel). The products are made with 1% milk and fortified with nonfat dry milk solids. Depending on the flavor, the products have up to 35% less sugar, 25% more calcium and 25% more protein than whole milk. ESE Dairies hopes the new caramel flavor will appeal to schoolchildren, particularly in Hispanic markets. (Company report) ... Oberweis Dairy, North Aurora, Ill., has expanded its dairy store reach to include Northwest Indiana, with a new 2,800-sq.-ft. unit located in Schererville. The company decided to open an Indiana location after finding that scores of Indiana residents had been crossing over the border into Lansing, Ill., to visit a store unit there. In other news, the company is now offering franchise opportunities; its current stores are all company-owned. (The Times, Munster, Ind.) ... The butter sculpture medium is making its debut at the Champlain Valley Fair in Vermont in the form of a 330-lb., 6-foot long Jersey cow. The sculpture is being created in full view of spectators in a cooler studio (a large compartment with three Plexiglas walls) from Cabot butter. Over the course of the 10-day fair, butter replicas of the Vermont Statehouse and a covered bridge will also be created on-site. (The Burlington Free Press, Burlington, Vt.)

STOCK MARKET TICKER

As of 9/7/04, 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		27.30 37.13 79.87 47.32 16.20 49.39 11.74 31.80 17.05 19.32 20.97 32.50 27.18 35.33 34.92 13.35 04.52		+0.16 +0.18 +0.10 -0.21 +0.17 -0.37 +0.29 +0.30 +0.00 +0.03 -0.13 +0.05 +0.16 +0.26 +0.61 +0.15 +0.17		+1.10 +0.06 +0.37 +0.07 +0.05 +1.11 +0.35 +0.52 +0.52 +0.25 +0.77 +0.10 +0.82 +0.49 +1.40 +0.15 +0.35
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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