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Oberweis $21 million sale to Winnetka private equity firm gets bankruptcy court approval

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A Chicago bankruptcy judge approved the sale Wednesday of the century-old Oberweis Dairy to a Winnetka-based private equity firm, which plans to expand production and retail locations while preserving the venerable brand name.

There may even be a few new product offerings in the pipeline, but the premium ice cream and milk will remain the same.

“We’re not going to change our positioning. We’re not changing our recipes. We’re not changing the name,” said Geoff  Hoffmann, co-CEO of Hoffmann Family of Companies, the new owner of Oberweis. “That’s what we bought, and that’s what we’re so excited about.”

The Hoffman Family of Companies bested rival bidder Chicago-based Dutch Farms with a $21.25 million offer for the assets of Oberweis at a bankruptcy auction last week. It is expected to close the deal June 17, according to Hoffmann.

Started in 1915 by Peter Oberweis, an Aurora dairy farmer who peddled milk from a single horse-drawn wagon, the company has grown into a multistate enterprise with 40 ice cream stores, widespread grocery distribution and home delivery service. But Oberweis, known for its old-school bottled milk and ice cream, filed for Chapter 11 bankruptcy protection in April amid declining revenues, mounting debt and business missteps that left the family-owned dairy facing its own expiration date.

In April, Oberweis notified the state it might have to close its North Aurora plant and lay off workers if it didn’t find a buyer. Now the plant will remain open, with infrastructure improvements and increased production at the top of the to-do list for the new owners.

Hoffmann said plans are in the works to enhance production capabilities and streamline operations at the 27-year-old plant over the next 18 months.

“We’re going to make a number of improvements to the plant, both from an aesthetic standpoint and also from a functional standpoint,” Hoffmann said. “But our plan is to make that factory as busy as it’s ever been.”

In addition, Hoffmann plans to open new dairy stores, spruce up existing locations and increase the product line, all under the Oberweis brand name. There are no plans to close any locations or make substantial cuts to the business, Hoffmann said.

Down the road, Hoffmann will be looking to expand the Oberweis retail footprint across Chicago, including along the North Shore, where the new parent company is located. It will also explore staking new turf in other markets where the investment firm has significant holdings, including Florida, Michigan and Wisconsin, Hoffmann said.

While its home delivery service flourished during pandemic lockdowns, Oberweis has been struggling since, with annual revenue declining from an all-time high of  $116 million in 2020 to $95 million last year, according to its bankruptcy filing.

Hoffmann said Oberweis plans to stay in the home delivery business and grow it along with the retail footprint.

“It’s a pretty important component of the business, so we have no plans to shut it down,” Hoffman said. “Our plan right now is to expand it.”

In recent years, the dairy industry has been losing ground to plant-based alternatives such as almond milk. But in 2023, dairy sales were up 3.7% to $90.4 billion, mostly due to inflation, according to a report from Chicago-based consumer research firm Circana.

Meanwhile, plant-based dairy sales, which are up nearly 50% since 2019, were essentially flat last year at $4.1 billion, according to Circana.

Hoffmann said Oberweis will explore adding dairy alternatives to the product line.

“Everything’s on the table,” Hoffmann said. “We want to give our customers what they want, at the end of the day.”

In addition to broader industry headwinds, Oberweis made a number of recent missteps including an ill-fated attempt to enter Asian markets, outsourcing organic milk and sweet drink products to a Texas manufacturer and transitioning to amber-colored bottles in grocery stores, which customers found unappealing.

But Hoffmann said the Oberweis products themselves remain the cream of the crop for loyal customers, a base that the new owner hopes to grow. The Oberweis brand equity also remains an asset, despite the company’s recent financial challenges, Hoffmann said.

The Oberweis name became associated with politics in the new millennium when Jim Oberweis, chairman of the dairy and grandson of its founder, launched a string of high-profile but mostly failed bids as a Republican candidate for various offices. The dairy magnate finally won a seat as an Illinois state senator, serving from 2013 to 2021.

The Hoffmann family has perhaps a lower profile, but a broad portfolio of businesses, ranging from wineries and charter cruise ships to the Florida Everblades, a minor league hockey team.

Founded by patriarch David Hoffmann in 2002, the family’s investment firm owns more than 100 brands in 30 countries. Oberweis is its first foray into the dairy business, but the elder Hoffmann grew up on a Missouri dairy farm.

While Hoffmann is still developing a more detailed strategic road map for Oberweis, the core value proposition remains the same.

“It’s the best ice cream in the world,” Hoffmann said. “I think the chocolate milk is great too.”

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