Dean Foods Case Analysis

Dean Foods Final Memo

• Problem or Opportunity

o (Problem #1) Changes in consumer behavior have forced Dean’s to form a new business model in an effort to maintain and possibly increase their current market share.

o (Problem#2) Dean Foods has a channel management issue from the producer level, all the way up to the retail level.

o (Problem #3) The emergence of private labels (i.e. Kroger, Wal-Mart)

• Causes of Problem/Opportunity/Factors-Trends

o (Explanation #1) In today’s fast paced world where fewer meals are eaten at the home, consumers are looking for convenient products. Due to the fact that milk needs to be constantly refrigerated and has a very short shelf-life, most consumers do not classify it as a convenient choice. Portion size has also been an issue. Milk is most commonly sold in gallon and half gallon containers, and this size is no longer appealing to the modern customer.

o (Explanation #1 Cont.)In years past the population of the United States was not very diverse. With increasing diversity in our country, the number of people who are lactose intolerant is also growing at an alarming rate. Along with this the nutrients that have always been milk’s “selling points” are now being added to other beverages such as orange juice and sports drinks. With many substitutes available for the nutritional benefits that milk offers, this is causing a decrease in milk consumption.

o (Explanation #2) With the consolidation of the industry from a producer standpoint, logistics and shipping have become pressing issues. When your product has such a short shelf-life you are constantly challenged to provide the freshest product possible to the consumer. As the number of dairy farmers in the country continues to lessen, this also decreases Dean’s scale opportunities. With bigger farms in fewer places their growth model has become dated and their margins have decreased.

o (Explanation #2 Cont.) National retailers have entered the market; putting...