Walmart is planning to build a dairy processing plant in Indiana to supply private-label milk to about 600 stores.
The company is planning to build a more than 250,000 square foot milk processing plant in Fort Wayne, Indiana. This milk processing plant is expected to create more than 200 jobs. The plant is expected to be functional in summer of 2017 and will supply milk to stores in Indiana, Illinois, Michigan, Ohio and northern Kentucky.
Walmart will be having a greater control over input costs and more closely align it with other grocery chains like Kroger and Texas-based H-E-B that have already set up their own milk processing plants as it will be eliminating intermediary suppliers.
Walmart’s recent announcement has helped spark a 12 per cent slide in shares of Dean Foods Co, one of the suppliers of milk to the affected stores.
From late 2017, Dean Foods is expecting a loss of 100 million gallons of very low-margin private-label fluid milk volume. However, it is not expecting any impact on the supply of its own national brands and would not be material on its results.
It has been confirmed by Walmart that Dean Foods would continue to supply milk for its Great Value and Member’s Mark private label white and chocolate milk to other Walmart supermarkets and Sam’s Club membership-based wholesale stores.