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October 27, 2004

Land O'Lakes reports sales gains .... Unilever to increase ad spending .... Dairy contributes to Nestle results .... Dairy-themed crayons, currency .... Healthy Trend For Dairy .... Winn Dixie results dip, company sells off stores .... Kroger, union reach agreement .... Dairy Security Workshop .... Odds-and-Ends .... Stock Market Ticker .... More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Arden Hills, Minn.-based Land O'Lakes Inc. reports $1.8 billion in sales for its third quarter 2004, a gain of about 11% as compared to $1.6 billion in sales for the same period last year. The quarter tallied a net loss of $29.9 million, compared to the net loss of $1.6 million in 2003. Year-to-date LOL sales are up $5.8 billion, compared to YTD sales of $4.4 billion at the end of the third quarter last year; YTD net earnings are $32.0 million, compared to $42.9 million in the first nine months in 2003. LOL's Dairy Foods division YTD sales were $2.9 billion, up about $800 million over the previous year. Division sales for the quarter totaled $952 million, up from $786 million for the third quarter of 2003. (Company report)

Dutch food giant Unilever PLC plans to juice up its advertising spending in the fourth quarter to win back market share after a 2% profit drop in the third quarter. Sales losses were attributed to weak sales of ice cream, soft drinks and household goods in Europe. The company also believes that a demand drop for its SlimFast range drinks is a result of the U.S. Atkins diet craze. Pretax profit in the three months to Sept. 30 fell to $1.68 billion, down from $1.7 billion the same period a year earlier. Underlying operating profit, before exceptional items and goodwill, fell 3% in the period to $2.36 billion. Sales dropped 4% in the quarter to $13.59 billion. (AFX European Focus)

Vevy, Switzerland-based Nestle reports that growth in the Americas and Asia led "strong" year-to-date sales results. Despite the combined negative impact of foreign exchange fluctuations and divestitures, total Nestle sales were stable at $53.8 billion. Dairy product sales for the company lent a hand, with the Milk Products, Nutrition and Ice Cream Group posting 4.9% growth to $14.99 billion. (Company report)

After a nationwide contest, Crayola unveiled its new state-themed crayon names, with dairy-related names selected for two states. The color for Texas, "Alamo a la mode," was chosen in dual recognition of the state's historical landmark and Blue Bell ice cream from Blue Bell Creameries, Brenham, Texas. Wisconsin's color -- "Moovalous Cheese" -- honors that state's cheesemaking tradition. The company's State Your Color contest drew 25,000 entries from kids of all ages; contest winners received the limited-edition state crayon collection and an assortment of Crayola products. (Crayola)

Wisconsin cheese is not inspiration for the state's crayon alone -- the new Wisconsin quarter features the face of a dairy cow and a chunk of cheddar cheese, along with an ear of corn and the state motto, "Forward." Unveiled Monday, the coin is the 30th to be released by the U.S. Mint; the state coins are put out in the order in which states joined the union. (Associated Press)

HEALTHY TREND FOR DAIRY

The dairy industry is tapping into opportunities in the beverage market. A limited rollout of 80'N Sunny under the Land O'Lakes brand kicked off last week; the kid-targeted, lowfat milk/fruit juice blend has 80 calories per eight-ounce serving. Two months ago, Stonyfield Farm began selling organic, yogurt-based Juice Smoothies, building on the earlier success of YoBaby yogurt and milk drinks for kids; drinks now make up 20% of Stonyfield's business. Next year, General Mills will begin selling Go-Gurt yogurt drinks that are fortified with calcium and vitamins. Big beverage manufacturers are also in the fray. Pepsi is testing Milk Chillers in three flavors: chocolate, banana and strawberry. Last year, Coke introduced Swerve, its first dairy-based product, in such flavors as vanilla and banana. (USA Today)

Dairy products headed a list of low-carb favorites submitted by readers of Weider Publications' Shape magazine. Published in the November issue, the poll cited string cheese, lowfat yogurt, and part-skim ricotta cheese among the readers' preferred low-carb foods. (Shape magazine)

CUSTOMER CLIPS

Jacksonville, Fla.-based Winn-Dixie Stores Inc. posted a $153.1 million sales loss in its fiscal year's first quarter, its seventh straight quarter of losses. Sales in the period (ending Sept. 22) fell 3.4% to $2.34 billion, compared to $1.25 million in the first quarter of the previous fiscal year. As part of the company's plan to save $100 million in annual expenses, the company spent $54.2 million this quarter to close some supermarkets and warehouses. In total, Winn-Dixie plans to cut 10,000 jobs and 156 stores. To date, about 4,700 jobs have been cut; 47 stores have closed and another 34 are slated to be sold or sublet. In addition, three distribution centers have been closed; another in Kentucky is slated to be sold or closed this quarter. The various closures/sell-offs leave the chain with 922 stores and about 90,000 workers. Winn-Dixie stock shares have lost about two-thirds of their value this year. (Bloomberg News)

In related news, E.W. James & Sons Supermarkets, Union City, Tenn., purchased 10 Winn-Dixie stores in Kentucky this week; stores will be converted to the E.W. James & Sons Supermarkets banner by Dec. 31 and will remain open during the conversion. Terms were not disclosed. Before the Winn-Dixie store purchase, regional player E.W. James & Sons had about 25 stores in Kentucky, Tennessee, Arkansas and Mississippi. Most of its stores are under the company name banner, with six being Save-A-Lot stores. (Associated Press)

After 12 hours of talks on Friday stretched into early Saturday morning, a tentative contract between The Kroger Co. and union workers was reached. United Food and Commercial Workers vote today on the agreement. If ratified, the contract will cover about 8,500 employees in 70 stores in Ohio, Kentucky and Indiana. Both sides report that the contract includes wage increases and improved healthcare coverage. The previous contract expired Oct. 9, but remained in effect during negotiations; members had voted to authorize a strike if needed. (Associated Press)

IDFA NEWS

Hotel Deadline is This Friday for IDFA's Dairy Security Workshop
To help dairy processors secure their operations, IDFA will hold a special program -- Hot Topics: Dairy Security Workshop -- on Tuesday, November 16 in Washington, D.C. This intense one-day program will review government concerns, current regulations and guidelines relating to the dairy industry and security. Workshop speakers include high-level representatives from the Food and Drug Administration, the Department of Homeland Security and the Transportation Security Administration. Hotel reservations must be made directly with the Grand Hyatt (800/233-1234) by this Friday, October 29, in order to guarantee a room at the special group rate. For complete details and the program agenda, IDFA members can click here.

ODDS-AND-ENDS

Possible market rigging is alleged by Italian prosecutors, who added four banks and an Italian bank's asset management arm to the investigation of Italian dairy giant Parmalat. Citigroup Inc., UBS AG, Deutsche Bank AG, Morgan Stanley and Banca Intesa's asset management arm Nextra could stand trial under Italian law. (Associated Press) .... Bel/Kaukauna USA has finally caught up with consumer demand for The Laughing Cow cheese, which got a boost in the bestselling South Beach Diet book. The Tarrytown, N.Y.-based company added significant production in both Europe and the United States throughout spring and summer to meet demand for the cheese, which is wrapped in portion-control wedges. The company has also introduced the smaller-cubed The Laughing Cow Light Gourmet Cheese Bites. (Company report) .... A just-published historical tome, Wawa, depicts the 200 years of business of Wawa Inc., which was founded as an iron business in 1803 but became a dairy processor in the late 1800s and eventually a major mid-Atlantic convenience store operator. Company historian Maria Thompson and retired executive Donald Price co-wrote the book and utilized images from company archives, local collections and family scrapbooks. Chairman and CEO Richard Wood Jr. is the fifth generation of the family to lead the Wawa, Pa.,-based company. Wawa's milk routes were established in the late 1950s and the first Wawa Food Market opened in 1964. The company now operates 540 markets in the mid-Atlantic region. All royalties from the sale of the book will be donated to the Children's Hospital of Philadelphia. (csnews.com)

STOCK MARKET TICKER

As of 10/26/04, 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		25.99 29.05 80.13 43.75 16.70 49.38 12.24 32.82 14.73 19.96 17.57 33.45 28.81 33.73 35.89 14.88 03.33		+0.40 +0.59 +0.08 +0.36 +0.07 +0.56 +0.02 +0.47 -0.12 +0.16 +0.23 +0.05 +0.46 +0.84 +0.44 -0.08 +0.06		+0.05 +0.05 +0.05 -0.16 +0.07 +2.57 +0.06 +0.38 -0.17 +0.38 -0.80 +0.65 +0.18 +0.41 +1.21 -0.02 -0.29
Source: Yahoo! Finance

****STOCK MARKET TICKER CORRECTION - Due to a production error, last week's Stock Ticker 'Change Over Last Week's D-brief' column carried incorrect figures. The chart with correct numbers is below; D-brief regrets the error.****

STOCK MARKET TICKER

As of 10/19/04, 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		25.94 29.00 80.08 43.91 16.63 46.81 12.18 32.44 14.90 19.58 18.37 32.80 28.63 33.32 34.68 14.90 03.62		-0.08 -0.20 +0.04 -0.07 +0.22 +0.20 -0.06 +0.11 -0.23 -0.44 -0.41 -0.34 -0.23 +0.16 -0.57 -0.05 +0.01		-0.07 -0.79 +0.13 -0.29 +1.12 +0.54 -0.09 +1.27 -0.20 -0.67 -1.05 -0.95 +0.99 +0.37 -0.45 +0.15 -0.20
Source: Yahoo! Finance

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