Stater Bros. to Sell Santee Dairies

Stater Bros. Markets has announced it will sell its Santee Dairies/Heartland Farms division to Dean Foods, noting that rival supermarket chains have become reluctant to purchase products from a dairy owned by a regional competitor. Terms of the deal were not disclosed. The future growth of Santee Dairies products was limited because most potential customers are competing

SAN BERNARDINO, Calif. — Stater Bros. Markets here has announced it will sell its Santee Dairies/Heartland Farms division to Dean Foods, noting that rival supermarket chains have become reluctant to purchase products from a dairy owned by a regional competitor. Terms of the deal were not disclosed.

“The future growth of Santee Dairies products was limited because most potential customers are competing supermarket chains that already operate their own dairies and have been advised by their parent corporations not to purchase products, other than Knudsen fluid milk and Arnold Palmer Tee, from Santee Dairies, which they feel would help with the expansion of Stater Bros. Markets,” Jack Brown, chairman and chief executive officer of Stater Bros., said in a statement.

Santee operates a private-label and co-packing business, and holds regional manufacturing licenses for products including the Knudsen and Foremost dairy brands. The dairy posted an operating profit of $500,000 off of $101 million in sales last year, according to the Los Angeles Times.

Stater Bros. has had an ownership stake in Santee since 1986, when it purchased 50% of the dairy from then-bankrupt Knudsen Foods. In 2004, the company purchased the remaining shares of the dairy from Kroger Co. Brown said he hoped the sale would present the dairy with new opportunities for growth, protecting “the future of the Santee family of employees.”