American Agriculturist Logo

Liquidation of Dannon’s Stoneyfield holdings, forced by U.S. Department of Justice, roils organic milk market. Buyers line up. Impact still undetermined.

John Vogel, Editor, American Agriculturist

April 3, 2017

2 Min Read
UP FOR GRABS: Stonyfield’s organic brands and its market share will soon be on the auction block.

This week, the organic milk industry will be churning the impact of Groupe Danone’s shedding of its Stonyfield division, the world’s largest organic yogurt manufacturer and a major Northeast organic milk buyer. It’s doing so to avoid an antitrust run-in with the U.S. Department of Justice.

The divesture would also clear the path for Danone to move forward with its proposed acquisition of WhiteWave Foods. Danone, the French dairy giant, already owns Horizon and Wallaby brands.

Stonyfield, based in Londonderry, N.H., churns $370 million in annual sales. That makes it a tasty deal with analysts estimating a purchase price of more than $700 million. Potential big-name buyers, analysts speculate, include Chobani, Coca-Cola, Dean Foods, General Mills and PepsiCo.

Dampening a monopolistic move
In 2016, the Cornucopia Institute, an organic industry watchdog, formally challenged the WhiteWave acquisition in DOJ filings, noting its negative economic impact on U.S. organic dairy farmers. “We openly questioned whether Danone was interested in WhiteWave because of its role in organic dairy,” noted Mark Kastel, institute co-director. The divesture suggests Danone is more interested in WhiteWave’s dominance in the growing, more profitable “plant-based” beverage category.

Danone CEO Emmanuel Faber confirmed it in a company news release: “As part of the agreement in principle with the DOJ, we made the strategic decision to divest Stonyfield as it allows us to take a major step toward completing the WhiteWave transition expeditiously.”

WhiteWave brands are top sellers in their categories. Horizon organic milk controls nearly 25% of the organic milk market, while their Silk brand is a leader in plant-based beverages.

Danone owns a 21% stake in the Lifeway organic kefir brand. Adding WhiteWave’s Wallaby and Horizon Organic brand yogurts to Danone’s existing market share would have allowed the dairy conglomerate to control a sizable slice of the U.S. organic market.

The organic churn
Organic Valley, the No. 2 organic milk brand, is a member-owned farmer cooperative that has been the longtime raw milk supplier to the Stonyfield yogurt brand.  If, after its acquisition, Danone had decided to dump Organic Valley, a Horizon competitor, as a supplier, it could have left only one major purchaser of farm milk in some U.S. regions, New England for one.

Organic Valley just launched a 50-50 joint venture with Dean Foods, the largest U.S. milk bottler, to process and market organic milk. Dean, WhiteWave’s former owner, has been without an organic offering since the spin-off of its former branded products division. The Stonyfield sell-off may put Dean Foods in a front-row seat at the auction.

 

About the Author(s)

John Vogel

Editor, American Agriculturist

For more than 38 years, John Vogel has been a Farm Progress editor writing for farmers from the Dakota prairies to the Eastern shores. Since 1985, he's been the editor of American Agriculturist – successor of three other Northeast magazines.

Raised on a grain and beef farm, he double-majored in Animal Science and Ag Journalism at Iowa State. His passion for helping farmers and farm management skills led to his family farm's first 209-bushel corn yield average in 1989.

John's personal and professional missions are an integral part of American Agriculturist's mission: To anticipate and explore tomorrow's farming needs and encourage positive change to keep family, profit and pride in farming.

John co-founded Pennsylvania Farm Link, a non-profit dedicated to helping young farmers start farming. It was responsible for creating three innovative state-supported low-interest loan programs and two "Farms for the Future" conferences.

His publications have received countless awards, including the 2000 Folio "Gold Award" for editorial excellence, the 2001 and 2008 National Association of Ag Journalists' Mackiewicz Award, several American Agricultural Editors' "Oscars" plus many ag media awards from the New York State Agricultural Society.

Vogel is a three-time winner of the Northeast Farm Communicators' Farm Communicator of the Year award. He's a National 4-H Foundation Distinguished Alumni and an honorary member of Alpha Zeta, and board member of Christian Farmers Outreach.

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like