Dean Foods reports Q3 volume loss and stalled Walmart plant operations

By Mary Ellen Shoup contact

- Last updated on GMT

To help drive growth, Dean Foods is focusing on building the brand equity of its DairyPure brand through a new product line launch and additional marketing.
To help drive growth, Dean Foods is focusing on building the brand equity of its DairyPure brand through a new product line launch and additional marketing.
Dean Foods reported a 6.6% decrease in fluid milk sales for Q3/17 compared to last year, causing the company to lower its full-year guidance from $50m to $75m to between $10m and $20m.

The volume decline is triple the 2.2% volume decline for the US milk category as reported by the USDA. In addition to the overall trend of declining fluid milk sales, the company said natural disasters such as the hurricanes that destroyed parts of Florida and Texas resulted in a loss of several million gallons of sales volume.

However, Dean Foods remains encouraged that it has won new business that will translate into roughly 40m additional gallons of milk on an annual basis.

“We expect to begin shipping this volume late this year and on into early 2018,”​ Dean Foods CEO Ralph Scozzafava said during the Q3/17 earnings call.

When asked by analysts about the progress of Dean Foods’ partnership with Walmart​ to manufacture its private label milk brand, Scozzafava said that the Indiana plant is going through “normal start-up glitches”​ and that it will not be able to meet its December 2017 launch date.

The company is now aiming for a potential March 2018 launch date.

Product innovation

Looking ahead, Scozzafava said the company will continue to focus on reducing its cost structure to drive efficiencies through its OPEX 2020 productivity program.

Dean Foods also has plans to build the brand equity of its brands, particularly DairyPure, through new product innovation and improved marketing.

“We'll build brand equity in DairyPure with a new digitally-led advertising campaign that we believe will break through and really connect with consumers, drive brand equity, and increase household penetration of the brand,”​ he said.

In addition, DairyPure will enter the emerging single-serve flavored-cottage cheese category to play in high protein and on-the-go convenience snacking trends being driven by millennial consumers.

The company’s new product line, DairyPure Mix-Ins, combines its cottage cheese with fruit and nuts, and contain between 15 grams and 17 grams of protein, the company said.

“DairyPure Mix-Ins scored very high in consumer testing and is receiving strong customer response through our initial selling process, which is currently under way,”​ Scozzafava said.

“I look forward to sharing more about Mix-Ins in 2018.”

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