November 12, 2003

Researchers increase unsaturated fats in milk via dairy cow feed supplement...Saputo earnings on the rise...Kraft and Dean embroiled in SEC's Fleming investigation...New aseptic line for YoCream...Soy baby formula kills two in Israel...U.S. Royal Ahold units to combine personnel...Supermarket labor disputes update...Dairy People News...Odds-and-Ends...Stock Market Ticker...More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

A new dairy cow feed supplement developed by professors at University of California-Davis can block the formation of saturated fat in milk. The supplement, made of heat-treated whey protein and oil, prevents cow digestive systems from converting feed high in unsaturated fat into the saturated fats found in milk. A year of research included the collection of more than 1,500 milk samples; scientists found the supplement created as much as an eightfold increase in unsaturated fat levels in milk. While the supplement does not lower the caloric count in milk and other dairy products, benefits including improved cardiovascular health are expected. The formula does not require FDA approval, as processes and foods utilized are already permitted (genetic modifications are not involved). The invention has been submitted to the U.S. Patent Office for approval. Pilot projects are underway and are expected be followed with large-scale milk and feed production. (Sacramento Bee- California)

Stronger sales for the U.S. cheese division and better average selling prices for cheese on the U.S. market boosted the net earnings of Canada's Saputo Inc. by 28% for the second quarter of fiscal 2004. Earnings jumped to US$44.4 million (C$58.2 million) for the quarter ending Sept. 30, compared to earnings of US$32 million (C$42 million) in the second quarter a year ago. The company reports sales of US$697.8 million (C$915.5 million) for the quarter, up 6.2% over the same period last year. The U.S. price per pound of cheese was 38 cents higher this year over last, creating about US$41.9 million (C$55 million) in additional Saputo sales. Saputo's U.S. Cheese Division sales totaled US$265.4 million (C$348.2 million) for the quarter, up 8.4% over the US$243.2 (C$319.1 million) for the same period last year. (Canadian Press, company report)

Northfield, Ill.-based Kraft Foods Inc. and Dallas-based Dean Foods Co. may face civil action by the Securities and Exchange Commission (SEC). Dean and Kraft each received an SEC Wells Notice, in which investigators claim the processors helped grocery distributor Fleming Cos. speed revenue booking. The SEC did not criticize the way questioned transactions were posted in the Kraft and Dean accounting books. Frito-Lay is also being investigated for similar actions. Fleming filed for bankruptcy protection in April. (Associated Press; Fort Worth Star Telegram-Texas)

Portland, Ore.-based YoCream International Inc. has started up a new $2.5 million aseptic bag packaging line for frozen smoothies and other beverage products. The line fills aseptic bags ranging from a half-gallon to 5-gallons. The resulting products will be shelf-stable, and are expected to help YoCream serve convenience stores, military installations and international customers. The high-acid line will also package juices, fruits and purees, and other frozen beverage mixes.

A non-dairy kosher baby formula produced by German processor Humana for an Israeli company with U.S. ties is believed to have caused the deaths of two babies in Israel. At least 17 more babies are seriously ill from neurological and cardiological complications. Tests showed that the Remedia brand soy-based milk substitute contained at least 10 times less than the advertised quantity of Vitamin B1 (thiamin). The deficiency caused a condition commonly known as beriberi. Israeli officials plan to file criminal charges against the company for negligence, and two class action suits have already been filed against distributor Remedia. Pittsburgh-based H.J. Heinz Co. bought a 51 percent stake in Remedia in 1999. Humana has stated that it decided to rely on the natural Vitamin B contained in soya instead of adding B1 to the product. (The Jerusalem Post; Agence France Presse; Associated Press)

CUSTOMER CLIPS

As part of its plan to regain its stature as a global retail giant, Royal Ahold NV plans to "re-engineer" its Food Retail division, which includes 9,000 stores in more than two-dozen countries. In the United States, Ahold unit Giant Food LLC of Landover, Pa., will combine some administrative and managerial functions with those of sister supermarket chain Stop & Shop, Quincy, Mass. Ahold previously combined administrative operations of Bi-Lo LLC in South Carolina and Bruno's Supermarkets Inc. in Alabama, as well as a previous consolidation of personnel for Giant Food Stores LLC and Top Markets LLC in New York. Ahold reports it will continue to invest in companies that can become first or second in their respective markets over the next three to five years, while divisions which do not meet company objectives will be sold. The Dutch retailer announced a $3.1 billion write-off last month as a result of accounting issues at its U.S. Foodservice division. While Ahold sales are down for the first half of the year, the retailer reports it made a profit in the first half of this year, in contrast to a loss during the same period a year ago. The U.S. attorney's office in Manhattan and the SEC continue to investigate U.S. Foodservice for accounting irregularities. (The Washington Post)

Supermarket labor disputes update: Talks between the United Food & Commercial Workers union and three Southern California supermarket chains resumed Monday with the help of federal mediators. The meeting marks the first negotiation attempt in nearly a month between the union and Safeway Inc. (Vons and Pavilions), The Kroger Co. (Ralphs) and Albertsons Inc. The strike/lock-out action began Oct. 13. This week, the union started to urge Northern California consumers to boycott Safeway via informational pickets at select stores and radio commercials in Sacramento and the Bay Area. (Associated Press, Sacramento Bee)...The contract for 4,000 Kroger UFCW union employees at 58 central Indiana stores has been extended indefinitely to facilitate the negotiation process; the previously extended contract was due to expire this morning. The extension allows either side to rescind the extension with 72-hour notice. The extension also covers 300 workers at 13 Sav-On stores in northern Indiana and 200 workers at Kroger stores in Indiana cities Richmond and New Castle. Meanwhile, negotiations have ceased in the separate Kroger/ UFCW dispute in West Virginia, Ohio and Kentucky, where a strike involving 3,300 workers also began Oct. 13; 44 Kroger stores remain closed as a result. (Associated Press)...The AFL-CIO and its affiliated unions have created a special emergency strike fund to help UFCW workers. The fund, "Hold the Line for America's Health Care," is separate from UFCW strike benefits. (Associated Press)

DAIRY PEOPLE NEWS

Curtis Kurth, vice president of planning and market analysis for Foremost Farms USA, will retire Dec. 1. Evan Kinser has been promoted to director of fluid milk marketing for the Baraboo, Wis.-based cooperative; he previously served as director of risk management and dairy economics. Kinser will continue to be responsible for the cooperative's risk management program and will also handle Federal Order activities as well as the marketing, sales planning and coordination of fluid milk...Clay Hough and Chip Kunde join IDFA as senior vice presidents. Hough becomes IDFA's general counsel, and will oversee IDFA's international trade, regulatory and scientific affairs; Kunde will oversee legislative affairs, economic policy, grassroots activity and the Ice Cream, Milk and Cheese political action committee (PAC)...Dean Sommer is the new cheese and food technologist for the Tech Support Team at Dairy Management Inc.'s Do it with Dairy® Wisconsin Center for Dairy Research. Sommer has 23 years of professional dairy industry experience, including research for the University of Wisconsin-Madison's Dairy Science Department, numerous technical and management roles with Waupun, Wis.-based Alto Dairy Cooperative and involvement in the FDA HACCP dairy facility pilot program...In Passing: Harold "Babe" Orfitelli, 79, past owner and president of Manchester, Conn.-based Royal Ice Cream Inc., died Nov. 2. (Hartford Courant-Connecticut)...Hubert Rogers, 91, a production manager for Borden Ice Cream Co. for 32 years before his 1976 retirement, died Oct. 30. (Daily Herald-Arlington Heights, Ill.)...Thomas Jefferson Cunningham, 92, a retired ice cream maker for the Dixie Ice Cream Co., died Oct. 29. (Lexington Herald Leader-Kentucky).

IDFA NEWS

One Month Left to Comply with Challenging New Biosecurity Regulations
Companies must be fully compliant with the new biosecurity regulations by the December 12, 2003, deadline - To be sure your company has all the facts, register now for IDFA's Biosecurity Briefing on November 20 in Washington, D.C.! At this one-day workshop, attendees will learn the complete details of what companies must do to fulfill their obligations under new FDA regulations regarding food facilities registration and prior notice of food imports. Participants will be able to actually register their facilities during the program, with IDFA staff helping every step of the way. Plus, attendees will receive an overview on what's next from FDA since two more rules - on recordkeeping and administrative detention -- are coming out soon. For complete agenda and registration information for IDFA's Biosecurity Briefing, click here.
http://www.idfa.org/meetings/2003biosecuritybriefing.cfm

Additionally, IDFA is launching a new online service to assist the dairy and food industries with food facilities registration. IDFA has partnered with an independent company, Registration and Licensing Systems, Inc. (RLS), which specializes in web-based regulatory data registration for government agencies. RLS will be providing its services to the dairy industry exclusively through IDFA. For complete information on the benefits of IDFA's online facility registration service, click here.
http://www.idfa.org/meetings/facilitiesreginfo.cfm

ODDS-AND-ENDS

Under proposed legislation to be voted on next year, the European Commission could ban the term yogurt from use in Britain for what it calls non-conformance to the EC definition of standardized Euro-pudding. Under proposed EC legislation, all yogurt sold in Britain would be labeled "fermented milk." The EC would allow "yogurt" only on the labels of products made with a traditional type of live bacteria. Labels for most existing products in Britain would be required to describe yogurt products as a "mild alternate-culture heat-treated fermented milk," while products containing live bacteria would be allowed to omit the words "heat-treated." The Dairy Industries Association Limited called the planned legislation "totally ludicrous," and is joined in its lobbying against the draft legislation by various European dairy organizations. (The Daily Telegraph-London)...Mayville, Minn.-based Old Fashioned Foods is recalling snack cheese spreads and flavored spreadable cream cheese because of possible contamination with Listeria monocytogenes. No illnesses have been reported in connection with the products, sold under the brand name Old Fashioned Cheese to retail stores throughout Wisconsin, St. Paul-Minneapolis and Rockford, Ill. (Saint Paul Pioneer Press-Minnesota)...The 75th anniversary of Kraft Velveeta cheese product was showcased in a segment on the ABC network's Good Morning America show Nov. 6. On-air personalities discussed their positive associations with the product and taste-tested foods prepared on camera made with Velveeta, including macaroni and cheese, grilled cheese sandwiches and Southwestern cheese dip. Also mentioned in the segment was the history of Velveeta—in 1931, it became the first cheese product to gain American Medical Association approval—and its $332 million in annual sales. (ABC transcript)

STOCK MARKET TICKER

As of 11/11/03, 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		23.86 32.08 77.26 43.86 29.68 77.20 23.85 10.39 29.36 17.86 16.49 20.17 28.71 24.18 34.88 35.37 20.02 07.73		+0.25 +0.73 -0.04 -0.16 +0.09 +0.39 -0.08 +0.12 -0.36 -0.24 -0.31 -0.08 +0.21 -0.20 -0.12 -0.08 +0.01 -0.08		+0.00 +1.38 +0.01 -0.91 -0.13 -0.40 -0.09 +0.01 +0.21 +0.60 +0.04 -0.03 +2.88 -0.56 +0.54 -0.52 +0.00 -0.04
Source: Yahoo! Finance

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