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December 22, 2004

CoolBrands to acquire Kraft's yogurt business .... Shullsburg Creamery receives cheese plant grant .... PBM Nutritionals to purchase Wyeth plant .... Whey-based edible food wraps developed .... Global Marketwatch .... Dairy labeling workshop set for Jan. 25 .... Progress made between California union, supermarkets .... Stater Bros. reports record sales .... New board chairman for Wild Oats .... Odds-and-Ends .... Stock Market Ticker .... More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Toronto-based CoolBrands International Inc. plans to acquire the Kraft Foods Inc. yogurt business for about $59 million. The purchase, to be made by CoolBrands' wholly owned subsidiary Integrated Brands Inc., includes the licensing for the Breyers, Creme Savers and Light 'n Lively brands; those products have a combined 2004 net revenue of $90 million. The deal also includes Kraft's yogurt processing facility in North Lawrence, N.Y. The transaction is subject to regulatory approval and is expected to be completed in the first quarter of 2005. (Company report)

The Shullsburg Creamery in Shullsburg, Wis., will get back into the cheese business with help from a $27,000 state grant to assist with site and engineering costs for a new 22,000-square-foot cheese plant. The company ceased cheese production in 1994. It now plans to create a line of small batch, American-style specialty cheeses carrying the Shullsburg Creamery label. The grant is part of Gov. Jim Doyle's "Grow Wisconsin" initiative to spur reinvestment and innovation in Wisconsin's dairy industry. (Telegraph Herald, Dubuque, Iowa)

PBM Nutritionals Inc. has agreed to purchase the Wyeth Nutritionals infant formula manufacturing facility in Georgia, Vt. The location is capable of producing 33 million pounds of powdered infant formula annually. In 1997, PBM became the exclusive U.S. marketer and distributor of Wyeth's infant formula products. Wyeth (formerly American Home Products) and PBM entered into an exclusive supply arrangement to launch the first store-brand infant formula in the United States. PBM currently distributes store-brand infant formula products to more than 20,000 retail locations in the United States and Canada. (NewsRx.com)

Edible food coatings derived from whey have been developed by a University of California-Davis food scientist. Used to help prevent food spoilage, the whey protection can either be a smooth, glossy coat or a thin plastic-like film. The whey coating is not intended to replace traditional packaging entirely; food would still have to be protected by another barrier, such as a bag or box. However, edible films could cut down on the amount of throw-away packaging required, such as the bag-in-box or plastic-plus-foil approaches used now. The research has been supported by the California Dairy Research Foundation and Dairy Management Inc. For more information, visit www.ediblefilms.org. (Associated Press)

GLOBAL MARKETWATCH

Italian dairy giant Parmalat Finanziaria SpA owes nearly US $26 billion to creditors, including major international banks, a judge ruled last week in a decision that will affect who will become a shareholder in the reorganized company. The Italian judge recognized claims for money from Bank of America Corp. and Citigroup Inc., despite attempts from the company's new management to have them excluded. Meanwhile, Parmalat's government-appointed turnaround commissioner Enrico Bondi believes that the banks were complicit in the company's collapse; he has filed lawsuits against 45 financial institutions under Italian bankruptcy law. Since the collapse, Italian prosecutors have sought indictment of 32 of Parmalat's former managers, directors, auditors and bankers. The Italian court handling Parmalat's insolvency case is expected to release a list of valid debt claims tomorrow. (Associated Press; The Brockville Recorder and Times, Ontario) .... In other Parmalat news, the Dutch securities regulator intends to fine Parmalat's Rotterdam-registered subsidiaries after apparent market abuse was discovered during a year-long inquiry. Parmalat raised more than US $4 billion through bonds issued by Rotterdam-registered holding and financing companies. A decision on fines has not yet been announced by the Netherlands Authority for Financial Markets. Some Parmalat employees involved in the Dutch case have already been arrested in Italy. (National Post's Financial Post & FP Investing, Canada)

Five executives from one of China's biggest dairy companies, Yili Corp., are under investigation by the China Securities Regulatory Commission for possible embezzlement. The men are under investigation for "economic problems" and suspected embezzlement related to bond dealings and management buyouts; those detained by police include the chairman and chief financial officer. The company is based in the northern region of Inner Mongolia. (Associated Press) .... In other dairy news from China, a Chinese court ordered two shopkeepers who sold fake infant milk powder to pay $8,950 in compensation to the family of a one-year-old boy whose head swelled and limbs wasted away from malnutrition after drinking the nutrient-void formula. More than 200 infants were made ill by the formula earlier this year; at least 12 babies died. More than 130 merchants, milk producers and officials were arrested, but the government hasn't reported what happened to most of them. Regulators have forced 54 substandard milk powder producers to close as a result. (Associated Press)

CUSTOMER CLIPS

A potential work stoppage at northern California supermarkets was avoided with Sunday's tentative contract agreement between the United Food and Commercial Workers and retailers Safeway Inc., Albertsons Inc. and The Kroger Co.-owned Ralphs chain. The contract covers about 8,000 employees at 170 stores. Workers are expected to vote on the agreement by mail in the coming weeks. Both sides made concessions to avoid a strike/lockout like the one in southern and central California that kept more than 50,000 grocery workers off their jobs for several months earlier this year and resulted in more than $1.5 billion in lost sales. In other news, a tentative contract was also reached Friday between UFCW and Raley's Inc., encompassing 6,500 employees and 100 stores owned by the Sacramento-based, privately held retailer. This progress could help ease negotiations between stores and about 30,000 union members in the San Francisco area; the previous contract there has been extended to Jan. 15. (Los Angeles Times)

Colton, Calif.-based Stater Bros. Holdings Inc. announced record sales and earnings for its 52-week fiscal year that ended Sept. 26, 2004. Sales for fiscal year 2004 were $3.7 billion, up 34.5% compared to sales of $2.8 billion in FY2003. Sales for its fourth quarter of 2004 were $840.9 million, up 18.9% over the same period last year. A privately held supermarket chain of 159 stores in southern California, the company reported record net income of $71.8 million for FY2004, compared to $10.1 million in FY2003. The results for the fourth quarters of 2004 and 2003 reflected net income of $12.7 million and $2.6 million, respectively. The company notes results were "favorably impacted" by the southern California strike affecting other area retailers earlier this year. (Company report)

Wild Oats Markets Inc., Boulder, Colo., reports that Robert Miller has been elected to serve as the non-executive chairman of the company's board of directors. He currently serves as the non-executive chairman of the board of Rite Aid Corporation and was the CEO of Rite Aid from December 1999 until June 2003. Prior to that, he served as vice chairman and chief operating officer of The Kroger Co. following the chain's 1999 acquisition of Fred Meyer Inc., where Miller had served as CEO since 1991. Miller started his food retail career at Albertson's Inc., where he spent 30 years in several senior management positions. At Wild Oats, he replaces John Shields, who stepped down as chairman earlier this year but continues to serve as a board director. (Company report)

IDFA NEWS

Register Now: New Dairy Labeling Workshop on January 25
Dairy processors will need to make labeling changes soon to comply with federal rules, so IDFA has just added a new program to its educational calendar, IDFA's Labeling Workshop: Making the Change, set for January 25 in Washington, D.C. Within the next 12 months, dairy manufacturers must comply with new Food and Drug Administration (FDA) regulations regarding food allergens and trans fat content. In addition, many processors are looking to update their labels in order to promote appropriate health and nutrition claims, including the dairy/weight-loss connection. At this one-day workshop, IDFA will cover what dairy processors need to know as they make labeling changes, whether they are mandatory or for better marketing. For complete details or to register, click here.

ODDS-AND-ENDS

Orrville, Ohio-based Smith Dairy has launched Splenda-sweetened SMITH'S No-Sugar-Added Chocolate Lowfat Milk. The product contains 31% fewer calories, 54% fewer carbohydrates and 54% less sugar than regular lowfat chocolate milk. The milk is packaged in half-pint, gable-top cartons featuring school-themed designs. The product joins the six-flavor line that Smith's currently offers to schools and foodservice operators in Ohio, Kentucky and Indiana. For the holidays, Smith Dairy also rolled out a new flavor in its popular Moovers eggnog line, English Toffee. (Company report) .... A truck accident resulted in a 4,500-gallon milk spill in Marin County, Calif., last week. The driver of the truck was uninjured; no other vehicles were involved. The truck overturned, rupturing the tank. Milk flowed across the road, down a hillside and into a creek. The California Department of Fish and Game responded to the accident to oversee milk cleanup. (The San Francisco Chronicle) .... Germany may be known for its beer, but at least one German politician is calling for milk sales at 2006 World Cup games with a letter campaign to soccer officials. Coca-Cola has exclusive rights to sell nonalcoholic beverages at World Cup stadiums in Germany, but denies reports that it has banned milk sales. Coca-Cola states that it returned the milk sales rights to World Cup organizers in October. (Associated Press) .... Note: D-Brief publication will resume on Jan. 5 -- Happy Holidays!

STOCK MARKET TICKER

As of 12/21/04, 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		32.42 80.30 48.91 17.72 54.92 13.22 35.30 17.00 21.35 19.50 36.60 34.88 38.58 38.75 13.75 04.58		+0.19 +0.01 -0.21 +0.12 -0.16 +0.02 -0.30 +0.05 +0.37 +0.42 +0.40 +0.46 -0.19 -0.29 +0.35 -0.02		+0.01 -0.04 +0.39 -0.39 -1.58 +0.34 -0.18 -0.51 -0.44 +0.33 +0.75 +0.86 +0.53 -0.18 +0.54 +0.14
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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