Profit over Organics: Nation’s Largest Dairy Marketer Sets Up Competing Market Category

Dean Foods Creates “Natural” Dairy Products Using Conventional Milk

From: The Cornucopia Institute

BOULDER, CO:  A division of Dean Foods, the organic industry’s largest
namebrand manufacturer, rocked the organic world this week when it was
reported that the agribusiness giant intended to create an entirely new,
lower-priced, product category, “natural dairy,” aimed squarely at pirating
away organic customers.  If successful Dean, the largest milk processor in
the United States, will add to the pain many organic farmers are feeling due
to slowing sales caused by the economic downturn.

For the first time the Horizon namebrand will market products that are not
certified organic.  Horizon has had the highest dollar volume of any organic
industry brand.

Dean’s WhiteWave-Morningstar division, which controls the Horizon, Organic Cow, Silk, and other specialty brands and is based in Longmont, Colorado, has launched their “alternative to the organic label” at a time when sales in the industry have flattened after averaging 20% per year growth rates for more than a decade.  Recent articles in the New York Times, Boston Globe, and the Associated Press have profiled falling prices and production caps now being placed on farms producing organic milk-with many of these family farmers now facing financial ruin.

“This move by Dean Foods comes at a time when organic dairy farmers around the country are in financial crisis due to a glut of milk,” said Mark A.
Kastel, Senior Farm Policy Analyst at The Cornucopia Institute. “Responsible participants in this industry are using their marketing
strength to ramp up organic demand.  Dean has instead chosen to profiteer at the expense of the hard-working family farmers who have built this
industry.”

This move comes on the heels of the recent decision by Dean/WhiteWave to
switch almost the entire product offerings of their Silk soymilk line to
“natural” (conventional) soybeans.  Many consumers and retailers have
expressed outrage when the switch to conventional soybeans was quietly made in Silk products without lowering the price.  Industry critics have referred to the move as “sheer profiteering.”

“They are handling the introduction of natural products under the Horizon
label a little bit differently than they handled their switch to conventional soybeans sourcing in Silk,” Kastel stated.  “With their soy products the appearance of their packaging and UPC product codes remained the same.”

Many retailers and consumers around the country, who had been longtime loyal customers, were outraged to find that their favorite organic brand had been switched to conventional, somewhat clandestinely.  This has caused some retailers to now drop the Silk products.

Sara Loveday, a marketing communications manager at WhiteWave told the
Natural Foods Merchandiser, an industry trade publication:  “We’ve only been organic in the past and the majority of our business will remain organic. These are our first natural offerings in the marketplace, and Horizon always tries to provide great-tasting products for moms and for families.”

The Dean/WhiteWave spokesperson continued by saying the natural Horizon products would be “easier on the pocketbook.”

“Many consumers do not understand green terminology,” said Suzanne Shelton, whose firm, the Shelton Group, just released a national survey examining consumer perception about food labeling.  “They prefer the word ‘natural’ over the term ‘organic,’ thinking organic is more of an unregulated
marketing buzzword that means the product is more expensive.  In reality,
the opposite is true: ‘Natural’ is the unregulated word. Organic foods must
meet government standards to be certified as such,” Shelton concluded.

“It is apparent to us that moves toward “natural” dairy products offerings
will have a negative impact on the organic category,” said Jack Lazor a
certified organic dairy farmer from Westfield, Vermont.  “It is now more
important than ever that consumers of organic dairy products understand the benefits of organic foods and farming.  We need to cultivate meaningful
relationships with our customers so that we can cut through the veil of
corporate greed where natural is easily mistaken for organic.”

Lazor and his wife, Anne, widely respected as one of the first organic dairy
farmers in the United States, founded Butterworks Yogurt in 1984, a leading
organic brand in the Northeast.

Organic food has grown from a small niche to a successful $24 billion market category fueled by consumers desire for a safer and more nutritious food supply.

“When the first Horizon natural products are introduced-a yogurt aimed at
children and single-serve milk-they will promote them as being without
growth hormones.  But Dean Foods will not be able to mention that the
products are produced without pesticides, herbicides, antibiotics and other
drugs, and genetically modified feed crops, or that the cows are required to
graze in pastures rather than confined to factory farm feedlots.  These are
all factors that truly differentiate organic production from natural/conventional agricultural and livestock production,” explained
Kastel.

In a letter today to Dean Foods’ chairman Greg Engel, The Cornucopia
Institute, widely recognized as the nation’s preeminent organic farming
industry watchdog, suggested that in order to preserve the integrity and
shareholder value in two of the nation’s leading organic brands, Horizon and
Silk, that the corporation reconsider its new tactical direction.  It questioned why a company, after substantial investments, would want to
alienate a market demographic that has proven, over the years, to be highly
dedicated and passionate.

“Dean Foods has just declared war on the organic industry.  Although the
first shot has been fired it will not be the last,” Kastel lamented.  We
hope they will reevaluate this ill-advised product launch.”

———————————
The Cornucopia Institute, a Wisconsin-based nonprofit farm policy research
group, is dedicated to the fight for economic justice for the family-scale
farming community.  Their Organic Integrity Project acts as a corporate and
governmental watchdog assuring that no compromises to the credibility of
organic farming methods and the food it produces are made in the pursuit of
profit.  The majority of its funding comes from individual members, mostly
family-scale organic farmers.

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