Deans Foods filed for bankruptcy last month and blamed the downturn of fluid milk as the reason.

I find this explanation lacking.

What killed Dean Foods is a lack of diversification and not reading the signs around them and acting accordingly.

It is true that fluid milk sales have been dropping for years with an overall loss of 20% over the last 10 years, but organic fluid milk is up 25% since 2012. Almond, soy, and rice beverages do cut into fluid milk sales and are up 50%, while oat milk is up an amazing 639% since 2014. Even dairy milk’s eternal best friend, breakfast cereal, has been on a downward path with a 20% loss by volume since 2009. Deans took a further hit when Walmart built its own fluid milk plant, thus cancelling a sizable contract with the company.

Here is my question. At what point did Deans say to itself, “We as a company need to start diversifying our products, because fluid milk is going the way of the print newspaper.”

I believe that if Deans Foods had been watching the signs, there would have been ample time to invest more into its ice cream and cultured products, which continue to show increases in volume. Such a strategic move might have kept the company afloat. Last year Deans did buy Good Karma Foods, a plant-based beverage company, but this feels like a last-ditch effort and obviously it came too late.

The lesson in all this is simple.

Industry trends are all around us. Companies need to carefully watch the ebbs and flows and adjust accordingly in order to stay profitable. If a company chooses to do things the way it always has, then Deans Foods is a shining cautionary tale.

By Brett Roeller
Director of National Accounts, QualiTru Sampling Systems
brett@qualitru.com   Follow Brett on LinkedIn