The sale of Oberweis receives approval from the bankruptcy court

A Chicago bankruptcy judge on Wednesday approved the sale of the century-old Oberweis Dairy to a Winnetka-based private equity firm that plans to expand its manufacturing and retail locations while retaining its 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 are not going to change our positioning. We do not change our recipes. We are 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 we’re so excited about it.”

The Hoffman Family of Companies defeated rival bidder Dutch Farms of Chicago last week with a $21.25 million bid for Oberweis’ assets at a bankruptcy auction. The deal is expected to close on June 17, according to Hoffmann.

Founded in 1915 by Peter Oberweis, an Aurora dairy farmer who sold milk from a single horse-drawn wagon, the company has grown into a multi-state operation with 40 ice cream shops, widespread grocery distribution and a home delivery service. But Oberweis, known for its old-fashioned bottled milk and ice cream, filed for 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 told the state it might have to close its North Aurora plant and lay off employees if a buyer was not found. Now the factory will remain open, with infrastructure improvements and increased production at the top of the new owners’ to-do list.

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

“We are going to make a number of improvements to the factory, both from an aesthetic point of view and from a functional point of view,” said Hoffmann. “But our plan is to make that factory as busy as it has ever been.”

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

Going forward, Hoffmann will look to expand Oberweis’ store footprint in Chicago, including along the North Shore where the new parent company is located. It will also explore new markets where the investment firm has significant interests, including Florida, Michigan and Wisconsin, Hoffmann said.

While the home delivery service thrived during pandemic lockdowns, Oberweis has struggled since, with annual revenue falling from a record high of $116 million in 2020 to $95 million last year, according to the bankruptcy filing.

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

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

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

Meanwhile, plant-based dairy sales, which have increased nearly 50% since 2019, remained virtually flat at $4.1 billion last year, according to Circana.

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

“Everything is on the table,” Hoffmann said. “Ultimately we want to give our customers what they want.”

In addition to broader industry headwinds, Oberweis has 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 switching to amber bottles in supermarkets, which customers discovered unattractive.

But Hoffmann said the Oberweis products themselves remain the cream of the crop for loyal customers, a base the new owner hopes to grow. 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 series of high-profile but mostly unsuccessful bids as a Republican candidate for various offices. The dairy magnate eventually won a seat as an Illinois state senator, serving from 2013 to 2021.

The Hoffmann family may have 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.

The family’s investment company, founded in 2002 by patriarch David Hoffmann, owns more than 100 brands in 30 countries. Oberweis is his first foray into the dairy industry, but the elder Hoffmann grew up on a dairy farm in Missouri.

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

“It’s the best ice cream in the world,” Hoffmann said. “I also love the chocolate milk.”

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