No. 1 milk company, owner of Le Mars plant, declares bankruptcy

No. 1 milk company, owner of Le Mars plant, declares bankruptcy

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LE MARS, Iowa -- Dean Foods, America's biggest milk processor and owner of a large plant in Le Mars, Iowa, filed for bankruptcy Tuesday amid a steep, decades-long drop-off in U.S. milk consumption blamed on soda, juices and, more recently, nondairy substitutes.

The Dallas company said it may sell itself to the Dairy Farmers of America, a marketing cooperative owned by thousands of farmers. It was not immediately clear what such a move might mean for the company's Northwest Iowa plant, which makes products for retailers and other customers.

"Despite our best efforts to make our business more agile and cost-efficient, we continue to be impacted by a challenging operating environment marked by continuing declines in consumer milk consumption," Dean Foods CEO Eric Berigause said in a statement.

Since 1975, the amount of milk consumed per capita in America has tumbled more than 40%, a slide attributed to a number of reasons but mostly the rise of so many other choices, including teas, sodas, juices and almond and soy milk.

That has hit dairy farms and milk sellers hard, leading some smaller family farmers to quit the business.

Another blow to Dean Foods came when Walmart opened its own milk processing plant in Indiana last year.

Dean Foods has lost money in eight of its last 10 quarters and posted declining sales in seven of the last eight.

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The company said it will continue operating normally while it puts its finances in order under Chapter 11 bankruptcy. It has lined up about $850 million in financing from lenders.

Built in 1963 along U.S. Highway 75, the Le Mars plant was formerly operated by Wells Enterprises. The Le Mars-based family business, today the nation's second-largest maker of ice cream, got its start in 1913 when founder Harry C. Wells and his brother, Fred H. Wells, purchased a horse, wagon and milk route from a local farmer.

Dean Foods acquired the Le Mars milk plant in a 2007 deal after Wells decided to divest its fresh milk and cultured dairy holdings to focus solely on the production and sale of ice cream and frozen novelties.

At the time, the new owners kept the plant's 180 employees, which includes managers, production workers, truck drivers and other support personnel. A current workforce number was not immediately available Tuesday morning.

The Journal's Dave Dreeszen contributed to this story.

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