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December 15, 2004

Land O' Lakes president to retire...Dreyer's CEO named to board of San Francisco Federal Reserve Bank...Kraft to close yogurt plant...Parmalat USA files reorganization plan...School vending update...Producer News...Wal-Mart enters Minneapolis grocery market, eyes Ohio, Japan...Former Kmart executives settle civil fraud charges...Winn-Dixie ousts president... Odds-and-Ends...Stock Market Ticker...More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Land O'Lakes Inc. President and CEO Jack Gherty will retire from the Arden Hills, Minn.-based company at the end of 2005. He has served as president and CEO since 1989 and has been with Land O'Lakes for 34 years. While president, he oversaw the company's growth in annual sales from $2.4 billion to more than $6 billion and net earnings jumped from $34 million in 1989 to $84 million in 2003. Additionally, the co-op now has members from 39 states, up from 15 when Gherty started. He also guided Land O'Lakes through a number of growth initiatives including the acquisition of Purina Mills and the merger with Atlantic Dairy Cooperative and Dairyman's Cooperative Creamery Association. (Company report)

T. Gary Rogers, chairman and CEO of Dreyer's Grand Ice Cream Holdings Inc., Oakland, Calif., was named to the board of directors of the Federal Reserve Bank of San Francisco. He was appointed by the Federal Reserve's Board of Governors in Washington, D.C. As a director, Rogers will provide the Federal Reserve System with economic information from his industry and region as well as suggest changes in the Reserve Bank's discount rate. Rogers bought Dreyer's Ice Cream in 1977 with partner William F. Cronk and an investor. He took the company public in 1981. Last year Dreyer's merged with Nestlé Ice Cream Co. LLC to form Dreyer's Grand Ice Cream Holdings Inc. (Company report)

As part of its major restructuring plan, Northfield, Ill.-based Kraft Inc. will close a yogurt-making plant in Otsego County, N.Y., in April, cutting 67 jobs. Production will be transferred to the Kraft plant in North Lawrence, N.Y., after April 8. The Otsego County plant makes Breyers fruit-on-the-bottom yogurt. (Associated Press)

Parmalat USA Corp. filed a plan to exit bankruptcy by liquidating all of its assets except for a small interest in its Wallington, N.J.-based Farmland Dairies. One of Parmalat's creditors, a unit of General Electric, would get 80 percent of the common stock and 100 percent of preferred stock in Farmland, which could continue selling milk in New York, New Jersey and Michigan. Farmland's Atlanta business will be among the remaining assets liquidated. The plan, filed in U.S. Bankruptcy Court in New York, also calls for Farmland to obtain a loan for as much as $110 million to pay expenses once it exits bankruptcy. The court must still approve the plan. The reorganization plan came just as Time magazine published an investigative report detailing the extensive corporate fraud at Italian parent company Parmalat Finanziaria SpA. (The Record, Bergen County, N.J.)

Nationwide, there are 7,000 to 7,500 milk vending machines in schools, and most of those have been installed in recent years, dispensing flavored milk in portable packaging. In Wisconsin, two-thirds of the high schools have milk vending machines (365 machines total), the highest percentage in the country. As a moneymaking project, Future Farmers of America clubs operate about half the vending machines in Wisconsin schools, with school foodservice operating 40 percent. (Associated Press)

PRODUCER NEWS

In an attempt to help producers hurt by the mad cow outbreak, the Canadian Dairy Commission raised industrial milk prices 7.8 percent, about 5 cents more per liter. Industrial milk is sold to processors who make butter, cheese and other dairy products. Dairy producers were hit hard after a single cow was found with the disease 18 months ago. Since then, cows that were selling for around $700 each are barely netting $150 for older animals. Along with the price hike for industrial milk, the commission raised support prices for skim milk powder and butter, effective Feb. 1. Support prices are the prices at which the commission buys and sells products to balance seasonal changes in supply and demand. The support price for butter went up to $6.8695 per kilogram from $6.2968; the price for skim milk powder rose to $5.7282 per kilogram from $5.3928. (Toronto Star)

CUSTOMER CLIPS

Wal-Mart Inc., Bentonville, Ark., plans to enter the grocery market in Minnesota's Twin Cities. Wal-Mart wants to convert three existing stores to Supercenters with grocery products by early 2006. The stores are located in western suburbs Maple Grove, Elk River and Shakopee. A Supercenter has also been discussed for the eastern side of the cities in 2007. Wal-Mart will face stiff competition from Cub Foods, Rainbow Foods, and SuperTarget among others. This expansion continues the retailer's shift to growth in urban markets. The next big city in Wal-Mart's scope is Cleveland. While no deal has been inked, rumors are swirling. The City Council has asked Mayor Jane Campbell to produce a study of how big-box retailers in a planned shopping complex would affect jobs and businesses in adjacent neighborhoods...In other Wal-Mart news, the retail giant is among the bidders for Daiei Inc., a struggling Japanese supermarket chain. (Minneapolis Star Tribune; Plain Dealer, Cleveland, Ohio)

Kmart Corp., Troy, Mich., faces new scrutiny after former executives recently settled civil fraud charges that alleged deceptive accounting. The lawsuit, filed by the Securities and Exchange Commission, claimed that promotional payments from vendors were prematurely counted—or "pulled forward"—based on false documents given to Kmart accountants. These premature bookings caused Kmart to overstate its earnings in 2000-01 by $24 million. The suit named several former Kmart officials and ex-sales managers at Eastman Kodak, Coca-Cola, PepsiCo and Frito-Lay...In other Kmart news, the company is suing a former vice president of purchasing for allegedly stealing millions of dollars in a liquidation scheme. The suit claims William Mayville and two others not associated with Kmart inflated expenses and consulting services connected to liquidations after Kmart filed for bankruptcy in 2002. The suit also alleges the men resold store equipment after telling Kmart it had been given away. (Associated Press)

Jacksonville, Fla.-based Winn-Dixie Stores Inc. ousted President and CEO Frank Lazaran as it continues to struggle against Wal-Mart and other grocery chains. Lazaran joined the chain in June 2003. He was replaced by Peter L. Lynch, former president and chief operating officer of Boise, Idaho-based Albertson's. (Associated Press)

IDFA NEWS

Gold Business Partners: Sign Up Now for Special Session at Dairy Forum
As a special service to Gold Business Partner members, IDFA will present an exclusive 90-minute briefing on January 10 at Dairy Forum that is designed specifically for these valuable industry suppliers. Session topics will include: dairy market insights, with an emphasis on forces that could affect suppliers; business issues in the upcoming congressional session; regulatory updates on allergens and trans fat labeling, as well as new biosecurity rules on recordkeeping; and preparations for Worldwide Food Expo 2005. If you are an IDFA Gold Business Partner, be sure to sign up now for this complimentary session by contacting Cindy Cavallo at ccavallo@idfa.org, 202/220-3505. To review the full Dairy Forum program, click here.

ODDS-AND-ENDS

Forbes Medi-Tech Inc.'s cholesterol-lowering ingredient Reducol has been approved by the European Commission for use in milk-based beverages to be marketed in the European Union. (Company report)...Schepps Dairy, Dallas, Texas, has been rewarding citizens that help stop crime for 31 years with its anti-crime program. Parent company Dean Foods has expanded the program outside Texas to Dean's dairy subsidiaries in Milwaukee, Wis.; Minneapolis, Minn.; Lincoln, Neb.; Grand Rapids, Mich.; and other cities. The program started after a Schepps Food Mart clerk was murdered in Dallas in 1973. Company founder Harmon Schepps offered a $5,000 reward for information. Since then, more than $250,000 has been awarded to tipsters for their assistance in solving crimes (more than $1 million has been offered but many tipsters chose to remain anonymous). (Dallas Morning News)...Judges have crowned the World's Smelliest Cheese, a Vieux Boulogne which emits an odor described as a combination of "damp straw and rotting tangerines." The Vieux Boulongne is soft but firm with a mild, nutty, slightly alcoholic flavor. It is made with cow's milk, washed with beer and aged seven to nine weeks. The contest was led by Dr. Stephen White of Cranfield University, Bedfordshire, England. Epoisses de Bourgogne, a cheese with an odor so pungent it is banned from being taken on public transportation in its native France, finished only tenth. (London Daily Mail)

STOCK MARKET TICKER

As of 12/14/04, market close.

Company/Symbol		Last Trade		Change over Previous Close		Change over Last Week's D-brief
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		32.41 80.34 48.52 18.11 56.50 12.88 35.48 17.51 21.79 19.17 35.85 34.02 38.05 38.93 13.21 04.44		+0.16 -0.01 +1.25 -0.11 +0.57 -0.12 +0.36 +0.47 +0.07 +0.45 +0.84 -0.26 -0.06 +0.19 +0.21 +0.16		+0.91 +0.18 +2.72 +0.26 +2.12 +0.42 +0.97 +1.28 +0.53 +0.32 +0.37 +1.11 +0.49 +1.42 -0.25 +0.37
Source: Yahoo! Finance

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