America is not drinking milk much, forcing its biggest milk-producing company file for bankruptcy

People's shift to soda, juice, almond milk and other food items has seen a steady drop in demand and it has left the milk-producing firms to struggle. The demand for butter and cheese has not been affected though.


                            America is not drinking milk much, forcing its biggest milk-producing company file for bankruptcy

America has seen a reduction in its milk consumption, so much so, that its biggest milk producer filed for bankruptcy on Tuesday, November 12. Dean Foods, the decades-old Dallas-based company blamed the consumers who have reportedly taken to alternative drinks like soda, juice and almond milk, for its misfortune. 

According to a report in the Associated Press, the company said it might sell itself to the Dairy Farmers of America, a marketing cooperative owned by the farmers. 

Best of efforts could not turn fortunes around: CEO

“'Despite our best efforts to make our business more agile and cost-efficient, we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption'.” Dean Foods Company's President and CEO Eric Beringause said in a statement.

A woman shops for milk in a grocery in Chicago, Illinois. Despite the bankruptcy of Dean Foods, the price of milk was predicted to remain high in 2019 (Photo by Tim Boyle/Getty Images)

Statistics raise an alarm for milk producers by pointing out that the quantity of liquid milk consumed per capita in the US has gone down by more than 40 percent since 1975. While the Americans still gulped down 24 gallons a year in 1996, it came down to 17 gallons in 2018. 

The popularity of beverages like tea and sodas and the growing use of protein bars, yogurts, and other instant breakfast items have hurt milk’s demand. Besides, health and animal rights concerns have also added to the white liquid’s woes as people have shifted choices to non-dairy alternatives. 

Oat milk sales go through the roof; cow milk sales drop

To give one example, while oat milk sales in the US has gone up by a whopping 636 percent over the past one year to worth over $52 million, sales of cow milk has gone down by 2.4 percent in the same time, AP cited Nielsen data as showing. 

However, a fall in milk demand doesn’t mean the Americans have given up on butter and cheese as their consumption has gone up since 1996, compelling Mark Stephenson, director of dairy policy analysis at the University of Wisconsin-Madison, to say that the people of the US are eating their dairy instead of drinking it. 
 
All this eventually affected Dean Foods’ business which earned 67 percent of its sales from fluid milk in 2018, as per its annual report. A firm that employs 16,000 people and runs 60 processing facilities across the US, Dean Foods received a big blow last year when Walmart opened its own milk-processing unit in Indiana. Dean has put its finances in order under Chapter 11 bankruptcy besides lining up almost $850 million in financing from lenders. 

Dean’s woes come at a time when dairy farmers are struggling with prices because of overproduction. The US is the world's second-biggest producer of milk after India, which produces 21 percent of world's milk.

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