Carnation to Cut Milk From State : Label to Disappear Along With Production in Oakland
Carnation milk, once a staple of family meals and school lunches, is disappearing from California.
“In the state of California, it will be phased out,” Carnation Co. spokesman Dick Curd said Tuesday. Curd acknowledged the planned discontinuance of the label after the Los Angeles-based company revealed plans to cease milk production at its 59-year-old plant in Oakland. On Monday, Carnation said it had agreed to sell its Main Street milk and juice plant in Los Angeles to a new company formed by Investcorp, an international investment bank.
As part of that transaction, the purchaser, Main Street Milk Co., has the right to use the Carnation label for milk it produces for about a year, Curd said. The label will cease to be available in Northern California about Aug. 1, when Carnation closes the Oakland milk operation that employes 170 workers.
Curd said Carnation has no plans to discontinue the Carnation milk label elsewhere in the country. The company will continue to produce milk in Arizona, Oregon and Washington. However, Carnation has been gradually cutting milk production. It sold a Houston plant in 1986.
Not Carried by Major Grocers
Dairy industry sources said they weren’t surprised to hear of the end of the Carnation milk label in California. Though the company was founded in 1899 in Kent, Wash., as a milk-condensing plant and in the early years became a family dairy, Carnation hasn’t been a big factor in milk sales in recent years, they said.
Carnation is no longer sold in major grocery store chains. Instead, the brand is distributed to schools, other institutional food service establishments, and small grocery and convenience stores.
“Milk is highly competitive, which is why we have fewer dairies,” said one dairyman. Competitive pressures stem from high capital costs and the need to have very high volume to make a profit while at the same time being restrained to a fairly narrow distribution area because the product is fresh, he said. “The people who control sales to consumers have a lot of economic clout,” he said.
Almost all major supermarkets carry only two brands, including its own brand, he said, which squeezes out many labels.
While acknowledging competitive pressures, Carnation said the major reason for discontinuing milk production in California stems from its desire to refocus its dairy operations on more promising ice cream products. “Milk sales have been increasing only about 1% to 2% a year. With ice cream you have 8%, 9% to 15% increases, especially in super-premium areas,” Curd said.
New Plant in Bakersfield
According to an Associated Press report, Carnation had another reason to close the Oakland plant. “Our problem is that we have an old plant. . . . We have a lot of problems with sewage, with contaminants. The company doesn’t want to spend the money to face up to that,” according to a quote attributed to Ross Mainwaring, a retired Carnation executive acting as a consultant to phase out the Oakland operation.
Curd said that assessment isn’t correct. There are no such problems at the plant he said, adding that “sewage” and “contaminants” are incorrect terms to apply to waste from milk-processing operations. Water discharged from cleaning may include some fat and oil, he said, but the amount of grease in the processed wastewater from the Oakland plant has always been very low.
Questioned about the statement attributed to him when reached by The Times at the Carnation Oakland plant, Mainwaring said: “I’d rather not comment.”
Curd said the Oakland plant will continue to produce ice cream until an ice cream and ice cream novelty plant under construction in Bakersfield opens. He said the company hasn’t made a decision on what it will do with the Oakland plant after ice cream production ceases.
Carnation customers in the San Francisco Bay Area will be served by Foster Farms Dairies of Modesto, a prominent milk supplier in the Sacramento and Monterey areas. Foster Farms will use the Oakland plant as a distribution center and will also use a Carnation distribution facility in San Jose, Carnation said.
Distribution Center Planned
Main Street Milk will service Los Angeles customers, including the Los Angeles Unified School District, Curd said. Main Street Milk will also take over the Carnation-owned fleet of trucks used to distribute milk in the city, he said.
Carnation also said its focus in Northern California will be ice cream, ice cream novelties, yogurt and cottage cheese. The company said it purchased 4.8 acres of land in Milpitas for the construction of a 35,000-square-foot center to distribute ice cream and novelty products. A ground-breaking ceremony for the $5-million facility is scheduled for early fall, with construction expected to be completed next summer, the company said.
Carnation, which has a number of dairy products and pet foods, is a unit of Nestle SA of Switzerland.
