California Gold and Dairyman's Creamery Cooperative Form Strategic Alliance; Dairy Cooperatives Expand Operations Through Two Joint Ventures.

PETALUMA, Calif.--(BUSINESS WIRE)--Jan. 31, 1997--California's second and third largest dairy cooperatives today announced a plan that will reshape the cheese business in California and create the largest cheese operation on the West Coast.

Through a strategic alliance, California Gold Dairy Products and Dairyman's Creamery Cooperative Association (DCCA) will jointly operate a cheese packaging facility through a new entity called Central Valley Dairy Products. All cheese manufactured by both cooperatives will be marketed through the newly-formed venture. This operational change is expected to take effect in March, following approval of the boards of directors of both cooperatives.

"It's time that the dairy industry work more closely together when it makes good business sense," said Richard Sturgeon, President and CEO, California Gold Dairy Products. "Combining production and marketing with DCCA is the right move for both cooperatives because it will bring high quality cheese products to customers and introduce new avenues to market products."

In an industry where strategic alliances are rare, California Gold and DCCA are placing fierce competition aside in the interest of growing market share and expanding production.

Through this alliance, DCCA will also purchase half of the Turlock processing plant, now owned and operated by California Gold, and each will then have equal ownership in the new cooperative to be known as the Turlock Cheese Association. All cheese produced by the Association will be marketed by Central Valley Dairy Products.

"DCCA is extremely excited about the opportunity to work with California Gold. This joint venture is certain to position the two cooperatives as leaders in the dairy industry now and into the 21st century," said Jack Prince, President, DCCA.

To keep pace with production, the Turlock plant is currently undergoing a $3 million expansion that will add a new production system and increase the facility's operating space by 15,000 square feet. In addition to cheese, the plant will also produce Whey Protein Concentrate, a value-added product.

Whey, a milk byproduct that was previously discarded at the cost of $500,000 per year, will be converted to Whey Protein Concentrate a product that is expected to generate sales in excess of $2 million. Whey Protein Concentrate is used in baby formula, lactose products, animal feed and as fillers in various food products.

California Gold is the third largest dairy cooperative in California representing more than 350 farmers. The cooperative owns and operates plants in Hughson, Petaluma, Tracy and Turlock and provides dairy products to all major retail supermarkets and suppliers from the North Coast of California to the Central Valley and over into Northern Nevada.

Dairyman's Creamery Cooperative Association represents more than 265 dairymen in Tulare, Kings and Fresno counties and Southern California. The DCCA plant in Tulare is the single largest milk receiving facility in the United States. A diversified dairy manufacturer, DCCA produces such products as non-fat and whole milk powder, butter, yogurt and cream cheese, to name a few.

CONTACT: Kamer-Singer & Associates

Patrice Smith, 415/512-6800