Walmart Moves Into The Dairy Business Even As Milk Consumption Drops

Walmart announced its intent to build a dairy processing plant to supply its own store-brand milks back in March 2016; as a result, Dean Foods stock dropped 12 percent. Today, on reports that the Walmart plant, which is estimated to serve 600 stores (out of its 4,100+ stores in the US), will open soon, Dean Foods' stock price took another hit, declining a bit over 20%. However to give you the sense of how steep the decline has been, according to USDA and the Economic Research Service, in 1975 per capita availability was 247 pounds (the measurement used by the USDA) and as of June 2017 declined to 155 pounds almost a 38% difference. So we have to wonder why Walmart is entering this business and what is the impact of losing business from the largest grocer on companies like Dean Foods.