However, as coffee creamer and margarine have demonstrated, there is risk of substitution even with long-established consumer staples.
The intensity of rivalry is becoming greater. Firms in both dairy and soy are fighting for market share, one because of market contraction and the other because of market expansion. Firms compete for shelf space at major retailers and because the products lack differentiation, firms in the industry tend to compete strictly on brand name, rather than product attributes. Overall, this leaves the industry moderately unfavorable. Soy is more favorable that milk generally, but milk is the much larger industry and for a sizeable, established player with strong distribution networks it is still a good industry to be in.
The regulatory environment is important to Dean. The federal government has a stake in agricultural...
There are variety of programs and subsidies available to protect producers of goods like milk and soy. While in general Dean benefits from agricultural policies, it is also subject to FDA regulations concerning food safety. These are especially critical in Dean's milk products business, as the risk of spoilage and infection is higher. Dean and its subsidiaries must adhere strictly to the food safety standards and best manufacturing practices as laid out by the FDA in order to ensure that there are no disruptions to business. There are fewer regulations with respect to soy products, but again these are subject to FDA regulation. Both milk and soy are also subject to certification if they are to be labeled organic, kosher or halal in order to help Dean reach these alternative markets.
