Prepared Foods September 13, 2004 enewsletter

Dean Foods Co. said it will stop making weight-loss shakes and drinks because of poor sales.

Dean Foods, which makes the Healthy Shake Weight Loss Beverage and the Bonus Nutritional Supplement, will close its nutritional drinks plant in Michigan during the fourth quarter, according to a Securities and Exchange Commission filing.

Customers were told that production of nutritional drinks will cease by November 7, Dallas-based Dean Foods said in the filing.

Sales of nutritional drinks have fallen significantly this year, and "the company believes these volumes can't be replaced," the filing said.

Cory Olson, a spokesman for the dairy producer, declined to say specifically where the Michigan plant is located. He also declined to say how many workers at the plant would be affected by the shutdown.

The nutritional drinks category is "a small part of specialty foods at Dean Foods," Olson said.

Costs associated with the company's exit from the nutritional beverages business will lower earnings by about $10.2 million, of which $8.7 million will be booked in the third quarter, according to the filing.

The charges include about $1.6 million for workforce reduction costs, $7 million for the impairment of assets and $1.6 million for facility closure and other costs, the filing said.

Earlier, Dean Foods, which also makes Silk soy milk, Land O'Lakes butter and Marie's dips and dressings, cut its earnings outlook for the third quarter and full year, citing higher costs and competition.

Dean Foods cited volatility in raw-milk prices, competition and higher costs for fuel, resin and other commodities for its revised outlook.