The Wall Street Journal reports that Dean Foods, the largest milk company in the U. S., has filed for Chapter 11 bankruptcy:
 Dean Foods Co. , the biggest U.S. milk company, filed for bankruptcy protection, a fresh setback to a U.S. dairy industry struggling against declining U.S. milk consumption and rising competition.
Dean and dairy farmers for years have grappled with consumers’ decadeslong move away from traditional cow’s milk, as beverage sales shift toward bottled water, fruit juices and milk alternatives made from soy and oats.
Within the milk business, Dallas-based Dean’s brands have struggled as grocery chains push low-price store brands and in some cases build their own milk plants, reducing their reliance on Dean. A recent jump in milk prices, up 10% over the past three months, boosted costs while Dean has worked to close plants and reduce expenses.
The company said it has secured financing to continue operations and pay employees while it discusses a potential sale to Dairy Farmers of America Inc., the largest U.S. dairy cooperative.
I think there is an important factor in this that goes unmentioned in the article: demographics. Worldwide about 65% of the people are lactose intolerant. In Northern Europe it’s 10%. In parts of Asia and Africa the prevalence is as much as 95%. In Mexico although lactose intolerance is not a major factor, dairy malabsorption is and fresh milk just doesn’t play the same role in the diet that it has over the last century in the United States.
So I suspect that demographic factors including changes in tastes play a role in the decline of the dairy industry. It isn’t the only one. Retail is having similar problems. They’ve needed to adapt to the changes in the population and it isn’t easy.
This development will be inconvenient for me. Dean’s has been the only readily available source for real cream. The stuff that’s generally sold in the stores as cream is actually ultra-pasteurized which won’t whip unless you add thickeners to it which they do. The results in cooking aren’t the same as those when you use real cream. I’ll need to hunt around for another source.
Update
This article from Canada echoes the point I made above:
The overall decline of all types of milk since 2009 may be the result of more dairy milk substitutes available to consumers, such as soy milk and almond milk. Some people are also choosing frozen desserts with alternative bases, such as coconut oil, instead of ice cream. This rise in dairy alternatives may also reflect demand from people who are lactose intolerant or who have specific dietary preferences
The consumption of dairy milk started to tank seriously in 2009 and nobody seems to have a really good explanation for it. It can’t really be explained by alternatives and it doesn’t seem to be related to prices.
Not to worry, DFA has been picking up debtor dairy bottlers for decades.
The DFA is a dairy farmers co-op. They’re Dean’s foods largest supplier and creditor. DFA will take it over and sell half of it to Hiland dairy to manage.
They just need to sell their milk.
What interests me is Dean’s contractual obligations to Central States Pension Fund. They’re first in line at bankruptcy. How long can the co-op stand up?
Dairy farm bankruptcy is at record highs.
I wonder if there is an added penumbrae of reasons for declining dairy consumption, such as the perception that lactose-free food is healthier or lactose is a source of health problems, enabled by labeling (circa 2009?). And of course, is someone in a group (family or otherwise) won’t eat anything with lactose, it starts to impact the rest of the group.
I think a big part of it is more choice. Growing up my choices for something to drink were soda (not generally allowed by my mom), milk, water, and juice.
My kids drink less milk than I did, opting for flavored seltzers primarily. Still, they drink a fair amount of milk. We go through about 2 gallons in a week.
We’re fortunate that we have a milk delivery company – its the same company that delivered milk to my house as a kid – including cream that isn’t ultra-pasteurized.
Well, if you make your living retailing a product off grocery shelves, your linear footage shrinking gets your attention. Soy milk, almond milk, organic milk. A wide and expanding range of fresh juices.
Deans had a division called White Wave which retailed many of these products, it was making money but they had to sell it to pay debt.
I think the dietary aversion is to dairy fats, while skim milk is available nobody really likes it. Despite that, about half of dairy production now goes into cheese, primarily for pizza.
Sadly, the evidence that it’s actually better for you is kind of mixed. And as steve points out, diet studies are generally bad.
Also it’s too bad that major producers don’t make better cheese. Traditional cheese in general may be eaten by people who are lactose intolerant but that’s frequently not the case for the cheese produced by major manufacturers because of the methods they use. Fortunately, much the same thing that happened with beer is happening with cheese. A lot more “craft cheese” is being made than was the case ten years ago and some of it is excellent.
Actually, fluid dairy consumption tanked in 2007 when the price spiked to $5 per gallon due to Chinese demand for whey powder for infant formula (their own domestic supply contains enough heavy metals to kill a baby). (one child policy).
After sales dropped due to the price, they just never recovered, unless you went to $1.99/ gallon, a loss leader.
Australia and New Zealand appear to have met Chinese demand for infant formula since then.