Dean Foods

Through thoughtful acquisitions and careful financial management, Dean Foods Company has grown from a small regional dairy into a diversified food company with sales of more than $3 billion. Dean's steady growth has been achieved by acquiring strong regional brands, then boosting their profits by modernizing operations and increasing productivity. The company is the leading fluid milk, frozen vegetable, and pickle processor in the United States. Its brands, which include Dean's, Birds Eye, Freshlike, and Veg-All, in addition to many regional brand names, are supplied to grocery chains, retail stores, and food service outlets. Dean's product line includes ice cream, frozen desserts, canned vegetables, relishes, salad dressings, dips, and non-dairy creamers. Sam Dean, Sr., was working with a brokerage firm in Chicago when he decided to start his own company. As he had been brokering evaporated milk, it seemed logical to enter that business. When he founded the Dean Evaporated Milk Company in 1925, it consisted of one plant in Pecatonica, Illinois. Soon, two more plants were added. Dean entered the fresh milk industry in the mid-1930s, and until 1947 Dean's market was mostly fluid milk in Northern Illinois. In 1947 Dean also entered the ice cream business. A major milestone for the company came in 1961 with the purchase of Green Bay Food Company. This acquisition marked Dean's entry into the pickle business and Green Bay continues to lead this profitable Dean division. Four years later, Howard M. Dean, grandson of the founder and at the time a supply officer for the U.S. Navy, was tapped by his uncle, who was then chairman, to join the company. Howard Dean became company president in 1970, along with some other changes in management that signaled a new era for Dean Foods. Included in that new era was an acquisition strategy--perfected by Kenneth J. Douglas--that set the stage for the company's next decade. Most often, Dean absorbed well-known regional brands and companies that were small and healthy. Dean provided them with infusions of capital--especially to upgrade facilities--and access to marketing and management expertise. Dean was remarkable for its decentralized management structure, allowing acquired companies relative autonomy. In nearly all cases, acquired companies saw increased earnings within a year or two of joining the Dean family. With one exception, all acquisitions through 1992 were privately held companies, often family owned. While other industry giants relied on brand-name, premium-priced products, Dean made its reputation through low-margin markets, providing regionally labeled goods to leading grocery chains and restaurants. For this reason, the Dean name was often not as recognized as some of its regional product lines. The company built its success on local favorites. Dean acquired a few more Midwestern dairy concerns in the 1960s, including Wisconsin's Fieldcrest Sales, purchased in 1966. Changes in the dairy industry, where competition necessitated economies of scale, caused many smaller companies to look to Dean for survival. Seven out of the 12 companies Dean acquired up to 1991 had approached Dean. Gandy's Dairies, Inc., of Texas was acquired in 1976, followed by Bell Dairy Products and Price's Creameries in 1978. Creamland Dairy of Albuquerque, New Mexico, also joined the family that year. In 1980 Florida companies McArthur Dairy Inc. and T.G. Lee Foods, Inc., were purchased, granting Dean a solid entry into that region. Later, Hart's Dairy of Florida was added to that state's holdings. Moving out of the largely Midwestern markets proved profitable for Dean as early as 1985, when its Southern and Southwestern regions became the company's strongest performers. Dean began serving Pennsylvania and eastern Ohio with its 1984 purchase of a Sharpsville, Pennsylvania, dairy. A Kentucky-based dairy specialty company brought Dean into that area through a 1985 acquisition. Dean's sales hit the $1 billion