By Nicole Zhu
Last week, America’s largest milk producer, Dean Foods, announced that it would be filing for Chapter 11 bankruptcy. While the company has struggled in past years, in no small part because of internal issues, Dean Foods’s failure to thrive is the canary in the coal mine for many traditional food companies. As consumers’ tastes pivot from dairy and meat to more plant-based alternatives—powered by motivations as varied as health benefits and environmental concerns—these companies face a crossroads: adapt to a changing reality or die.
Long before the bankruptcy announcement, Dean Foods had already been in hot water: failed business relations with grocery chain Food Lion, as well as the decision by Walmart—Dean Foods’s largest customer—to start processing its own milk in 2017, forced Dean Foods to terminate over 100 contracts with dairy farmers. Prior to the filing, Dean Foods had reported net losses in eight of its last 10 quarters. According to Vice, “Despite the company's valuation of $74 million, Reuters reported, Dean had approximately $968 million of debt as of this June.”
But by and large, Dean Foods’s decline almost directly correlates with ever-lower milk consumption—which has decreased steadily in the past years, in favor of bottled water and plant-based milk alternatives like oat, soy, and almond milk. According to CNBC, sales of nondairy milks have risen 23% in the last four years. The reasons for the pivot are plentiful: consumers might be sensitive to lactose, or looking for better-tasting or more healthy milks, or even be seeking more environmentally sustainable plant-based options.
This switch from traditional to new forms of our most customary staple—dairy—is not limited to just this area. For protein, many consumers are beginning to shift away from traditional meats such as beef, pork, and chicken, powering the quickly growing meat-alternative industry of foods such as vegetable burgers, seitan, and other non-meat proteins.
While many companies in the field are jumping onto the bandwagon and either acquiring alternative-food companies or foraying themselves into developing those new products, fate was not on Dean Foods’s side: in 2013, the company spun off their soy and almond milk branch, preventing them from joining in on the alternative foods’ industry-wide growth.