Eric Beringause, the new chief executive officer of Dean Foods, says he knows the dairy business so well that his friends tell him he must have milk running through his veins.
He’ll need to use all that knowledge to pump some blood into the embattled milk processor.
Shares of the Dallas-based company fell the most on record last week after it reported a bigger-than-expected quarterly loss and said it would burn cash this year.
Americans are drinking less milk, losing market share even to water at grocery stores. Dean Foods bonds slumped to record lows as well.
Beringause declined to comment on specific actions to turn around the company. His appointment has sparked speculation that Dean is moving away from a sale, an option that it’s been exploring as part of a strategic review.
On a call with analysts, he indicated the firm needs growth projects, “whether it’s related to cost reduction or growth-related to new products.”
“Clearly there’s opportunities to grow the business,” he said when asked about whether Dean’s model for milk processing still works. “I would refer to this as a target-rich industry for private-label and branded products.”
Dean Foods has previously worked to acquire small, regional processors. The company has dozens of plants around the country, mostly making milk and ice cream for brands such as Friendly’s and Steve’s.
Beringause said he would be on the road over the next several weeks, visiting facilities and meeting with customers, suppliers and business partners. He’s already heard some of their views on the industry and Dean’s position in the market, discussions that have convinced him about the company’s “significant potential.”
Some analysts aren’t sure. Despite the change in leadership, BMO Capital Markets is reluctant to predict a substantial recovery, given the worsening pressures on the company. Its costs are skyrocketing, with dairy inflation picking up pace as it loses business from its biggest customer — Walmart, which is now processing its own milk.
Beringause has spent his career in food, beverage and consumer products, and touted 30 years of operational experience. He was most recently CEO of Gehl Foods, a producer of dairy-based beverages, where he oversaw major changes to the business, resulting in “significant growth.”