Prepared Foods January 31, 2005 enewsletter

Dean Foods Company announced that it intends to pursue a tax-free spin-off of its Specialty Foods Group business to Dean shareholders. The company also announced that, effective immediately, an experienced and proven management team headed by Sam Reed, former CEO of Keebler Foods Company, has joined the Specialty Foods Group to lead the new company. In conjunction with their employment, the new management team has made a cash investment of $10 million in the Specialty unit, representing 1.67% ownership of the new business.

The planned debt-free spin-off of the Specialty Foods Group will create a publicly traded private label and regionally branded consumer packaged goods company with approximately 1,700 employees and estimated 2005 revenues of over $700 million. In conjunction with the spin-off, Dean Foods is moving its Mocha Mix non-dairy creamer, foodservice dressings, and Second Nature egg substitute businesses into the Specialty Foods Group from the Dean's Branded Products and Dairy Groups. The Specialty Foods unit's strong operating cash flows, combined with an unleveraged balance sheet, will provide the new management team with significant financing capacity for the potential expansion of its platform through targeted acquisitions and other initiatives, believes Dean.

"Bringing this high-caliber team on board and effecting a tax-free spin-off of the Specialty Foods business provides a unique opportunity to unlock value for Dean Foods' shareholders," commented Gregg Engles, chairman and chief executive officer of Dean Foods Company.

"Dean shareholders will own shares in a new publicly traded consumer packaged foods company with a proven leadership team and significant strategic and financial flexibility. Sam Reed and his colleagues have an excellent track record of operating and building food businesses, and under their leadership, we believe the new company is well-positioned for value creation. Following the spin-off, we at Dean will be able to further sharpen our focus on our core businesses."

The new executive team previously served as the senior management of Keebler Foods Company from 1996 through its sale to Kellogg in 2001. In addition to Reed as chairman and CEO, the management team of the new company includes David Vermylen as president and chief operating officer; E. Nichol McCully as chief financial officer; Thomas O'Neill as general counsel and chief administrative officer; and Harry Walsh as senior vice president of operations. Terms of the agreements entered into between the new management team and Dean Foods are summarized in an 8-K filed by Dean with the Securities and Exchange Commission.

"We are excited by the opportunity to lead this business as an independent company," stated Reed. "It is a strong business and offers a unique opportunity for growth. We look forward to working with the talented employees of the Specialty Foods Group to realize the potential of the new company."

The business lines included in the new company are expected to produce 2005 revenues of over $700 million and operating margins of between approximately 12% and 14%. If the unit were retained by Dean, it would be expected to contribute approximately $0.37 to $0.39 per share to Dean Foods' 2005 adjusted earnings. Inclusive of the businesses that are being spun off, Dean's 2005 adjusted earnings are expected to be between $2.20 and $2.30 per share. Information about the Specialty Foods Group segment's 2004 performance will be available in Dean's upcoming earnings announcement on February 10, 2005.

The spin-off is intended to take the form of a tax-free distribution to Dean Foods' shareholders of a new publicly-traded stock. The stock distribution ratio will be determined at a future date.

The transaction is expected to be completed in the third quarter of 2005, subject to confirmation by the Internal Revenue Service of the tax-free nature of the transaction, registration of the new security with the Securities and Exchange Commission and certain other customary conditions.