The news of Dean Foods filing for bankruptcy came after a difficult few years full of disappointing numbers. It announced plant closures and plans to sell the company. Borden’s bankruptcy will be slightly different.
On January 5, Texas-based Borden said that it will use the Chapter 11 court proceedings to pursue a financial restructuring designed to reduce its current debt load, maximize value and position the company for long-term success. It will continue operating ‘business as usual’ under the court's supervision.
The company intends to work closely with creditors, customers and employees to identify value-maximizing restructuring plans that will benefit all stakeholders. Borden emphasized that its situation is distinct from Dean Foods, and that it’s in a better position from an operational standpoint.
“Borden is EBITDA-positive and growing, which means we have solid earnings and are healthy. Dean Foods is not profitable. Borden intends to continue operations and strengthen our position to achieve long-term prosperity, whereas Dean Foods announced its intention to sell substantially all of its assets,” Borden said.
Continued innovation plans
In 2019, Borden indicated it was evolving to meet the modern dairy landscape. In May, the brand re-designed its packaging and re-launched the classic mascot Elsie the cow. They called it a ‘dramatic revival’ in leadership, ownership and focus.
In August Borden revealed its Kid Builder drink in time for back-to-school season. The Chocolate and Strawberry milks contain 50% more protein and 50% more calcium than other 2% milk options, available in both individual and multi-serve sizes.
Also over the summer Borden released three limited edition state fair-inspired milk flavors - Banana Taffy, Blueberry Cobbler and Cotton Candy. And this holiday season, Borden sold holiday drinks Eggnog and Gingerbread Eggnog in a variety of sizes for a limited time.
Tony Sarsam, Borden CEO, told DairyReporter the company will continue with new projects and products as planned, calling innovation “one of the real keys of being successful in this industry.
“We are squarely focused on business as usual. In terms of our employees, we have no plans for any layoffs, and we have no plans to cease any production.”
Sarsam shared that Borden will be introducing a new line of dips this year, in addition to its existing sour cream-based Ranch, French Onion, Jalapeno and Fiesta dips. The 2020 launches will be more ‘high-end’ with ‘greater inclusion,’ with creamy salsa, Mexican street corn and Mediterranean vegetable varieties.
Challenged by raw milk prices and market conditions
In Borden’s official release, Sarsam said, "Borden is EBITDA-positive and growing, but we must achieve a more viable capital structure. This reorganization will strengthen our position for future prosperity.
"Despite our numerous achievements during the past 18 months, the company continues to be impacted by the rising cost of raw milk and market challenges facing the dairy industry. These challenges have contributed to making our current level of debt unsustainable.”
In a statement provided to DairyReporter, the National Milk Producers Federation (NMPF) said, “US dairy remains a strong and diverse industry. Looking more broadly than milk in a glass, per-capita dairy consumption has been on the rise since the 1970s, with 2018, the most-recently reported year, being the most popular year for U.S. dairy since 1962.
“NMPF member cooperatives providing milk to Borden Dairy could be affected by its bankruptcy filing. We will work closely with those cooperatives to provide whatever assistance we can throughout the process.”
The International Dairy Foods Association (IDFA) told DairyReporter, “In light of today’s news about Borden Dairy Co., we are confident that Borden is doing the right thing for the future of their company. For more than 150 years, Borden has been an iconic brand delivering delicious and nutritious dairy products to people across the country, and we are optimistic that future generations will continue to enjoy Borden products."
"As dairy consumption in the United States and around the world continues to grow at historic levels—with per-capita dairy consumption on the rise since the 1970s—our members’ products will continue to evolve to meet changing consumer preferences. Innovative products such as lactose-free milk, extended shelf life products and microfiltered milk, which delivers higher protein and lower sugar, are growing in popularity alongside butter, cheese, yogurt, and frozen desserts."
Sarsam said, "Borden Dairy is a heritage American brand that has been in business since 1857. We have a very tenured workforce of 3,300 people who live and breathe our values of teamwork and creative problem solving, and I am extremely confident and optimistic about our continued success in the future."