Friday, February 01, 2008

The Canadians are Coming

Two Canadian companies announced this week they will purchase major Wisconsin cheese companies.

First, Saputo Inc., the largest dairy processor in Canada, said it
planned to buy Alto Dairy Cooperative for $160 million. Alto has the largest U.S. cheese plant east of the Mississippi River in Waupun and a smaller plant in Black Creek. Between them, they have 467 employees. Two years ago, Alto launched its first artisan cheese -- Black Creek Classic, and last year, released a pasture-grazed cheese.

Yesterday, Agropour, a Canadian dairy cooperative,
announced it will buy Trega Foods, a cheese company that was formed by combining three of Northeast Wisconsin's oldest cheese plants. The sale is expected to be finalized by the end of February and will include the company's three cheese plants in Little Chute, Weyauwega and Luxemburg.

The eternal optimist in me says it's a good thing that Wisconsin is considered to be an attractive place to invest in -- it means our dairy infrastructure is healthy and robust.

The cynical side, however, wonders how many more Wisconsin cheese plants will fall into foreign investor hands, as the U.S. dollar continues to fall in value, milk prices continue to stay high, and the medium-sized cheese plants continue to be squeezed.

My prediction for Wisconsin cheese plants: the big will get bigger, the small will stay small and the mediums will combine with other mediums to stay competitive.

Why? It's too hard for medium-sized Wisconson commodity cheese companies to compete with the West without increasing volume. And the small guys will continue to stay small because most of them have diversified into high-end, higher-margin, small batch artisan cheeses. That's good for people like me who enjoy artisan cheeses, but sad for the companies and dairy farmers who have been selling milk and and making cheese at cooperatives and family-owned companies for 100 years.

2 comments:

The Cheesemonger's Wife said...

This is a big purchase/sale for WI. As a future cheese maker and small farm owner, I feel it is so very important to remain cognizant of what big business is doing in our community. How wonderful that Canada wants to buy in WI and add to the economy there....but I just hope we don't loose sight of the beauty of a family farm.

Anonymous said...

Go with the cynical side as all of the profits of these purchases as well as the goat cheese plant that the state invested heavily in will go to Canada. The dollar is not down significantly versus the Canadian dollar. These companies know that they can go after the US market much easier from the US and Wisconsin cheesemakers have been playing the "California doesn't really count" game for so long they have not made the infrastructure changes required to compete. Wisconsin is also losing in the small cheese area because of the ridiculous licensing laws that make it to difficult to start up a company making cheese and even worse with butter. Isn't it funny that the WCMA back a licensing law in Wisconsin because they believe only licensed cheesemakers make good and/or safe cheese, but they can't get enough of unlicensed cheesemakers in for their contest. Remember that Wisconsin has not won since 1988 and has lost every year to an unlicensed cheesemaker.