Milling & Baking News - June 14, 2011 - (Page 14)

Business  Debate likely to rage on, but HFCS demand seen stabilizing in U.S. NEW YORK — While the debate over the relative merits of highfructose corn syrup is not likely to end any time soon, the tide may have turned in favor of HFCS, said a top executive at Corn Products International, Inc. Speaking May 25 at the Citi Global Consumer Conference, Cheryl K. Beebe, Corn Products’ executive vice-president and chief financial officer, cited data indicating HFCS demand was rising for the first time in recent years. Ms. Beebe commented at some length on the U.S. high-fructose corn syrup market in response to a question about Mexican demand for U.S. HFCS and prospects for corn refining capacity utilization in North America. While the healthfulness of HFCS has been under fire in recent years, Ms. Beebe said the furor in fact has not been triggered by problems with any one particular ingredient. “The reality is that the whole debate is really more about obesity,” she said. “And so we say it’s really about balance of calories. And the reality is sugar and cane sugar and corn sugar or high-fructose corn syrup are the same thing. There’s been a lot of press about that. And so it has been proven over again and again that it is really the same thing. So, for consumers, it’s all about balance.” Ms. Beebe cited data indicating a decline in HFCS in recent years, with carbonated soft drink demand slipping. “It seems to have stabilized,” she said. “And certainly in the food side of the business, using corn syrup versus sugar has really stabilized. And in fact, there was a report that said that for the first time in, I believe eight quarters, that it actually increased. “So the debate will continue. There will be articles that are written, but the reality is the science says it’s the same. Many of the (food companies) switched from high-fructose syrup to sugar to help market the brand, and it was all about marketing. Many found it didn’t necessarily increase the share of the brand. In fact, with the differential between sugar and HFCS several have gone back the other way. Because of 14 / June 14, 2011 Milling & Baking News the pressure on commodities they are not willing to pay the 20% to 30% premium that they have to pay for sugar. So you are getting a little bit of switching back. You won’t read probably many articles on that.” Regarding exports of HFCS, Ms. Beebe described shipments to Mexico as “pretty robust” and expressed the good pace would continue. “The demand for corn sugars, as well as for cane sugar in soft drinks, has increased over the past regardless of how I do that, we’ve had double-digit earnings per share growth along with steady cash flow generation as well.” She affirmed 2011 earnings per share guidance of $4.85 to $5.15, or $4.35 to $4.65 adjusted for a $58.4 million payment the company received in January from the government of Mexico. The payment followed a judgment in the company’s favor in a North American Free Trade Agreement (NAFTA) Chapter 11 Tribunal in 2009. Even following the adjustment, earnings would be up sharply from $3.24 in 2010. Commenting during the presentation on the company’s ‘The reality is sugar and cane sugar and corn sugar or high-fructose corn syrup are the same thing. There’s been a lot of press about that. And so it has been proven over again and again that it is really the same thing. So, for consumers, it’s all about balance.’ — Cheryl K. Beebe, executive vice-president and chief financial officer, Corn Products International, Inc. couple of years (in Mexico) with the growth in the population and the increase in the middle class,” Ms. Beebe said. She repeated comments she made in a recent earnings call with analysts in which she described utilization as a “bit tighter,” averaging between the “high 80s to low 90s” as a percentage of U.S. corn refining capacity. “We do recognize that the high-fructose corn syrup for soft drinks won’t increase over time and there could be a slow decline, depending on the brands,” she said. “But we see much more of a period of stability rather than any major change.” Analysts during the presentation questioned whether earnings growth at Corn Products was sustainable, but Ms. Beebe said the company’s long-term track record of growth gave her confidence in the outlook for the next several years. “Long term when you think about the organic growth, ingredient portfolio expansion, and the geographic footprint combined with the operational excellence, we look for low double-digit earnings per share growth over the five year strategic planning period,” she said. “If I break down the last 10 years, strategic plans was Ilene S. Gordon, Corn Products’ chairman, president and chief executive officer. She said the company’s October 2010 acquisition of National Starch offers the company access to a range of on-trend areas in food and beverages. “The wholesome area is one that is focused on the clean label trends in Europe where consumer product companies such as Marks & Spencer are very much focused on prepared foods or ready meals, and very much want to label the products to have no chemical modifications,” she said. She offered texture as another area of innovation for the company, citing yogurt as a category where the company has particular expertise. Offering an overview of the company’s geographic diversification, she noted that North America, where Corn Products operates 13 plants, accounted for 53% of first-quarter sales. Looking at the data another way, she noted that 65% to 70% of the company’s sales are outside the United States. While supplying beverage makers represents an important part of the company’s business, the percentage of sales has declined to only 11% globally, Ms. Gordon said. MBN /

Table of Contents for the Digital Edition of Milling & Baking News - June 14, 2011

‘Grain chain’ gives unanimous support for MyPlate
Canadian government targets C.W.B. monopoly on wheat marketing
MacLennan named president of Cargill
Celebrations may be premature for bakery fl our buyers
Editorial - Last hope for Doha Round not becoming non-Round
Wayne Turnbull reopens New Orleans bakery
General Mills adds Fiber One 90-Calorie Brownies
Packaged snacks sales reach $64 billion
Nestle joins project of food, genes
G.F.F.: One-ounce servings key to balanced meals
Oldways director offers mixed review of MyPlate
Stimulus boost for SNAP helps avert diminished food security
Smucker full-year profi t falls 3% on restructuring, acquisition costs
Debate likely to rage on, but HFCS demand seen stabilizing in U.S.
Kellogg sets 2010 to the side, looks forward to better 2011
Analyst: Nestle ‘unlikely’ to acquire General Mills
Grain Processing investing $100 million in emission reduction projects
Winter wheat crop forecast for 2011 up 2% from May
Wheat carryover forecast for 2012 lowered to 687 million bus
High fuel prices push shipping costs up; weather slows Upper Midwest rail traffi c
Canadian government targets C.W.B. monopoly on wheat marketing
Irish Pride launches bread with omega-3 fatty acids
Acquisitions help drive revenue gains at Aryzta in quarter
F.A.O. sees no respite from grain price strength and volatility
Gonnella offering scholarship to attend AIB
Paul Ridder named president of Tasty; Charles Pizzi to remain as adviser to Flowers
Chris Delaney named c.e.o. of Goodman Fielder
Bob Klima joins Caravan as business development manager
Fruit powder provides vitamins, fiber
Non-dairy ingredient achieves pareve certification
Products focus on noodle production
Trademark signifi es sustainable palm oil
Enzyme concentrate enhances baking properties of flour
U.S.D.A. raises forecast for 2011-12 world wheat ending stocks
Ingredient Market Trends
Ingredient Week
Marketplace Business Network
Ad Index

Milling & Baking News - June 14, 2011