ST. LOUIS — A family-owned investment firm founded by billionaire developer and Washington, Missouri, native David Hoffmann aims to buy Oberweis Dairy, the Illinois company that sells ice cream and milk — famously in glass bottles.
Osprey Capital, the investment arm of the Hoffmann Family of Companies, known here for buying up and then selling wineries and small businesses, has entered discussions to acquire Oberweis and all of its assets, according to a late Tuesday press release. The firm will compete against Brian Boomsma, an Illinois businessman and founder of Dutch Farms, who is also vying to buy the company.
Both bidders made public commitments, this week, to keep Oberweis operating after a sale. But any successful operator will have to overcome declines in the dairy business, which have forced thousands of U.S. farmers out of business, thrown other large milk producers into bankruptcy, and led to the closure of Southern Illinois’ Chester Dairy Co. in 2019.
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Like Chester Dairy, Oberweis’ roots lie in the early 20th century. In 1915, farmer Peter Oberweis began selling milk to his neighbors out of the back of a horse-drawn wagon in Aurora, Illinois. In 1927 he became co-owner of the company’s predecessor, Big Woods Dairy, and in 1929 he bought full ownership and renamed it Oberweis Dairy.
The company grew expansively over the decades, and in 2020, revenues hit an all-time high of $116 million.
But Oberweis began to struggle as consumers went all-in on plant-based milks and protein drinks and spent less on dairy products. President Adam Kraber attested in court filings that, combined with some “improvident†financial choices, Oberweis found itself unable to survive the decline in sales.
The filings detail a series of missteps. Oberweis underinvested in its manufacturing plant, putting off maintenance and upgrades. It overspent on marketing. It aggressively expanded its home delivery business with non-dairy products like seafood and tomahawk steaks — which only served to dilute the company’s brand as a dairy seller. It reacted slowly to changing customer preferences, like growing demand for organic and plant-based milk. It tried unsuccessfully to enter markets in Asia.
All the while, Americans drank progressively less milk each year.
“There is nothing the (Oberweis) business could have done to reverse this precipitous decline in consumer demand for its chief product,†Kraber wrote. “Yet — again in hindsight — if the (Oberweis) Business had been more agile, efficient, or innovative, it might have better withstood the decline.â€
The filings show that the company tried to avoid bankruptcy. Oberweis cut millions in annual operating costs. It sold off equipment, cut jobs, raised prices, sold some delivery routes and consolidated others, and secured additional funding. But those efforts, Kraber wrote, only postponed the company’s decline.
The company shopped around to potential buyers before the bankruptcy case. Dozens signed non-disclosure agreements, and five attended in-person meetings and tours with Oberweis management. In January, the company signed a letter of intent with one. But in March, the buyer backed out. Oberweis filed for bankruptcy protection on April 12.
Oberweis announced Tuesday that Boomsma had filed a stalking horse bid for the company’s assets, setting the floor for the auction. The Hoffmann family announced its bid that evening.
Oberweis has said it expects to close a sale and emerge from Chapter 11 proceedings in late June.
The company operates a 72,000-square-foot headquarters in North Aurora, Illinois, where it makes most of its products. The company employs around 1,100 people now, but during the summer, when ice cream season peaks, its ranks often swell to beyond 1,500.
The Hoffmanns already have family ties to the dairy business: David Hoffmann grew up on a dairy farm, and his father drove a milk truck.
“Our vision is all about quality, legacy and longevity — we’re not looking to buy and flip businesses,†said Geoff Hoffmann, co-CEO of Hoffmann Family of Companies, in a statement. “The Oberweis name has been associated with delicious, premium quality products for decades. Notwithstanding its recent financial struggles, we see an opportunity to revive the company’s heritage of success. This may take many different shapes or forms and we are highly enthusiastic about the prospect of our involvement.â€
The Florida-based Hoffmann business empire — now run by David Hoffmann’s sons, following his retirement, is known here for a frenzy of buying and selling activity in recent years, linked to ambitious plans to transform the ºüÀêÊÓƵ region’s vineyards into a wine destination of national renown, on par with California’s Napa Valley.
After rapidly acquiring properties around Augusta, Hoffmann then put many up for sale, raising concerns about the company and the commitment that the new generation of ownership has to the area.