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November 3, 2004

Dean income dips by 67% .... Parmalat USA restructuring .... New CEO for Ben & Jerry's .... WestFarm sells ice cream operations ..... Global Marketwatch .... Wal-Mart pushes RFID .... Cuba to purchase more U.S. dairy cattle .... Dairy Security Workshop .... Odds-and-Ends .... Stock Market Ticker .... More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Third-quarter net income declined 67% to $40.2 million ($0.25 per diluted share) for Dallas-based Dean Foods Co., compared to $122.2 million in the third quarter of 2003. The loss is partially attributed to a write-off of $32.6 million in deferred financing costs for the third quarter (ending Sept. 30) as well as a $65.9 million gain in last year's third quarter from the sale of the company's frozen pre-whipped topping operations. Excluding those items as well as facility and restructuring costs, the adjusted diluted earnings loss was 12% ($0.46 per diluted share, compared to $0.52 in the third quarter of 2003). Adjusted net income totaled $74.3 million, an 11% decline from last year. Net sales for the third quarter totaled $2.8 billion, a jump of 20% over third quarter 2003, primarily driven by price increases due to record-high raw milk costs and strong volume growth in the company's Branded Products Group. Other boosts to sales included the acquisition of Horizon Organic and Ross Swiss Dairies in 2004 and Kohler Mix Specialties in October 2003. The company reports that its Dairy Group margins will "continue to be negatively impacted by inflationary and competitive pressures" but points out that the company continues to grow milk market share; volume is up 2.6%, Dean's largest increase in five years. The Dean Branded Products Group generated operating margins of close to 11% during the third quarter. For the first nine months of the year, Dean Foods' total net sales increased 20% to $8 billion, compared with $6.7 billion in the first nine months of 2003. Net income totaled $186.5 million, compared with $269.2 million last year. (Company report)

Parmalat USA Corp. is devising a reorganization plan that is centered on the Farmland Dairies LLC unit, which operates in New York and New Jersey. The company's Milk Products of Alabama unit was previously sold to Dallas-based Dean Foods Co. for $21.6 million as part of the company's bankruptcy emergence plan. (Daily Deal/The Deal)

New leadership is in place at Ben & Jerry's Homemade Inc., as Walt Freese will move from the company's chief marketing officer to CEO. He succeeds Yves Couette, who has been heading the South Burlington, Vt.-based Unilever unit since January 2001 and plans to step down by Jan. 1, 2005. During Couette's tenure, total global sales of Ben & Jerry's products increased by 37%, operating margins tripled, the number of retail ice cream scoop shops almost doubled, and the company expanded from operations in five countries to 15. Couette will become senior vice president in Unilever's beverage category. Freese has been part of Ben & Jerry's for more than three years, previously serving as general manager of herbal tea company Celestial Seasonings, Boulder, Colo. He has also held senior marketing roles with Kraft Foods and Nestle. (The Burlington Free Press)

Seattle-based WestFarm Foods has sold its ice cream operations to Northern California's Humboldt Creamery Association. The Nov. 1 deal includes the Darigold brand license, the WestFarm ice cream plant in Los Angeles and ice cream equipment from WestFarm's Seattle facility. The sale is designed to allow WestFarm to focus on its other product lines. WestFarm Foods is the processing unit of Northwest Dairy Association. (Company reports)

GLOBAL MARKETWATCH

Paris-based Danone SA is going to renegotiate its U.S. joint venture contract with Coca-Cola Co. regarding bottled water Evian, which has seen a major slip in sales. Evian is expected to post less than $100 million in U.S. sales for the year, compared to $220 million four years ago. While the current agreement allows Danone to impose a financial penalty against Coca-Cola, management has decided instead to renegotiate the contract by June 2005. Coca-Cola owns 51% of the venture, Danone the remainder. (AFX News)

Toronto-based Arla Foods Inc. has acquired National Cheese Company Ltd., a specialty cheese business with operations in Montreal, Vancouver and Concord, Ontario. Arla Foods Inc. did not disclose how much it paid for the family-owned company, which boasts Tre Stelle as its flagship brand. Parent company and global dairy player Arla Foods amba Denmark is a Danish- and Swedish-owned cooperative. (Company report, Canadian Press)

CUSTOMER CLIPS

This fall, Arkansas-based Wal-Mart Stores Inc. will begin utilizing radio-frequency identification-tagged (RFID) cases and pallets at a Sam's Club store in Plano, Texas. The retailer can then track those items automatically using the electronic tags. While Wal-Mart's official January RFID project launch date is still two months out, dairy processors are among those suppliers that have either started or will start to ship RFID-tagged cases and pallets within the next two weeks. The company will alert customers of cases that contain RFID tags via signs and literature explaining the RFID technology; tags can be removed after purchase. By January, the company will expand RFID from one to three Texas distribution centers and increase the number of participating stores from seven to more than 130. By June, Wal-Mart reports RFID will be live in up to six distribution centers and up to 250 Wal-Mart and Sam's Club locations. (InformationWeek)

Cuba will purchase 100 head of U.S dairy cattle worth $300,000, as part of a larger food deal announced this week at a trade show in Havana. The cattle will be shipped from Vermont by J.P. Wright & Co., which is based in Naples, Fla. This agreement builds on the $7 million dairy cattle deal between Cuba and Vermont that was outlined in D-brief last month. In addition, the Havana agreement included $10 million in wheat and meat products from Louis Dreyfus of Georgia. During the last three years, Cuba has agreed to buy $900 million in U.S. farm goods. (Associated Press)

IDFA NEWS

Register Now for Dairy Security Workshop on Nov. 16
To help dairy processors enhance the security of their operations, IDFA will hold a special, one-time program -- IDFA's Hot Topics: Dairy Security Workshop -- on Tuesday, November 16, 2004, at the Grand Hyatt in Washington, D.C. "In today's environment of heightened concerns, IDFA is working to provide processors with all of the information and tools they need to secure their company's plants and products," said Clay Detlefsen, IDFA vice president of regulatory affairs and counsel. "By attending this workshop, dairy professionals can get fully briefed on the most up-to-date information available on this crucial topic." For an agenda and registration information, IDFA members can click here.

ODDS-AND-ENDS

Lifeway Foods Inc. is rolling out a new line of spreads, Lifeway Cream Cheese Gourmet. Flavors include Plain Whipped, Vegetable, Strawberry, Chives, Apple Cinnamon Raisin, Sun Dried Tomato, Lox and Onion, Honey Mustard, Apricot, and Cheddar Cheese with Horseradish. Sold in 7.5-oz. containers, the product will be available in additional varieties in the coming months. The line will be marketed in specialty and gourmet food stores by the Morton Grove, Ill.-based company. (Company report) .... A federal grant for $50,000 will help the Kirby family's third-generation dairy farm in Maryland's Cecil County put an ice cream processing facility and small shop in place to cater to the local trade. The grant is one of 97 awarded nationally to ag businesses in order to help create new markets and increase farm income; recipients must match grants. A separate grant for $30,000 went to the Garrett County Milk Processing Coalition in Maryland to help fund a feasibility study for potential building of a processing facility for flavored milk, cheese or ice cream. (The Daily Record, Baltimore, Md.) .... Ice cream from Cincinnati's Graeter's (a 133-year-old family-owned ice cream company) was featured in a recent Time magazine article that detailed the 'must-haves' of celebrities. Actress Ashley Judd orders custom pints of Rocky Road; she has also special ordered enough ice cream for the entire basketball team at her alma mater, the University of Kentucky. Graeter's offers 22 flavors at a cost of $70 for six pints, including shipping. (Time)

STOCK MARKET TICKER

As of 11/02/04, 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		26.53 29.95 80.30 43.95 16.99 50.70 12.21 33.45 15.25 20.14 18.65 33.10 30.52 34.80 37.01 14.76 03.32		+0.03 -0.12 -0.10 -0.14 +0.00 +0.17 -0.09 -0.23 +0.09 -0.44 +0.30 -0.28 +0.97 +0.27 -0.04 +0.15 -0.03		+0.54 +0.90 +0.17 +0.20 +0.29 +1.32 -0.03 +0.63 +0.52 +0.18 +1.08 -0.35 +1.71 +1.07 +1.12 -0.12 -0.01
Source: Yahoo! Finance

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ABOUT D-BRIEF

D-brief is written by Dairy Field magazine, a Stagnito Communications Inc. publication, www.dairyfield.com. It is provided for the benefit of the industry by the International Dairy Foods Association (IDFA), www.idfa.org.

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