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Why Dean Foods Co (DF) Stock Is Falling Today

Less and less people are buying milk in the U.S.

By Karl Utermohlen, InvestorPlace Writer

Dean Foods Co (NYSE:DF) shares were down on Monday as the company’s main product is not selling as well as it has in the past.

Dean Foods Co (DF)DF stock hit a six-year low after a downgrade from analysts at Goldman Sachs Group Inc (NYSE:GS), which lowered the stock’s rating from a “neutral” to a “sell.” This is because weakening sales volume may have an effect on cheaper milk costs, according to analyst Judy Hong.

The main reason why milk isn’t selling as well as it used to is the fact that there’s a slew of non-dairy substitutes that serve essentially the same purpose as dairy milk, including almond milk, oat milk and soy milk. The price of a gallon of whole milk fell in March to about $2.90 at U.S. grocery stores.

This marks the cheapest price of milk in 14 years, according to data from the Bureau of Labor Statistics. This price decline has prompted Dean Foods to reduce costs, according to the company’s announcement earlier this year.

This means that the company will end supply contracts with some farmers as the processing sector gets more competitive. Other companies such as retail chain Food Lion are also ending their contracts with Dean Foods.

DF shares plummeted about 7.7% as of Monday afternoon, while GS stock was up about 1.3%.

Article printed from InvestorPlace Media,

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