Thursday, November 14, 2019

ICYMI: "Dean Foods, America’s biggest milk producer, files for bankruptcy"

Milk has been a tough business for at least a decade and although we've seen the ignoranti ascribe the industry's travails to trade war or politics or somesuch, the truth is milk prices have not even kept up with inflation over the last century.* This is in part because of overproduction and in part because of changes in consumer behavior - non-milk drinking, milk substitutes, soy, almond etc.
So the whole supply chain is seriously stressed.
From CNBC:
  • Dean Foods announced that it has filed for Chapter 11 bankruptcy.
  • The Dallas-based milk processor said it is engaged in “advanced discussions” with the Dairy Farmers of America about a potential sale.
  • Dean Foods’ business has struggled as more consumers turn to nondairy milk or buy private-label products.
Dean Foods on Tuesday announced that it has filed for Chapter 11 bankruptcy protection.
The Dallas-based milk processor said that it plans to use the Chapter 11 proceedings to keep running the business, and address debt and unfunded debt obligations as it seeks to sell the company. Dean Foods has secured commitments for $850 million in debtor-in-possession financing, a type of funding for companies in financial distress.
https://fm-static.cnbc.com/awsmedia/chart/2019/11/12/111219_declining_milk_consumption.1573571811242.png
Customers are expected to receive their dairy products without any interruptions....MUCH MORE
*I haven't checked recently but one stat that comes to mind is a gallon of milk at retail that cost 82 cents in 1950 now goes for $3.50, a four-fold increase in nominal price while the CPI is up almost 11-fold in the same 70-odd years.
That's a tough business.