October 29, 2003

Dreyer's to integrate processing capabilities from Nestlé deal...New ergonomic package for Land O’Lakes milk from Dean Foods...M&M/Mars prevails in EU slotting cases... Corporate layoffs at Albertsons...Wal-Mart sting nets 300 illegal immigrants...Supermarket labor disputes continue...Dairy Financials...Odds-and-Ends...Stock Market Ticker...more news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Oakland, Calif.-based Dreyer's Grand Ice Cream Holdings Inc. plans to consolidate its production efforts while expanding production capability in Bakersfield, Calif., and on the East Coast. The June 2003 Nestlé Ice Cream Co./Dreyer’s merger added three Nestlé facilities to the five existing Dreyer’s plants. Four of the eight facilities are in California: Union City, Bakersfield, Tulare and City of Commerce. The Dreyer’s Union City, Calif., processing facility will close in February 2004 and production will be moved to other facilities. The 100,000-sq.-ft. plant is to be sold; it is known locally for its tours, production of ice cream and frozen desserts for retail and commercial sale, and housing distribution, sales and research facilities. The company plans to offer alternative positions or work locations to about one third of the facility’s 221 employees.

Distribution of Land O’Lakes milk in the Easy Pour Gallon will roll out in Minnesota’s Twin Cities market following a successful market test by Dallas-based Dean Foods Co. The re-designed gallon incorporates a stabilizing thumb groove and handle, making it easier to maneuver. A centered spout is designed to allow for ease, stabilization and accuracy when pouring. Focus group studies further revealed that the ergonomic container allows children to more easily pour their own milk than from other gallon containers.

Hackettstown, N.J.-based M&M/Mars prevails in a six-year legal slotting battle overseas that it brought against Ireland's HB Ice Cream, as well as in a related case involving multi-national Unilever NV. When Mars entered the Irish ice cream market in 1989, both HB and Unilever tried to enforce exclusivity contracts in freezers supplied to retailers, effectively banning Mars placement. In both cases, European Commission judges declared that it is a breach of EU rules on fair competition for ice cream manufacturers to force an exclusivity provision on retailers in exchange for a “free” freezer. Mars initially complained about HB to the European Commission in 1991; that case is now concluded. EU regulators initially ruled against Unilever's exclusivity clauses on monopoly grounds in 1998, and added the final ruling last week. Unilever has two months to appeal. (Associated Press, Press Association)

CUSTOMER CLIPS

Citing the need to cut costs and mounting competitive pressure, Albertsons Inc. laid off an undisclosed number of the 2,000 corporate employees at its Boise, Idaho, headquarters earlier this month. The last major layoff at the company's headquarters occurred in the summer of 2001; during 2001 and 2002 nearly 1,300 employees above store level were laid off nationwide. By the end of 2004, the retailer plans to cut $750 million in costs by various means. It also closed or sold more than 300 stores in 2002. (The Idaho Statesman)

Last week’s raid on 60 Wal-Mart stores in 21 states resulted in the arrest of more than 300 illegal workers by federal officials. The arrested members of cleaning crews were hired through contractors and were all in the country illegally. Various law enforcement officials also accused Wal-Mart Stores Inc., Bentonville, Ark., of having direct knowledge of the various immigrations violations, despite 1998 and 2001 investigations of the retailers’ cleaning crew contractors. The company has 100 such subcontractors cleaning about 700 of its U.S. stores. Wal-Mart’s U.S. holdings include 1,494 discount stores, 1,386 Supercenters, 532 Sam's Clubs and 56 Neighborhood Markets. (Associated Press)

Supermarket labor disputes continue: In St. Louis, Shop 'n Save Warehouse Foods Inc.; Schnuck Markets Inc. and Dierbergs Markets Inc. announced that the 100,000 striking and locked-out UFCW union workers must pay the full cost of health care coverage during the labor dispute, even if they return to work immediately. The action began Oct. 7; all three supermarkets pay full insurance premiums two months in advance, which means company-paid insurance is good through Nov. 30. Union officials expected workers to have to pay to extend coverage beyond Nov. 30. (St. Louis Post-Dispatch)...Southern California enters the third week of strike/lock-out action by clerks against Safeway Inc. (Vons and Pavilions), The Kroger Co. (Ralphs) and Albertsons Inc.; the dispute began Oct. 13. Union representatives say the Northern California supermarket industry faces a similar labor dispute next year if retailers attempt similar healthcare and wage cost-savings measures. Supermarket union contracts expire in July 2004 in the Sacramento area and in the Bay Area in September 2004. (Associated Press)...In the separate Kroger/ UFCW work action involving union employees at 44 Kroger stores in West Virginia, Ohio and Kentucky over similar contract issues, Kroger and union officials are expected to resume negotiations today. Meanwhile, Kroger faces more labor strife in Indiana, where about 4,000 union workers at 40 Kroger supermarkets voted Friday to reject a five-year contract offer from the company. Contract talks resumed Tuesday; the current contract negotiation accord expires at 12:01 a.m. on Nov. 2. (Associated Press, The Indianapolis Star)...Concerns about last week’s contract negotiation breakdown between 14,000 UFCW workers and Safeway and Fry's Food Store supermarkets in Phoenix are somewhat alleviated. Talks have been extended indefinitely; the current contract expired Oct. 25. (The Arizona Republic)

DAIRY FINANCIALS

Year-to-date sales rose 2.3% and net earnings 17.7% for Arden Hills, Minn.-based Land O'Lakes Inc. LOL reports sales rose to $4.4 billion in the first nine months of 2003, compared to sales of $4.3 billion in the same 2002 period. YTD net earnings reached $42.9 million vs. $35.3 million in the same 2002 period. While the third quarter is traditionally the company’s weakest, sales gained 11.4% to $1.58 billion (net loss of $1.3 million) compared to $1.4 billion in the 2002 third quarters (net loss of $12.0 million). LOL branded cheese volume in its Deli Cheese division gained 3%, but total YTD dairy food sales dropped about 3% to $2.1 billion.

Wilbraham, Mass.-based Friendly Ice Cream Corp. reports record net income of $5.3 million for the third quarter ending Sept. 28, a 52% jump compared to net income of $3.5 million in the comparable 2002 quarter. Total sales for the quarter increased 1.3% to $160.4 million, compared to $158.3 million for comparable 2002 quarter.

IDFA NEWS

Early registration numbers from Worldwide Food Expo, which opened this morning at McCormick Place in Chicago, indicate that this year's show will exceed attendance expectations -- for both domestic and international visitors. Attendance is already outpacing the '01 Worldwide Food Expo; the show may be the largest yet since its inception in 1997. Worldwide Food Expo runs through Saturday. Lead sponsors for the event are the International Dairy Foods Association, the International Association of Food Industry Suppliers, the International Bottled Water Association, the American Meat Institute and the American Frozen Food Institute. Registration on site is open each day; Saturday registration is free.

ODDS-AND-ENDS

Former Stella Foods exec Lawrence Benjamin is the new CEO of U.S. Foodservice, the $1.1 billion accounting-scandal plagued division of Dutch retailer Royal Ahold NV. Most recently CEO for NutraSweet, Benjamin is credited with restructuring Stella Foods; he also spent eight years with Kraft Foods. Former U.S. Foodservice chief Jim Miller left Ahold’s U.S. Foodservice division in May. Last month, Ahold reported a $1.4 billion loss for 2002. (The Baltimore Sun)...Mayfield Dairy Farms launches two new winter season Mayfield ice cream flavors—Snow Cream and Spiced Dulce. Nostalgic-style Snow Cream combines milk, sugar and vanilla, while Spiced Dulce blends dulce caramel and spiced pear flavors with crispy toffee bits. In a separate rollout, the Athens, Tenn.-based processor introduces Mayfield Vanilla Lowfat Milk in pint-sized Chugs. Mayfield serves nine Southeastern states and is a division of Dean Foods Co...An on-carton lottery promotion by Australia's largest dairy company, the Dairy Farmers group, is creating controversy in the land down under. The promotion aims to stem declining milk consumption by placing Lotto tickets on about 25 million two and three-liter milk cartons; about 94% of Australians routinely play Lotto. Critics including the South Australian Lotteries Commission say it is irresponsible to promote a daily staple in such a manner, particularly as minors are encouraged to drink milk. (The Advertiser-Australia).

STOCK MARKET TICKER

As of 10/28/03, 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		23.92 30.10 77.41 45.20 30.55 76.55 29.94 10.32 29.30 17.46 15.96 21.14 26.45 24.91 34.25 35.19 21.20 07.95		+0.15 +0.05 -0.03 +1.09 -0.30 +0.17 -0.01 +0.00 +0.35 -0.10 +0.16 +0.04 -0.27 +0.15 +0.04 +0.14 +0.07 +0.02		+0.01 -0.57 +0.01 +0.70 -0.75 +0.95 -0.01 +0.29 +0.35 +0.02 -0.40 -0.53 -0.55 -0.15 +0.35 +0.17 -0.34 -0.05

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