Blog: Dean BestWhere do you sit on the troubles at Dean Foods?

Dean Best | 5 October 2007

The problems at Dean Foods have provoked a wide range of opinions. Some say the US dairy giant’s woes are of its own making; others point to the “perfect storm” of a number of external factors coming together and hitting the business.

Without wishing to sit too much on the fence, I believe Dean Foods has been a victim of factors outside its control and perhaps a lack of foresight on the part of the company’s management.

Sure, rising dairy commodity prices (brought on by growing demand in Asia, by US government policy on biofuels and by the vagaries of the weather) have left Dean Foods – and many other food processors – battling against what many see as an unprecedented jump in costs.

However, as far as Dean Foods is concerned, there is some truth in the argument that the company has brought some of its problems on itself. Some industry watchers believe the company helped create the current over-supply of organic milk in the US through its policy of building “factory-scale organic dairies".

One dairy expert told me this week: "In terms of organic dairy, Dean Foods has helped to create a monster that has now turned around and bit them in the rear end.”

And it seems to have been pretty painful, too.


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