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Leading Dairy Processors File For Bankruptcy Amid Slumping Milk Consumption

The dairy industry is hard hit as consumers gravitate to plant-based options to dairy such as almond, soy and oat beverages. Dean Foods, the country's biggest dairy processor, filed for Chapter 11 bankruptcy protection in November and Borden Dairy Co., followed close behind with its filing on Dec. 5. This news should prompt convenience service providers who haven't already done so to respond to customers' growing desire for plant-based milks. Dallas, TX-based Dean Foods, which has 16,000 employees and 6...

January 8, 2020 by Emily Jed

The dairy industry is hard hit as consumers gravitate to plant-based options to dairy such as almond, soy and oat beverages. Dean Foods, the country's biggest dairy processor, filed for Chapter 11 bankruptcy protection in November and Borden Dairy Co., followed close behind with its filing on Dec. 5.

This news should prompt convenience service providers who haven't already done so to respond to customers' growing desire for plant-based milks.

Dallas, TX-based Dean Foods, which has 16,000 employees and 60 processing plants nationwide, has reported a net loss in seven of its last eight quarters. Borden, also based in Dallas, operates 12 milk processing plants and distributes nearly 500 million gallons of milk annually and reported losses of $42.4 million in 2019.

Borden chief executive Tony Sarsam cited the rising costs of raw milk and market challenges as leading to the decision to file for bankruptcy.

Dairy farmers have been squeezed by changes in the international milk market and domestic oversupply. Last year, the Dairy Farmers of America, the country's largest dairy cooperative, cited lower average milk process for annual net sales of $13.6 billion, a $1.1 billion decrease from 2017. More than 2,700 dairy farms have gone out of business in the past 18 months, Borden noted in its filing.

Contributing to the decline is a rise in consumption of plant-based milks, with a 14% spike in U.S. sales in the past two years, according to a July report from the Plant Based Foods Association. Almond-, oat- and coconut-milk lattes have become mainstream in coffee shops and sales of oat milk especially have been skyrocketing.

News reports also point to stagnating breakfast cereal sales contributing to the decline as protein bars, yogurts and other on-the-go breakfasts have replaced a morning bowl of cereal.

Both companies will continue to operate during their restructuring.

Click here to read more from The Washington Post and here for a Forbes report.