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Is Dean Foods Facing A Secular Headwind Of People Consuming Less Breakfast & Milk?


Even though fears of decline in milk consumption have been popping up from time to time, shares of Dean Foods Co (NYSE: DF) haven’t seen any kind of downturn, as they are up more than 20 percent year-over-year.

Dean Foods CEO, Gregg Tanner, was on CNBC recently to share his outlook on milk prices and discuss if the notion of there being a secular trend in people eating less breakfast and consuming less milk is true.

Milk Prices Going To Be Stable

Tanner thinks that the milk prices won’t see a significant change anytime soon.

“I think raw milk costs are going to stay pretty benign,” he said. “Our belief is that the global market continues to outperform, the U.S. production continues to stay up, about 1.7 percent up was the number that we received yesterday. So, we think it’s going to stay about where it is at right now, probably creep up a little bit in the second half of the year.”

Breakfast Occasion Not What It Used To Be

Tanner was asked if the notion that there is a secular headwind facing the company of people eating less breakfast and drinking less milk. He replied, “I don’t know that there is a secular change. I think we are seeing some demographic changes that have driven a lot of this. The breakfast occasion at home is just no longer what it used to be.”

“Very few families are sitting down having breakfast and having cereal and milk with their cereal. So, I think we are seeing some of that. But I think we are also seeing the shift more towards on-the-go, so, we are seeing more single serve. We have a lot of people who continue to look at alternative beverages as a way of getting their protein."

“And we believe that we are one of the most cost-effective deliverys of protein out there. So, when you compare us to some of the alternative beverages. You get 8 grams of protein in a single serving of milk. In many of the others, you will get 1 gram of protein in a single serving. So, we believe we are a great alternative,” Tanner said.


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