September 17, 2003

YoCream reports sales...Novelty maker Frecker's Ice Cream to close...F & A Dairy to expand...Minnesota pilot program ups use of commodities in schools...Alto Dairy donates cheese, receives milk powder...Two co-ops shop for Northeast plant... Kroger Co. earnings drop...Online retailing expands...Global Marketwatch...Odds-and-Ends...Stock Market Ticker...More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Portland, Ore.-based YoCream International Inc. reports third quarter sales increased 5.5 percent to $6.6 million, up from $6.3 million in the third quarter of 2002. Impacted by a non-recurring freight charge settlement expense of $157,000, net income for the quarter slumped 28.5 percent, to $336,000 compared to $470,000 last year. For the nine months ending July 31, sales rose 8.8 percent to $15.5 million compared to $14.2 during the same 2002 period. Net income for the first nine months of 2003 was $485,000, down 39 percent from $798,000 in the same 2002 period.

Wholesale ice cream novelty processor Frecker's Ice Cream, Columbus, Ohio, will close after 66 years of ownership by the Frecker family. The company manufactured novelties carrying Ohio brands Velvet and Pierre's as well as for customers in Indiana and Michigan; its processing facility property will be put up for sale. Three Frecker brothers-Bob, Ed and George-have run the business since 1977. Their father, Eddy Frecker, founded the company and used the dairy's products to supply his Columbus chain of 16 malt shops until the early 1950s. He died in 1987. (Columbus Dispatch-Ohio)

With the help of up to $7 million in industrial revenue bonds to be issued this fall from the city council in Las Cruces, N.M., F & A Dairy will complete the first of two phases of its cheese plant expansion project. When complete, the project will double the manufacturing capacity at the plant and will add up to 60 full-time employees to the current full-time staff of 90. The city council issued F & A $8 million in bonds about 10 years ago, when the company first opened its facility. (Las Cruces Sun-News-New Mexico)

Now in its third year, a state-wide pilot program in Minnesota provides schools with a way to use more of the $15 million in USDA food aid commodity entitlements. Since its inception, the amount of commodities delivered to schools in the state has doubled. Schools are allowed to buy products that incorporate commodity foods, including bulk cheese and nonfat dry milk, and then are reimbursed for the value of the commodity in the final product. For example, nonfat dry milk powder offered to schools by USDA is converted to yogurt by General Mills, while Bongard's Creameries uses the nonfat dry milk powder in sliced and grated cheeses; schools buy the products, then get a refund for the value of the nonfat dry milk. USDA plans to open the program to other states. Schools traditionally have received commodities via direct delivery or through a re-processing channel that diverts commodities to a government-approved processor, then ship the bulk product to schools. (Associated Press)

In a related story, Alto Dairy Cooperative, Alto, Wis., made a donation of 20,000 pounds of mozzarella cheese—enough to top about 40,000 pizzas—to the Hunger Task Force (HTF). As part of this pilot program, the dairy received a truckload of nonfat dry milk from the U.S. Food and Nutrition Service on behalf of HTF, which distributes food to food pantries and meal programs through the Emergency Food Assistance Program. HTF will distribute the cheese to 28 Milwaukee-area food pantries; cheese has not been available to food pantries through government programs since the 1980s. (The Reporter-Fond du Lac, Wis.)

Pioneer Valley Milk Marketing Cooperative, a small group of Massachusetts dairy farmers who sell milk from cows not treated with rBST, is teaming up with Organic Valley of Wisconsin, which uses organic milk from New England for its growing regional Northeast Pastures milk brand. The two cooperatives are shopping for a joint venture milk processing facility in the Northeast. The co-ops plan to run a mid-sized plant to process 70,000 gallons of milk a week; 80 percent of the processed milk will be organic. Facilities in Montpelier, Vt., and Greenfield, Mass., are under consideration. Each state has offered incentives to the two co-ops; a decision on the purchase is expected by November. (Associated Press)

CUSTOMER CLIPS

The Kroger Co. reports a second quarter earnings drop of 28 percent to $190.4 million, down from the $264 million in the comparable quarter a year ago; the chain cites competitive issues and last month's blackout as reasons for the decline. Sales for the quarter, which ended Aug. 16, increased 4 percent to $12.4 billion from $11.9 billion a year ago. (Associated Press)

Online grocery retailer FreshDirect Inc. plans to expand from its home base of New York into markets including Boston, Chicago and Washington, D.C., with part of the $31 million recently pledged by investors. FreshDirect Inc., founded four years ago, specializes in home delivery of perishables, including a wide selection of cheeses; nearly two-thirds of its business is in fresh foods. (Daily Deal/The Deal-New York)

Meanwhile, Albertsons Inc. reports it will expand its online grocery service at albertsons.com to residents in 13 Boise, Idaho, area zip codes. Consumers can schedule delivery within a 90-minute delivery window or can pick up pre-ordered groceries at one of 15 stores. As part of its promotion of the service, Albertsons will offer e-coupons during the first four weeks of service. During the week of Sept. 30, customers who spend $50 will receive a free half-gallon of Dreyer's ice cream.

GLOBAL MARKETWATCH

The Cancun Ministerial of the World Trade Organization meeting collapsed Sept. 14 as developing countries insisted on the elimination of export subsidies and major cuts to domestic supports in developed countries. (Associated Press)

Saputo Inc. plans to close two Canadian Milk Division plants and will sell a third, leaving it with 10 fluid milk processing facilities in Canada. A plant in Calgary, Alberta, will close in January 2004; production will be integrated into Saputo's Edmonton plant. A facility in Armstrong, B.C., will close by February 2004, with production to be absorbed by other facilities. Soyaworld, a soy-based beverage company based in British Columbia, will purchase Saputo's Annacis Island, B.C., facility in a deal expected to close by February 2004. Saputo currently co-packs Soyaworld products in the facility.

IDFA NEWS

Health Claims Workshop Offered in Conjunction with Expo '03 Set for October 28 in Chicago, IDFA's new workshop "A Healthy Pitch: Compelling Health Claims for Your Dairy Products" will teach dairy processors how to understand and apply new flexibility in federal rules on food health claims in order to better market their products. The workshop will cover the regulatory requirements from the Food and Drug Administration and the Federal Trade Commission about how dairy's benefits can be communicated on packaging, in advertising and through public relations efforts. Attendees will also learn about emerging scientific research surrounding specific opportunities for dairy, including potential claims on hypertension and weight loss. The workshop is being held in conjunction with Worldwide Food Expo 2003; workshop attendees will receive a complimentary registration to Expo '03. To register or review the full workshop schedule, click here. http://www.idfa.org/meetings/compellinghealthclaims_workshop.cfm

ODDS-AND-ENDS

The Bingham Cheese Co., Fort Collins, Colo., recalled 360 pounds of Bingham Hill Rustic Blue Cheese; the cheese may be contaminated with Listeria monocytogenes. The product was distributed in 5-pound wheels to supermarkets and specialty foods stores in Colorado as well as Georgia. No illnesses have been reported from the cheese. (Rocky Mountain News)...In passing: Patrick Boyle Healy, 83, former chief executive of the National Milk Producers Federation (he retired from NMPF in 1985) died of cancer on Sept. 12 at his home in Arlington, Va. He broke into the dairy industry in the mid-1950s, when he worked in the Agriculture Department's dairy division, then he joined the milk producers lobby. (The Washington Post)...Consumers are skirting the law to quench their thirst for raw milk through more than a dozen established cow share programs in states including Indiana, Wisconsin, Virginia, Michigan, Indiana, Ohio, Utah, Florida, Colorado, Tennessee, Texas and Washington. Laws typically permit cow owners to drink raw milk from their own cows; however, pasteurization is required for all milk sold to U.S. consumers in interstate commerce. In some cases consumers pay a "boarding" fee for each gallon of milk taken from the cow share program. The price for the raw milk ranges up to $12 per gallon. State regulators are closely monitoring the cow-share programs and in some cases states have ordered producers to cease operations, but the programs are fighting such mandates in court. (The Wall Street Journal)

STOCK MARKET TICKER

As of 09/16/03, 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 Horizon Organic/HCOW 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		22.62 29.54 77.40 47.73 29.99 72.55 23.95 09.90 29.48 17.80 16.63 25.49 27.80 24.63 34.75 34.98 19.25 10.28		-0.24 +0.49 -0.04 +0.63 -0.13 -0.02 +0.00 -0.01 -0.15 -0.85 +0.55 -1.04 +0.49 -0.14 +0.04 +0.33 +0.49 -0.12		+0.83 +0.24 +0.05 +0.48 +1.11 +1.53 +0.00 +0.18 -0.01 -1.30 +0.12 -1.90 +0.35 +0.08 +1.33 +0.78 -0.62 -0.64
Source: Yahoo! Finance

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