Not Crying over Spilt SoymilkSeptember 7th, 2010
Organic Farmers Celebrating Victory over Corporate Agribusiness
CORNUCOPIA, WI — It’s not often that family-scale farmers can go toe-to-toe with a $12 billion agribusiness and come out victors. But organic soybean producers, and a modestly scaled but powerful ally, The Cornucopia Institute, are claiming victory over Dean Foods in the organic marketplace.
Dean Foods, the manufacturer of Silk, the top-selling soymilk drink, was first “outed” in Cornucopia’s May 2009 report, Behind the Bean: The Heroes and Charlatans of the Natural and Organic Soy Foods Industry, for switching its soybean sourcing from American farms to cheaper organic beans from China. Later in 2009, Cornucopia revealed that Dean Foods had then largely abandoned organic soybeans altogether, stealthily changing the soybeans in their core Silk product line from organic to less expensive conventionally grown soybeans that the company was calling “natural.”
The shift away from organic outraged many loyal consumers and alienated retailers across the country that were not informed of the change and continued to inaccurately merchandise Silk products as “organic.”
Now leading natural/organic foods retailer Whole Foods Market has decided to shift its soymilk offerings back towards organic. Saying that its relationship with Dean Foods had “chilled,” Whole Foods indicated it was bringing in a new branded organic soymilk partner, Earth Balance. The national retailer also told the Denver Post, in an August 27 story, that it wanted Earth Balance’s soymilk products to contain only domestically grown soybeans carrying the organic label.
“Dean Foods has been roundly criticized for taking the organic out of Silk, and now the marketplace and consumers are passing their judgment,” said Mark Kastel, Cornucopia’s senior farm policy analyst. “They took what once was a pioneering 100% organic brand, before they acquired the company in 2003, and cheapened the product at the expense of American farmers and consumers. Now they are paying a price for their naked profiteering,” Kastel added.
Dean’s purchase of Silk initially excited American farmers who had been selling organic soybeans for use in Silk soymilk. Many thought that Dean would use its marketing prowess to further grow the Silk brand and expand demand for domestic organic soybeans. Instead, the company turned the screws on its farmer-suppliers and demanded that they compete on pricing with Chinese imports – something they were unable to do.
“White Wave (the operating division of Dean Foods that markets Silk and Horizon organic milk) had the opportunity to push organic and sustainable agriculture to incredible heights of production by working with North American farmers and traders to get more land in organic production, but what they did was pit cheap foreign soybeans against the U.S. organic farmer, taking away any attraction for conventional farmers to make the move into sustainable agriculture,” said Merle Kramer, a marketer for the Midwestern Organic Farmers Cooperative.
Dean spokesperson Molly Keveney told the Denver Post that staying with organic beans would have resulted in price increases. This statement stands at odds with the reality of falling farmgate prices for organic soybeans in recent years.
The shift away from organics by Dean in its Silk soymilk products also produced additional embarrassment for and anger at the company when Cornucopia discovered in 2009 that it had failed to change the soymilk product’s packaging to overtly reflect that it was being made with “natural” soybeans. Cornucopia filed a formal complaint with the USDA’s National Organic Program over the matter. The company ultimately corrected its misrepresentation.
“Consumers and retailers repeatedly reported to us that they were deceived and ended up unknowingly buying Silk products with conventional soybeans,” said Kastel. “We know of numerous retailers that ultimately pulled Silk products from their store shelves over the gross misrepresentation of the soymilk product,” Kastel added.
Earth Balance is not the only company that is seeking to capitalize on the consumer’s hunger for authentic, organic foods. A new “natural” entrant into the soymilk marketplace, 8th Continent, is taking direct aim at dissatisfaction with Dean’s handling of Silk. Other soymilk manufacturers such as Eden Foods and Organic Valley are also hunting for sales to the growing legion of organic consumers. Still, with Dean spending upwards of $29 million on major media advertising (according to The New York Times), it will continue to flex its muscles in the marketplace.
The Cornucopia Institute maintains a soy foods scorecard on its website (www.cornucopia.org), which provides information and ratings of soymilk and various soy foods and rates them on the integrity of their production (including whether brands buy from American family farmers or from China). The scorecard can be used by consumers and wholesale buyers to make purchasing decisions that support their values.
Dean Foods, a company that has seen a prodigious drop in share value in 2010, has been rumored to be looking for a buyer for its WhiteWave division (Silk, Horizon, International Delight, Land O’ Lakes creamer and other branded products).
In addition, Bloomberg News Service reported today (September 1, 2010) that there was speculation on Wall Street that Groupe Danone, the French dairy giant, was interested in acquiring Dean Foods.
“As part of our routine business operations, Dean Foods continues to evaluate all of our businesses on an ongoing basis,” Marguerite Copel, a Dean Foods spokesperson, said today in an e-mailed statement to Bloomberg. “It would be inappropriate for us to speculate about what choices we might make in the future.”
Original stories covering some of the controversial practices at Dean Foods concerning their Silk soy drink business:
The Denver Post — 8-27-10
The New York Times – 8-26-10
The catalyst: Cornucopia’s soy report outing Chinese soybean imports
Fort Worth STAR-TELEGRAM (McClatchy-Tribune) — 11-9-09 Grocers irked over not being told that bestselling soy milk is no longer organic