Dive Brief:
- Dean Foods has agreed to a 50-50 strategic joint venture with independent farmer cooperative CROPP, maker of the Organic Valley milk and dairy products brand, according to a news release.
- Dean Foods' processing services and extensive refrigerated distribution network will help CROPP grow the Organic Valley milk brand.
- Dean Foods benefits by expanding its portfolio to include a selection of Organic Valley's "recognized brands and products, marketing expertise, and access to an organic milk supply from America's largest cooperative of organic dairy farmers," the news release said.
Dive Insight:
This partnership makes sense for both parties and is indicative of an increasingly collaborative milk industry. As major dairy companies struggle with top-line growth, they are looking to partner with or acquire milk producers in the natural and organic sectors to meet consumers' changing demands.
Danone had this idea earlier this year when it acquired WhiteWave, whose portfolio includes a number of fast-growing plant-based and premium dairy products ranging from milk and ice cream to butter and yogurt. Dean Foods has taken a different approach by pursuing a partnership rather than attempting to acquire the CROPP cooperative.
Dean Foods is able to enjoy half of the profits generated by the Organic Valley milk products that fall under the partnership's purview without having to spend the capital to acquire the brand outright. The company may also be able to leverage the brand's connections with organic dairy farmers to expand DairyPure or its other products with more organic and premium options.
However, while the growth of organic dairy remains strong, it's important to note that some producers in this space have seen their sales growth slow in recent quarters. In its third-quarter earnings report last week, WhiteWave posted 5% sales growth in its premium dairy segment compared to 11% growth in the second quarter and 16% in the first quarter.