October 15, 2003

International dairy deals...Michael Foods to go to buyout firm...Closed Velda Farms facility gets new life...Pizza Hut to cut out the fat...Roundy's to buy Kohl's stores...Kroger to gain four Denver stores...Labor Issues...Odds-and-Ends...Stock Market Ticker...More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

International dairy deals are in the works, including the potential purchase of dairy product assets of Arden Hills, Minn.-based Land O'Lakes by Montreal, Canada-based Saputo Inc. Analysts speculate the Canadian cheese company may purchase the new LOL cheese plant in Tulare, Calif. (National Post's Financial Post & FP Investing-Canada)

Meanwhile, after more than a year of negotiations, a deal that will give Groupe Danone of France a controlling share of Russia's leading juice and dairy company Wimm-Bill-Dann could close by the end of October. Danone currently owns 7.2 percent of Wimm-Bill-Dann, and hopes to acquire the 68 percent of the company owned by the Russian company's executives. (The Moscow Times)

Minnetonka, Minn.-based dairy, egg and potato products distributor Michael Foods Inc. will be purchased by Boston buyout firm Thomas H. Lee Partners for $1.05 billion in a deal announced earlier this week. Michael Foods CEO Gregg Ostrander will continue to head Michael Foods; he and other managers will hold about 10 percent ownership. Dean Foods Co. previously agreed to purchase the Michael Foods Kohler dairy unit for about $160 million, for a combined sale price of more than $1.2 billion. Kohler makes ice-cream mixes as well as soy and organic milk. (Daily Deal/The Deal)

The former Velda Farms processing facility in Lealman, Fla., (closed in 1999) will become the new ice cream processing facility for Clearwater, Fla.-based Working Cow Inc. Operations are expected to start on Jan. 1, 2004. The company supplies ice cream to scoop shops and assisted living facilities, and makes about 180,000 3-lb. tubs of ice cream annually, with business expected to double over the next five years. (St. Petersburg Times-Florida)

CUSTOMER CLIPS

Dallas-based Pizza Hut Inc. is introducing the Fit 'N Delicious pizza as a lower-fat alternative to its regular recipe Thin 'N Crispy pizzas. The new pizzas have half the cheese of regular Thin 'N Crispy pizza and about 25 percent less fat (depending on other toppings). The company claims to be the first in the pizza restaurant channel to offer lower-fat options. In another effort to please consumers, the chain will offer family-size salad kits in the Orlando, Las Vegas, Minneapolis and Salt Lake City markets beginning in November 2003. Pizza Hut is a subsidiary of Yum! Brands Inc.

Roundy's Inc. will buy seven closed Kohl's stores in the Milwaukee, Wis., market from Kohl's corporate parent Great Atlantic & Pacific Tea Co. Pewaukee, Wis.-based Roundy's will convert the retail locations into Pick 'n Save stores. Earlier this year, Roundy's purchased seven Kohl's Food Stores in Madison, Wis.; six stores became Copps Food Centers stores and the seventh was closed. (Capital Times-Madison, Wis.)

The Kroger Co. reports it will purchase four Cub Food stores in the Denver area from SuperValu Inc. in a deal expected to close in late November. The stores will operate under the King Soopers banner as part of Kroger's King Soopers division, which currently operates 129 stores in Colorado under the King Soopers and City Market names. As part of the agreement, Cincinnati-based Kroger will also purchase a 695,000-square-foot distribution center and a 64,000-square-foot office building in Aurora, Colo.

LABOR ISSUES

Pickets and walkouts by union employees are expected at WestFarm Foods Washington state processing facilities in Lynden and Chehalis and at four plants in Los Angeles and San Jose, Calif., and Portland and Medford, Ore., this week. Nearly 200 union workers at WestFarm's Seattle area facilities were locked out seven weeks ago after a breakdown in contract negotiations. Pickets are already in place at several WestFarm facilities and at western Washington locations of one of the dairy company's biggest customers, Top Foods grocery stores. During negotiations, the union sought raises, the preservation of existing benefits and job protection; a 3-year contract expired July 31. WestFarm has continued operations with nonunion employees brought in from Idaho. While a federal mediator started working with both sides last month, contract talks have not yet resumed; the union and WestFarm have filed 11 unfair labor practice charges against each other with the National Labor Relations Board. (Associated Press)

Southern California supermarket clerks are striking and picketing for the third day at Safeway Inc. (Vons and Pavilions), The Kroger Co. (Ralphs) and Albertsons Inc. stores. The strike began Monday morning after 97 percent of the 70,000 union workers voted to strike. Contract negotiations ended Oct. 5; employee health insurance contributions are the main issue. Store managers and replacement workers are driving supply trucks, restocking shelves and serving as checkers to keep the nearly 900 stores open with reduced hours. Contract negotiations are not expected to resume in the immediate future. Teamster warehouse workers and tractor-trailer drivers are supporting the California strike on a limited basis and are honoring pickets at an Albertsons distribution center in Brea and at a Vons warehouse in El Monte; Teamsters support is expected to expand as early as next week.

Meanwhile, union workers at 44 Kroger stores in West Virginia, Ohio and Kentucky went on strike over health benefits late Monday. In response, Kroger closed 37 stores in West Virginia, five in Ohio and two in Kentucky at midnight Monday; store pharmacies remained open.

One bright spot in labor talks: after 18 months of negotiation, union workers at Jewel Food Stores Inc. in Wisconsin rejected a strike due to the economic climate; as a result, the proposed contract for 1,500 Jewel employees is automatically accepted and will be retroactive to April 2002, when the previous contract expired. The vote went against union bargaining committee recommendations to strike. (Associated Press; Milwaukee Journal Sentinel-Wisconsin)

Separately, 10,000 union grocery workers for Shop 'n Save Warehouse Foods Inc.; Schnuck Markets Inc. and Dierbergs Markets Inc. in St. Louis continue the strike that began Oct. 7. St. Louis stores have hired more than 7,000 temporary replacement workers to keep the nearly 100 impacted supermarkets 22 Shop 'n Save stores, 55 Schnuck stores and 19 Dierbergs stores open. Contract negotiations have not resumed. (Associated Press, St. Louis Post-Dispatch)

IDFA NEWS

Register Now for IDFA's Biosecurity Briefing on November 20

IDFA will hold a "Hot Topics: Biosecurity Briefing," on November 20 in Washington, D.C., to explain what dairy processors need to do to insure compliance with the new biosecurity regulations by the December 12, 2003, deadline. As part of the program, attendees will be invited back to IDFA's offices to register their facilities with FDA, with IDFA staff present to assist. For complete agenda and registration information, click here.
http://www.idfa.org/meetings/2003biosecuritybriefing.cfm

ODDS-AND-ENDS

Children's hospitals in New England are rooting for the Boston Red Sox: Chelsea, Mass.-based HP Hood has increased its Home Team Advantage™ children's hospital program contributions during the postseason playoffs. Hood will donate $200 to the program for every home run, double play and strikeout made by Red Sox players at Fenway Park during the American League Division Series; $300 each during the American League Championship Series and $500 each if the Red Sox play in the World Series. The Hood Home Team Advantage program, now in its third year, raised $71,300 during the 2003 regular season...St. Louis, Mo.-based Monsanto reports it has received FDA approval for powder manufacturing operations at its new Augusta, Ga.-based POSILAC processing facility. POSILAC is said to increase milk production by eight to 12 lbs. per cow daily...In Passing: Bud Roberts, 85, former president of Sacramento, Calif.-based Crystal Cream and Butter Co., died Oct. 5. He joined Crystal in 1948 as an accountant, and became Crystal's president in 1981. He retired in 1983. (Sacramento Bee)...Virgil Salm Jr., 51, part of the Hershey's Ice Cream Co. sales and management team for 22 years, died Oct. 10 from injuries sustained in a motorcycle accident in New York state. (The Post-Standard-Syracuse, N.Y.)

STOCK MARKET TICKER

As of 10/14/03, 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		22.30 31.06 77.53 44.87 30.84 75.57 23.94 10.22 29.35 19.10 16.63 24.08 26.80 26.24 35.11 35.18 21.69 08.39		+0.48 +0.56 -0.03 -0.10 -0.36 +0.30 +0.01 +0.02 -0.16 -0.16 +0.22 +0.50 -0.13 +0.21 +0.10 +0.05 -0.21 -0.07		+0.91 +0.68 -0.17 -1.63 +0.28 +0.43 +0.00 +0.00 -0.65 +0.10 +0.22 +0.78 -0.10 +1.19 -0.09 -0.08 +1.01 -1.31
Source: Yahoo! Finance

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