Publix expands dairy plant to make more of its store brand milk
- Publix Super Markets is expanding one of its dairy plants in Atlanta, according to The Shelby Report. Part of the regional grocer’s plan is to install specialized equipment to enable the production of its extended shelf life (ESL) product line. The facility will expand in size from 200,000 to 240,000 square feet.
- “The expansion of the Atlanta dairy plant will allow us to increase the volume of dairy production while expanding our customers’ in-store selections,” Brenda Reid, media and community relations manager told The Shelby Report.
- According to the regional grocer’s most recent annual report, it operates six manufacturing facilities throughout the Southeast, including three dairy plants, a deli plant and two bakery facilities.
Other large retailers — including Kroger, Albertsons and Walmart — are investing in milk processing and bottling facilities to make sure they have a steady supply of the commodity. Kroger now processes all the fresh milk its stores sell, while Walmart plans to open a dairy plant in Indiana next year that would greatly reduce the milk it sources from outside suppliers like Dean Foods.
Milk is a main traffic driver for stores. When shoppers run low or out, they have little choice but to visit a supermarket to replenish. And because milk is so frequently purchased, shoppers tend to know a “good” versus not-so-good price on a gallon of milk when they see it. So, getting more shoppers in the door on their fill-in trips means milk must be competitively priced.
Processing and bottling their own milk gives supermarkets more control over their supply. Plus, they can then undercut prices of other suppliers with their own private label brands.
Retailers also say operating their own facilities makes them more agile than traditional milk processors, since they can make other products such as juice and iced tea when milk demand or prices slump, according to The Wall Street Journal. “You can do a lot more in a dairy plant than make dairy,” Albertsons’s senior vice president for manufacturing Evan Rainwater recently told the newspaper.
Controlling their own milk supply is a win for grocers and for consumers. Unfortunately, big dairy suppliers like Dean Foods are finding themselves on the losing end. Dean Foods’ most recent quarterly earnings report show gross profits down 5% and net income down 45% compared with a year ago.
Dean’s branded varieties still sit in the dairy case next to store brands, and analysts have found items like the company's Dairy Pure milk to be as much as 40% more expensive. To offset some of its losses in dairy, the company has been busy expanding into some non-dairy products like juices and infused waters.
As milk prices continue to fall, independent dairy producers are getting squeezed out, and concerns are growing about further consolidation in the U.S. dairy industry. Large retailers not only have the money to invest, but they can also more easily absorb price fluctuations — especially if they control more of the supply chain through their own processing and bottling facilities.
- The Shelby Report Publix Adding 40,000 S.F. To Its Atlanta Dairy Plant
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