- Dean Foods announced that Eric Beringause will become CEO, president and a member of the board of directors on July 29. Beringause joins Dean from Gehl Foods, a producer of dairy-based beverages and foods, and has 30 years of experience in the industry.
- In the release, the company also announced that Ralph Scozzafava will immediately step down as CEO and resign from his position on the board.
- Beringause will be tasked with helping to turnaround the dairy company. "He has a long track record of creating value in dairy and consumer products companies, as well as a unique combination of turnaround and operational expertise," Jim Turner, non-executive chairman of the Dean Foods Board, said in the release.
Dean Foods has struggled in recent years and the company's board is hoping an executive shift can change that trajectory. After about five years at the company and not much fiscal improvement, Scozzafava is being pushed out, while Beringause faces an uphill battle in his new role.
Dean's recent earnings continue to disappoint. In May, the company reported a net loss of $0.67 per share for Q1, and earlier this year the company said it was exploring alternative options, including a sale. But Scozzafava remained optimistic despite struggles.
"We have the right plan and we'll continue to execute our five strategic pillars as we take meaningful and aggressive steps to deliver higher earnings and cash flow over the longer term," Scozzafava said in the May earnings call. "We have much to do and we're up for the task."
But whatever plans Scozzafava had to turn the company around did not appear to make any meaningful changes since the call. In the last three months, Dean's shares were down 56%. Earlier this month, the company also increased its borrowing base availability to $265 million to enhance financial flexibility and liquidity. Additionally, reports that Saputo was interested in buying Dean were squashed when the CEO said he wasn't interested.
With such turmoil, it seems like the board believed that Scozzafava was no longer up for the task.
Dean is likely betting that Beringause's experience in the dairy industry and other large companies will help as the company explores strategic alternatives like a sale and continues to work on its cost-cutting plan. Most recently, Beringause served as CEO of Gehl Foods for three years, where the company has expanded some facilities and acquired California Natural Products. Earlier in his career, he held various business development, finance, sales and marketing roles at companies like Nestlé, Nabisco Brands and Pillsbury. Since Gehl is also a dairy producer, Beringause is well acquainted with the struggles of the dairy industry.
Plant-based and other dairy alternatives have grown in popularity nationwide, hurting farms and milk producers. U.S. non-dairy milk sales were up 61% over the past five years, while dairy milk sales plunged 15% from 2012 to 2017, according to Mintel.
As the dairy industry and Dean Foods continue to struggle, Beringause said in the release that his top priority will be "to ensure we have the right footprint and strategies in place to drive sustainable growth and profitability." That strategy includes cost-cutting efforts or diversifying its portfolio, both of which the company has already tried with little success.
To cut costs, Dean Foods closed two milk processing facilities late last year and laid off 207 workers. Earlier in the year, the company shuttered three facilities. Dean also ended more than 100 dairy contracts with the company to curtail how much milk it was purchasing.
As its dairy business hurts, Dean has also been working to diversify its investments in waters, juices and plant-based products. The company bought a minority stake in Good Karma Foods, which sells non-dairy milk and yogurt, and later announced it was taking majority stake in the company. The dairy manufacturer also purchased Uncle Matt's Organic, a maker of probiotic-infused juices and fruit-infused waters, and the manufacturing and retail ice cream business of Friendly's Ice Cream. But these efforts haven't been enough. Dean, which owns DairyPure and TruMoo, saw stocks plunge nearly 70% in the last year.
With Scozzafava out after just two years as CEO, Beringause will likely be expected to turn Dean around fast. But if its continued efforts of cost-cutting strategies and diversifying its portfolio doesn't pan out, then he could be looking to make a sale or potentially face a similar quick tenure.