Dean Foods, the US dairy giant which shocked investors on
Wednesday by revealing the loss of part of a major contract, has lured a
veteran of one of the world's most competitive milk markets onto its board.
The Texas-based group revealed it had appointed as a director
Robert Wiseman, who helped expand Robert Wiseman Dairies from a family
enterprise into the supplier of one-third of the UK's milk.
The hiring comes a year after Mr Wiseman oversaw the sale of
Robert Wiseman Dairies, which was started by his father, to Germany's Theo
Muller for £280m, amid a wave of consolidation in the UK's bitterly competitive
milk supply market.
Rival Milk Link merged into the Arla empire weeks later,
while Dairy Crest, the last major UK milk group with a stockmarket listing, has
unveiled a series of plant closures in a bid to boost profitability.
Gregg Tanner, the Dean Foods chief executive, said that the "breadth
and depth" of Mr Wiseman's dairy sector experience would "strengthen the board's
ability to guide Dean Foods to continue to be a leading food and beverage
The announcement followed Dean Foods release on Wednesday of
a results statement which, while showing quarterly profits ahead of
expectations, forecast a bigger-than-expected drop in milk volumes this year
thanks to the loss of a part of a supply deal with an unnamed customer.
Dean Foods shares have lost more than 10% since the announcement, and attracted downgrads to price targets from brokers including BMO and UBS.
Robert Wiseman Dairies also suffered the loss of
high-profile contracts during Mr Wiseman's rein, most notably during the 2000s,
when it in 2004 lost a deal with supermarket chain Asda.
In 2005, the loss of a contract with retailer Morrison's
sent Robert Wiseman Dairies sales tumbling 11%.
The difficulty of the UK dairy market for milk suppliers is
a reflection of the stranglehold which a handful of big supermarket, Asda, Morrison's,
Sainsbury and Tesco, have on the market, lending them huge pricing power.
However, the ability of milk processors to pass on this pricing
pressure to dairy farmers has been limited by production margins which were
already thin, even before the dismal 2012 which sent feed prices soaring.