DALLAS — Launched this past April, few knew what to expect from Dean Foods’ national DairyPure brand. A few months into the launch and management is promoting the success of the new product, estimates the brand will be the company’s first multi-billion dollar brand within its product portfolio, and is executing plans to extend the brand into adjacent categories.
|Gregg Tanner, c.e.o. of Dean Foods|
“We are very pleased with what we are seeing in terms of DairyPure’s volume performance in the first few months following its national launch,” Gregg Tanner, chief executive officer of Dean Foods, said Nov. 9 in a conference call with financial analysts. “DairyPure has been purchased by over 20% of U.S. homes and we believe this can grow as we continue our investment behind the brand and target additional A.C.V. (all commodity volume) gains. DairyPure is already in six times more households than any other national white milk competitor brand.
“Since launch, our dollar and unit velocity has improved in each consecutive month, and given recent gains with vertical customers and several large key grocery customers, the momentum behind DairyPure, although early, is very promising.”
The new brand also has proven useful for retailers, as it has allowed operators to rationalize thousands of universal product codes down to fewer than 300 nationally.
Mr. Tanner said DairyPure has annual retail sales projections between $2.5 billion and $4 billion, when food service and other distribution channels are factored.
“DairyPure is allowing us to cost-effectively talk to and educate consumers on the benefits and attributes of fresh milk, and as DairyPure brings consumers back to the category, we believe over time we can improve our branded mix,” Mr. Tanner said. “We believe that the progress of DairyPure and continued success of TruMoo (the company’s flavored milk initiative) will provide us with a platform and enable a roadmap for our commercial and brand initiatives moving forward.”
He added that heading into 2016, the company plans to add to the DairyPure product portfolio with the introduction of lactose-free and nutrient-enriched varieties.
“While these represent just a few key upcoming initiatives, we look forward to generating sustainable growth from our brands through consumer insights, innovation, line extensions, and expansion into adjacencies that leverage our existing network and capabilities,” Mr. Tanner said.
During the third quarter of fiscal 2015, ended Sept. 30, Dean Foods earned $20,233,000, equal to 22c per share on the common stock, up from the same quarter of the previous year when the company recorded a loss of $15,972,000.
Sales for the quarter fell 14% to $2,033,693,000 when compared with the previous year.
“With volume performance coming in-line with our expectations and a continued focus on price realization, we delivered a third consecutive quarter of year-over-year improvements to gross profit and operating income,” said Chris Bellairs, chief financial officer. “During the quarter, we repurchased stock while further reducing our leverage, and year-to-date we’ve delivered almost $300 million of adjusted EBITDA and over $240 million of free cash flow. We remain focused on our initiatives and opportunities to grow our brands, reduce our costs, increase the profitability of this business and create shareholder value.”