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Land O'Lakes and Dean Foods expanded their strategic alliance in 2002 in an effort to combine the strength of Dean Foods position in the dairy case, with the strength of the LANDOLAKES brand. LANDOLAKES Dairy Ease™ Lactose-free milk was the first new product introduced as a result of this expanded relationship. Also, LandO'Lakes partnered with Frito-Lay to introduce Rold-Gold® (pretzels) with LANDOLAKES Butter flavor.
2002 was a year of challenge and change. However, actions taken in 2002 to continue to build the brand, restructure our manufacturing assets and complete the start-up of CPI facilities will be successfully leveraged in 2003 to improve our operating performance.
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INTRODUCTION | HIGHLIGHTS OF 2002 | LETTER TO THE STAKEHOLDERS | DAIRY FOODS AG SERVICES | BOARD OF DIRECTORS | FINANCIAL REVIEW | SENIOR STRATEGY TEAM |
Dairy Foods Industrial faced numerous challenges in 2002. The dairy processing operations in the Upper Midwest had to deal with a milk supply/processing demand imbalance. At Cheese and Protein International (CPI), the cheese and whey processing facility in California, higher than expected start-up costs and low mozzarella commodity prices combined to cause 2002 results to deviate from expectations. We believe this state-of-the-art facility will become one of the most efficient mozzarella plants in the nation and will provide long-term benefits to our customers and member-owners.
In an effort to further focus on efficiency, we consolidated several facilities during 2002. The Faribault, Minn., facility was closed and our spreads
manufacturing was consolidated in our plant in Kent, Ohio. The cheese operations which had been at our facility in Perham, Minn., were moved to Melrose Dairy Proteins (a joint venture that we own with Dairy Farmers of America). In early 2003, we closed our Perham facility, consolidating whey processing at our other facilities. We also announced we will close our Volga, S.D., facility near the end of 2003 and shift its milk supply to Davisco Foods International's new facility in Lake Norden, S.D. Land O'Lakes will market the cheese produced at this facility.