National Dairy, Lala merger adds chapter to consolidation trend

by Staff
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DURANGO, MEXICO — Grupo Industrial Lala, S.A. De C.V., moved the U.S. dairy processing industry into a new era of cross-national commerce last month with the announcement it had acquired National Dairy Holdings, Dallas, one of the leading milk processing companies in the United States. But it also added a chapter to the story of the milk processing industry’s growth and consolidation.

In announcing the acquisition, Rick Beaman, president of National Dairy Holdings, said, "Lala brings a breadth of resources and strong track record for understanding consumers’ needs, creating and manufacturing innovative products and marketing brands."

But before joining National Dairy in 2007, Mr. Beaman was an executive at Dean Foods, Dallas, the $12 billion leader of the U.S. dairy processing industry. Mr. Beaman is just one link between National Dairy and a group of Texas-based dairy industry executives who have worked for decades to consolidate the dairy business and build companies capable of serving the nation’s large retailers from coast to coast.

National Dairy Holdings was formed in 2000, before the merger of Dean Foods and Suiza Foods Corp. Initially it was owned by a partnership of executives, many of whom had been involved in a predecessor company called Milk Products L.P. These included former Suiza Foods chief financial officer Tracy Noll, and Tex Beshears, who had been in a top position at Southland Dairy, which in the late 1980s almost became the industry’s first coast-to-coast dairy.

Milk Products L.P., also based in Dallas, was a partnership born of the divestiture of Borden Dairies in the late 1990s. Milk Products was purchased by National Dairy in April 2002.

National Dairy’s first major acquisition was the North American interests of the European dairy company Wessanen, N.V. Wessanen USA consisted of Crowley Foods, Binghamton, N.Y.; Marigold Foods, Minneapolis; and Helluva Good Cheese, Sodus, N.Y., all strong units with well-developed regional brands.

Like Milk Products before it, National Dairy was partially owned by Dairy Farmers of America, Kansas City. To a degree, both served as relief valves to the consolidation activities of Suiza Foods and the merged Dean Foods. When Suiza and Dean sought regulatory approval for large scale acquisitions, they were sometimes required to divest certain assets of the acquired companies. Many of those assets were sold to Milk Products and later National Dairy Holdings.

Currently, National Dairy operates 18 processing facilities in the United States, producing brands that include Borden, Dairy Fresh, Velda Farms, Flav-O-Rich, and Sinton S ’s. In 2008 it generated sales s of approximately $1.6 billion.

The companies said National Dairy will operate as a wholly-owned subsidiary of of Lala, and that the existing management m team will continue to lead day-to-day operations.

Lala has established an iconic brand in Mexico, where it is an industry leader. It has been selling products to Hispanic markets in the United States for years, and the National Dairy acquisition will allow it to significantly expand these activities.

"Acquiring National Dairy and its leading regional brands provides Lala a unique opportunity to further broaden the manufacturing and marketing of value-added dairy products in the United States," said Eduardo Tricio, chairman of Lala. "We look forward to working with National Dairy’s management and employees to deliver top-quality, innovative and nutritious products to customers."

Dairy Farmers of America, the United States’ largest dairy cooperative, said it will "continue to explore new investment opportunities" for its members.

This article can also be found in the digital edition of Dairy Business News, June 2009, starting on Page 1. Click here to search that archive.

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