NODPA News, January 2017:
“If Danone is required to sell off their subsidiary, Stonyfield Yogurt and retail milk brands, to satisfy the Justice Department approval of their acquisition of WhiteWave, Organic Valley Fresh or some similar CROPP joint venture would be ideally positioned to purchase the brand. This would expand their retail presence and their product mix while securing a market for their producers, particularly those in New England and the Northeast.”
From the DOJ Press release, 4/3/2017:
“The Department of Justice announced today that it will require Danone S.A. to divest Danone’s Stonyfield Farms business in order for Danone to proceed with its $12.5 billion acquisition of The WhiteWave Foods Company Inc. “The proposed acquisition would have blunted competition between the top two purchasers of raw organic milk in the Northeast and the producers of the three leading brands of organic milk in the United States,” said Acting Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division. “Today’s proposed settlement will ensure competitive marketplaces for both farmers in the northeast that sell raw organic milk and consumers who purchase fluid organic milk in stores nationwide.”
In the NODPA News November 2016 issue, we did an in depth study and analysis of the proposed acquisition by Danone of White Wave. (in_danone-white-wave-111516.shtml) In that article and in conversations with the Department of Justice, industry leaders, investor groups and producers we laid out the problem and possible solutions to the reduction of competition between the two leading buyers and top brands in the markets for raw and fluid organic milk, potentially harming dairy farmers in the Northeast and U.S. consumers of fluid organic milk. Working with the Cornucopia Institute and others, the case was made on the effect of the acquisition resulting in a landmark decision about the effect on producers and consumers of the consolidation of the organic industry.
In looking at the buyers for Stonyfield, Dean’s name has obviously been mentioned as has Uniliver (Ben & Jerry’s), General Mills, Aurora Dairy Group, Chobani and PepsiCo as it is a valuable entry point into organic dairy with an established market and a dedicated supply.
Any prospective buyer will need to identify what supply agreements they intend to enter into once they own Stonyfield. The supply agreement with CROPP has approximately three years to run and the assumption is that any buyer will continue to honor that agreement. In the best possible case, in the future Stonyfield will expand its own pool of milk and increase the number of buyers in the Northeast to three rather than the two, which will be the best interpretation of the DOJ’s ruling. Stonyfield also has the option of working with other smaller buyers and Dairy Marketing Services to source their long term supply. A second option will be to continue with CROPP as their main supplier and maintain the status–quo for the foreseeable future. Whatever way it goes, the DOJ ruling is a good solution for organic dairy producers as it is an opportunity to expand competition for organic farmgate milk and deprive Danone/WhiteWave from any intimidation of CROPP by holding supply contracts as leverage for their cooperation on the supply side and in the organic consumer market.
For the full DOJ press release please go to:
