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October 20, 2004

Kraft sales up, earnings down...Dean to bid on Hawaiian dairy...Groupe Danone invests in China...Fake milk powder seized in China...New Product Scanner...New leader for Kmart...Safeway, Domino's financials...Odds-and-Ends...Stock Market Ticker...More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Northfield, Ill.-based Kraft Foods Inc.'s sales were up 4.7% in third quarter to $7.83 billion from $7.48 billion. However, the third quarter was the fifth in a row with a drop in earnings. Net income dropped 3.8%, to $779 million (46 cents a share), from $810 million (47 cents a share) in third quarter 2003. Kraft CEO Roger Deromedi notes first-half momentum in key businesses like cheese and meat contributed to results, as did growth trends in biscuits and pizza. Kraft increased wholesale prices for cheese, meat and pizza products to reflect a $225 million rise in commodity costs from a year ago. Promotional efforts in the competitive segments meant no price hikes to consumers, but combined with commodity costs resulted in reducing quarterly earnings by 15 cents a share, Kraft reports. (Chicago Tribune)

Dean Foods Co. of Dallas is making a bid for Foremost Dairies-Hawaii, which closed last week. Dean is the parent company of the remaining dairy in the state, Meadow Gold Dairies. The Foremost business, processing equipment, fleet of trucks and brand name are for sale. Meanwhile, the remaining 87 Teamsters and Allied Workers Local 996 employees laid off from the Foremost plant in Kalihi have accepted a severance offer. (Associated Press)

French dairy company Groupe Danone plans to build on investments in China; its Danone Asia Pte Ltd. Group has signed an agreement to purchase an additional 2% stake in one of China's largest dairy companies, Bright Dairy & Food Co Ltd. Danone will pay roughly $9.5 million for 20.84 million shares. Upon completion of the deal, Danone's stake in Bright Dairy will reach 5.85%; in a separate deal last year still pending government approval, Danone purchased 3.85% of shares in the company. (AFX European Focus)

In other news from China, almost 60 tons of fake milk powder with low nutritional value was recently seized by authorities in China's northeastern province of Heilongjiang. Seven people have been detained, with two under arrest. Initial reports have not included information on whether children were made ill, as in a previous case this year. (United Press International)

NEW PRODUCT SCANNER

The launch of Baskin-Robbins ice cream Cake Treats—Baskin-Robbins premium ice cream and cake—positions the product as an "everyday indulgence." With between two and eight servings each, Cake Treats range in price from $8.49 to $15.99 and are available in various sizes. Popular flavor combinations include Oreo® Cookies n' Cream with Devil's Food Cake, Chocolate Chip Cookie Dough with Devil's Food Cake and Strawberry Cheesecake with White Cake. As part of the promotion of Cake Treats, Randolph, Mass.-based Baskin-Robbins sponsored the "Piece of Cake" Survey, which found that 48 percent of Americans enjoy ice cream cake year round; vanilla and chocolate ice cream tied for first place as the respondents' favorite ice cream flavors. (Company Report)

Dwight Yoakam's Bakersfield Biscuits™ brand has introduced Border Dips™ brand real cheese dips at select Wal-Mart Supercenters. The refrigerated dips are positioned as restaurant quality products. Packaged in resealable 12-ounce tubs, the dips are available in two flavors: Jalapeno Cheddar and Queso Blanco. Grammy Award-winning, singer-songwriter/actor Dwight Yoakam is the creative force behind the line inspired by the down-home foods made by Yoakam's grandmother when he was a boy in rural Kentucky; it is marketed and distributed by Los Angeles-based Modern Foods. (Company report)

CUSTOMER CLIPS

Kmart Holding Corp. has appointed Aylwin Lewis as its new chief executive and president; he succeeds Julian Day, who was appointed in January 2003, when Kmart was in bankruptcy. Lewis is a 13-year veteran of the restaurant operator Yum Brands Inc., most recently serving as president and COO. Troy, Mich.-based Kmart reports Day will remain on the board of directors. (Associated Press)

Safeway Inc. third-quarter profits dropped 21% to $159.2 million (35 cents per share) in the three months ending Sept. 11. The Pleasanton, Calif.-based supermarket chain earned $202.5 million (45 cents per share) in the third quarter of 2003. Sales for the period totaled $8.3 billion, a slight rise from $8.28 billion last year. Factors that impacted results were the California supermarket strike, restructuring costs and diminishing value of the Dominick's chain in the Chicago area. (Associated Press)

High cheese prices and IPO costs limited earnings to $979,000 in the third quarter for Domino's Pizza Inc., which first sold stock to the public in July. Sales grew 11% to $325 million from $292.8 million for the quarter. Sales at franchised locations open at least a year rose 8.2 percent; with sales rising 6.8 percent at company-owned stores. Ann Arbor, Mich.-based Domino's also declared its first dividend of 6.5 cents a share. Excluding IPO costs and repayment of $109.1 million of debt with some of the proceeds, the company would have earned $16.1 million (23 cents per share). In the nine months ending Sept. 5, net income about doubled to $35.3 million, or 35 cents a share, from $17.7 million in third quarter 2003. Revenue gained 7.5 percent to $967.9 million. (Detroit Free Press)

IDFA NEWS

Register Now for New Dairy Security Workshop Next Month
In response to increasing member requests, IDFA will hold a special, one-time briefing for its members—Hot Topics: Dairy Security Workshop—on November 16 in Washington, D.C. This one-day program will explore government concerns, regulations and industry guidelines on dairy plant safety and biosecurity. In today's environment, it is more important than ever that dairy operations personnel know how to secure the company's operations and products. Senior executives and plant management as well as operations professionals will be fully briefed on the issues, recommendations and requirements for dairy plants in a post-9/11 world. For complete agenda and registration information, IDFA members can click here.

ODDS-AND-ENDS

Student complaints about protein-fortified, shelf-stable milk led to restoration of traditionally processed milk on school cafeteria menus in Rock Hill, S.C. ESL 1% milk in flavored and unflavored varieties will remain on the menu; the milk carries extra nonfat dried milk for an extra 4 grams of protein and 10% more of the RDA of calcium. The milk has a shelf-life of seven months. Students and parents had complained that the ESL milk's taste lacked freshness, was too sweet and that the protein fortification made it too thick. Meanwhile, school foodservice directors note that many students like the longer-lasting milk. (Associated Press)...A cheese-carving contest outside the Lambeau Field atrium was part of the kick-off of Plymouth, Wis.-based Sargento Foods' second season as the official cheese of Lambeau Field as well as its Touchdowns for Charity program. The football-themed carvings were created from 40-pound blocks of cheddar by six University of Wisconsin-Green Bay art students before last Monday night's game against the Tennessee Titans. The prize for the winning sculpture was $1,000. Sargento has donated to the Milwaukee-based Hunger Task Force for more than 12 years and gave the organization $67,000 last year under its Touchdowns for Charity program; $1,000 is donated to the organization for each Packers touchdown and $2,000 per TD during the playoffs. (Sheboygan Press, Wisconsin)...Consumers in Chicagoland can now order organic milk online and have it delivered to their homes. Wild Oats Markets Inc. will offer more than 200 Wild Oats branded natural and organic products for order online and delivery via Peapod; there are only two Wild Oats stores in the Chicago metro area. Available Wild Oats products will include organic milk, cage-free eggs and orange juice. Wild Oats posts nearly $970 million in annual sales, and operates 108 stores in 24 states and British Columbia, Canada. Skokie, Ill.-based Peapod serves 13 U.S. markets and is a wholly owned subsidiary of Royal Ahold, The Netherlands. (Wild Oats report)

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