US dairy sector struggling under severe pressure as the consumption habits of Americans shift
The U.S. dairy industry, the largest in the world, is under severe pressure as the consumption habits of Americans shift, data show.
US Dairy Sector Struggling – The amount of liquid milk consumed per capita in the U.S. has tumbled more than 40% since 1975
Borden Dairy filed for bankruptcy protection, the second major U.S. dairy to do so in as many months. Borden produces nearly 500 million gallons of milk each year for groceries, schools and others. It employs 3,300 people and runs 12 plants across the US.
American refrigerators are increasingly stocked with juice, soda and milk substitutes made from soy or almonds. At the same time, protein bars, yogurts and other on-the-go breakfasts have replaced a morning bowl of cereal. That has hammered traditional milk producers like Borden, which was founded in 1857.
Milk Consumption
The amount of liquid milk consumed per capita in the U.S. has tumbled more than 40 percent since 1975. Americans drank around 24 gallons a year in 1996, according to government data. That dropped to 17 gallons in 2018.
As milk consumption has fallen, dairy farms have closed their doors. In court filings, Borden said 2,730 U.S. dairy farms have gone out of business in the last 18 months alone. The remaining farms can command higher prices, but that pinches Borden, which can’t charge consumers more because of pressure from big competitors like Walmart. Walmart opened its own milk processing plant in Indiana in 2018.
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“Despite our numerous achievements during the past 18 months, the company continues to be impacted by the rising cost of raw milk and market challenges facing the dairy industry,’’ said Borden Chief Executive Tony Sarsam in a prepared statement. “These challenges have contributed to making our current level of debt unsustainable.’’
Boden Sales
US Dairy Sector Struggling – Borden tried to revive sales by relaunching its iconic mascot Elsie
Borden tried to revive sales by relaunching its iconic mascot Elsie, the smiling cow that first appeared on milk cartons in the 1930s. It also released new products like gingerbread-flavored eggnog and Kid Builder, a children’s milk with higher levels of protein and calcium designed to compete with Fairlife, a trendy milk brand made by Coca-Cola Co. Borden said sales rose, but not enough to offset broader trends in the industry.
US Dairy Sector Struggling – Dean Foods, the nation’s largest milk producer, filed for bankruptcy protection last year
Dean Foods
Dean Foods, the nation’s largest milk producer, filed for bankruptcy protection last year. Both dairies are based in Dallas, Texas. The two companies controlled about 13.5 percent of U.S. milk sales last year, according to Euromonitor, a consulting firm.
Like Dean, Borden said it will continue to operate during its restructuring. Late last month, a Texas federal bankruptcy court allowed Dean to access $850 million in debtor-in-possession financing.
