- Dean Foods has acquired a minority stake in Good Karma Foods, which makes non-dairy milk and yogurt, according to Just Food.
- Dean Foods is already the largest milk supplier in the U.S., and the company’s investment will allow Good Karma to more quickly expand distribution and increase investments in brand building and product innovation.
- Good Karma will continue to be led by its existing leadership and will operate as an independent company.
The move to invest in a competitor that is making inroads in the vegan space is a savvy one for Dean Foods. It allows the company to enter the space without having to devote its own manpower and resources. This move steals a page from the playbook of meat giant Tyson Foods, which acquired a 5% stake in plant-protein-based Beyond Meat in October.
Although Dean Foods is at the top of the dairy game, Things haven’t been too rosy for those in the milk industry of late. Demand for dairy as a whole has been decreasing, forcing farmers to dump millions of pounds of milk in the last 18 months and causing prices to drop across the board. In 2016, the U.S. Department of Agriculture offered dairy producers approximately $11.2 million in financial assistance to help deal with the industry’s challenges.
It’s no wonder that milk companies are looking closer at alternative milk products, which are rising in popularity.Mintel released a study that revealed that U.S. non-dairy milk sales grew 9% in 2015, while dairy milk sales declined 7% over the same period.
While some dairy providers have fought the tide of alternative products, or completely changed their business model to accommodate the trend, Dean Foods has decided to use its position to embrace the movement. This is a smart partnership on both sides of the equation. Good Karma now has the money behind it to increase both marketing and production and get will wind up in more stores. Meanwhile, Dean Foods is diversifying its portfolio, which could come in handy if the dairy industry continues to fall out of favor. A similar strategy, analysts say, was behind yogurt giant Danone's $12.5 billion takeover of organic foods manufacturer WhiteWave, which was completed last month.