Consumption of cow’s milk has been falling in the last few years. Because of this, dairy farmers have reported lower sales and rising debts. And now, Dean Foods, the largest milk producer in the US has announced it will be filing for Chapter 11 bankruptcy protection.
This follows an industry publication in March, noting that consumers “obsession” with dairy alternative milks was becoming catastrophic for the dairy industry. Rates of consumption are much lower than they have been in the past.
According to a report by the DFA, sales in 2018 were $1.1 billion lower than they were in 2017. The group said that the trend among consumers to switch to other types of milk, such as soy, oat, or nut milks, played a significant role in these changes and a decline in profits.
Dean Foods said that it’s seen a huge decline in sales, and this, along with rising debts, have forced it into bankruptcy in order to try and maintain its existing business functions. Next, the company says it aims to focus on continuing with its pension payments for current and retired employees.
The company added that it’s currently involved in “advanced discussions” with the DFA (Dairy Farmers of America, Inc.) over the possibility of buying “substantially all assets” of the company.
Dean Foods had previously tried to adapt to changes in the market. However, due to the decline being so strong, it has been hard to overcome. The company said it aims to continue providing its customers with an “uninterrupted supply of high-quality dairy products”.
CEO Eric Beringause said in a statement: “The actions we are announcing today are designed to enable us to continue serving our customers and operating as normal as we work toward the sale of our business. We have a strong operational footprint and distribution network, a robust portfolio of leading national brands and extensive private label capabilities, all supported by approximately 15,000 dedicated employees around the country.”