Dean Foods, the largest milk processor in the US, filed for bankruptcy this week after posting significant financial losses during the past year. The company has unsecured debts of $850m (€770m) and said it is in talks with Dairy Farmers of America regarding a potential asset sale.Based in Dallas, Texas, Dean Foods has endured a very difficult year after losing a supply deal with its biggest customer, Walmart, in 2018. Walmart, the largest supermarket chain in the US, ended its liquid milk contract with Dean Foods in 2018 after it opened its own milk plant in the state of Indiana. According to Dean, the liquid milk contract with Walmart accounted for almost 475m litres every year.
Dean Foods, the largest milk processor in the US, filed for bankruptcy this week after posting significant financial losses during the past year. The company has unsecured debts of $850m (€770m) and said it is in talks with Dairy Farmers of America regarding a potential asset sale.
Based in Dallas, Texas, Dean Foods has endured a very difficult year after losing a supply deal with its biggest customer, Walmart, in 2018. Walmart, the largest supermarket chain in the US, ended its liquid milk contract with Dean Foods in 2018 after it opened its own milk plant in the state of Indiana. According to Dean, the liquid milk contract with Walmart accounted for almost 475m litres every year.
Walmart’s new milk plant has the capacity to process almost 380m litres of liquid milk every year and serves up to 600 Walmart stores across the US. For the first half of its 2019 financial year, Dean Foods reported operating losses of almost $130m (€120m).
The company blamed the heavy losses on the end of the Walmart supply contract, higher farmgate prices for raw milk and a general decline in liquid milk consumption among US consumers. The company has also faced increased competition from the rising popularity of alternative drinks such as almond and soya milks.
Shares in Dean Foods have collapsed almost 80% in value this year, making the company one of the worst performers on the US stock market in 2019.
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