Walmart-at-the-Crossroads-FINAL-06.04.15

Walmart, including its subsidiaries such as Sam’s Club, is the largest customer of Dean Foods.
Approximately 19 percent of net sales for Dean Foods came from Walmart in 2013. In its
2013 annual report, Dean Foods acknowledged, “Price concessions to large format retailers
have negatively impacted, and [can] continue to negatively impact, [sic] operating margins and
profitability.”
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In fact, when Walmart transferred a significant portion of its business to other
suppliers in the first half of 2013, Dean Foods experienced a 7 percent decline in fluid milk sales.
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Ultimately, this price depression trickles down to farmers and makes them less able to earn a stable
living. This close relationship between Dean Foods and Walmart indicates that if Walmart were to hold
its supplier to labor and environmental standards, the dairy company would most likely comply.
i. Labor
Dean Foods is highly unionized in the U.S. with the International Brotherhood of Teamsters
representing workers at many of its dairy processing facilities.
Dean Foods, however, provides an example of this industry’s negative impact on another
segment of food labor – dairy farmers. In 2009, a group of dairy farmers filed a lawsuit against Dean
Foods Company and Dairy Farmers of America (DFA), claiming that these two entities monopolized
milk distribution in the Southeast and drove down the prices that DFA’s own farmer-members receive
for their products.
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In the lawsuit, the farmers sought $1.2 billion in damages.
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Dean Foods settled
the lawsuit for $145 million in the summer of 2012, and DFA followed with a settlement of $158.6
million in January 2013.
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Dairy farmers in the northeast region of the United States also filed a
lawsuit against Dean Foods and DFA in 2009. A settlement for this case has still not been reached.
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