Borden files for bankruptcy amid drop in US milk drinkers
Borden announced that it is filing for bankruptcy protection, the second major US dairy to do so in as many months.
The 163-year-old company cites falling milk consumption along with the raising price of milk for adding to the company's debt load.
Borden's bankruptcy filling comes on the heels of the Nov. 12 announcement that Dean Foods, America's largest milk processor, had filed for bankruptcy, claiming a steady decline in fluid milk consumption and the public's penchant for alternative products being to blame.
Borden said it filed for bankruptcy because it cannot afford its debt load and its pension obligations. The company currently employs 3,300 workers, 22% of whom are covered by a collective bargaining agreement.
Borden Dairy Co. — whose smiling mascot Elsie the cow first appeared on milk cartons in the 1930s — says it intends to use the court process to pursue a financial restructuring designed to reduce its current debt load, maximize value and position the Company for long-term success.
"Borden is EBITDA-positive and growing, but we must achieve a more viable capital structure," said Borden CEO Tony Sarsam in a news release. "This reorganization will strengthen our position for future prosperity. Over the past 163 years, we have earned the distinction of being one of the most well-recognized and reputable national brands. We remain committed to 'The Borden Difference,' which is our promise to be the most service-oriented dairy Company that puts people first. We will continue serving our customers, employees and other stakeholders and operating business as usual throughout this process."
Last year marked several major milestones for the Company, including the brand's reintroduction in Ohio, and the launch of several innovative products that earned local and national media acclaim, such as State Fair-inspired milk flavors, Gingerbread Eggnog and Kid Builder. The Company's growth last year outpaced the industry as it increased year-over-year sales.
Despite the company's numerous achievements over the past 18 months, Sarsam says the company continues to be impacted by the rising cost of raw milk and market challenges facing the dairy industry.
"These challenges have contributed to making our current level of debt unsustainable. For the last few months, we have engaged in discussions with our lenders to evaluate a range of potential strategic plans for the Company," Sarsam said. "Ultimately, we determined that the best way to protect the Company, for the benefit of all stakeholders, is to reorganize through this court-supervised process."
While Sarsam states that it is "business as usual" during the bankruptcy process, it is unclear whether or not the company plans to remain in business beyond that or liquidate. However, he refers to the bankruptcy process positioning the company for "continued success in the future".
In the meantime, Borden will be seeking court approval for these requests during the coming days and intends to work closely with creditors, customers and employees to identify value-maximizing restructuring plans that will benefit all stakeholders, Sarsam said.
"Borden Dairy is a heritage American brand that has been in business since 1857," Sarsam said. "We have a very tenured workforce...who live and breathe our values of teamwork and creative problem solving, and I am extremely confident and optimistic about our continued success in the future."
Company founder, Gail Borden, received the first patent for his process of condensing milk by vacuum in 1856. According to historical journals, Borden became interested in finding a way to preserve milk following a return voyage from London in 1851 when cows aboard the ship died from a disease and subsequently claimed the lives of children who had consumed the contaminated milk.
Borden's condensed milk was especially sought after by the Union Army during the Civil War. The company, then known as the New York Condensed Milk Company, officially changed its name to the Borden Dairy Co. after Borden's death in 1874.
Just a decade later, the company would pioneer the use of glass milk bottles in 1885.
The company would continue its upward trajectory in the new century, buying up more than 200 dairy companies, earning the distinction of becoming the largest distributor of fluid milk in the US.
Serving as the branding for the company was the widely recognized smiling cow sporting a chain of daisies around her neck. In 1936, a live cow named Elsie made her debut as the company’s official spokescow at the New York World’s Fair. The iconic bovine would become the company's advertising mascot until an ownership change in the 1980s which caused both sales to decline and Elsie's exposure to dim due to lack of marketing support.
Sarsam said last year's milestones also included the revival of the beloved spokescow who was tapped as one of the top 10 advertising icons of the 20th century by AdAge in 2000.
Borden is headquartered in Dallas and operates 12 milk processing plants and nearly 100 branches across the US that produce and distribute nearly 500 million gallons of milk annually for customers in the grocery, mass market, club, food service, hospitality, school and convenience store channels.
In 2019, Borden landed the No. 16 spot on Forbes' list of America's Most Reputable Companies.
The Associated Press contributed to this report.