Milling & Baking News - February 3, 2004 - 11

F I N A N C I A L

R E S U L T S

AIPC sees continuing slide in
dry pasta; sets out strategies
Continued from Page 1
heightened negative halo associated
with carbohydrate-based products."
He emphasized that the reducedcarbohydrate movement went beyond
followers of the Atkins diet to a larger
portion of the U.S. population striving to
reduce carbohydrate intake.
Mr. Trott said that AIPC estimates
that total retail pasta sales declined 3%
to 4% over the last 90 days, more than
anticipated. At the same time, AIPC's
performance was not as weak, with
slightly more than half of a percentage
point decline in consumption.
Looking ahead, Mr. Webster said, "We
expect the dry pasta category to continue
to decline 3% to 4% over the course of
the year, excluding the impact of new
products."
Mr. Trott added, "We view returning the
category to growth as the paramount responsibility as the leader in the category."
AIPC's efforts in that regard range
from providing recipe solutions to consumers to joining with Barilla S.p.A. and
the National Pasta Association to sponsor an international conference on pasta
next month in Rome, Mr. Trott said.
"We truly believe that when consumers learn more about carbohydrates they
will learn that not all carbs are created

equal, that there are good carbs and pasta
is a good carb," he said. "We are conﬁdent
that will come out of the conference."
Noting strength in the performance of
AIPC's Mueller's and Golden Grain labels, Mr. Trott said, "Our mission is very
clear - it's to be setting the pace for the
category so as Mueller's and Golden
Grain outpace the category, our branded
businesses will be very successful. "
Mr. Trott and Mr. Webster emphasized
the signiﬁcance AIPC is placing on a
new line of reduced-carbohydrate pasta
to be introduced later this month (see
related story below).
"Consumers have been challenging
the category to develop pasta that ﬁts
their changing lifestyle," Mr. Trott said.
"That has clearly affected the entire
pasta category."
AIPC is taking a three-pronged approach to the carbohydrate issue, the
executives said - an exclusive manufacturing agreement with Atkins Nutritionals, Inc.; educating consumers about the
beneﬁts of regular pasta, and introducing
new pasta products that will meet the
needs of individuals in the later maintenance phases of the Atkins diet and who
don't want to give up familiar foods such
as pasta.
Mr. Webster told analysts that while

AIPC offers reduced-carbohydrate
pasta under several brand names
KANSAS CITY - American Italian Pasta
Co. last week launched a line of reducedcarbohydrate pasta under the Mueller's,
Golden Grain, R&F, Ronco, Martha Gooch,
Luxury and Anthony's brands.
AIPC said the pasta has the same
taste as regular pasta with half of the
net grams of carbohydrates per serving - 19 grams versus the industry
standard 39 grams.
AIPC said the reduction in carbohydrates was achieved by increasing the
ﬁber and protein content with proprietary natural wheat-based ingredients.
In August, the company announced it
was offering pasta under the Atkins
Nutritional brand.
The reduced-carbohydrate pasta is packaged in 12-oz cartons and is available in ﬁve
varieties: spaghetti, rotini, elbows, lasagna
and penne.
The pasta will begin shipping in February
to grocery chains, mass merchandisers, club
retailers and drugstore chains.
"We are excited to be ﬁrst to market with
12 / Milling & Baking News, February 3, 2004

a product that is geared toward Americans
trying to reduce their carbohydrate intake
but not interested in the extreme low-carb
diets for either taste compromise or longer

term health concerns," said Daniel W. Trott,
president of AIPC Sales Co., and executive
vice-president of marketing, AIPC. "In addition to this important branded product
offering to consumers through our retail
partners across the country, we are also in
the process of rolling out AIPC's reducedcarbohydrate pasta to restaurant, institution
and ingredient customers."

the reduced-carbohydrate pasta involved higher costs, net revenues per lb
also are higher. "Depending on the strategic business unit and the speciﬁc packaging and product formulations, we are
expecting net revenues per lb of three to
four times our current average revenue
per unit," he said. Higher product sales
prices reﬂect higher ingredient, packaging and manufacturing costs, he said.
The targeted retail price of the
branded reduced-carbohydrate product
is $1.99 per unit, compared with slightly
more than $1 per lb for regular pasta, Mr.
Webster said. He pointed out that some
low-carbohydrate pasta now on the market sells for $3 to $7 per package.
Net income of AIPC in the ﬁrst quarter
ended Jan. 2 was $8,127,000, equal to 45c
per share on the common stock, down
9% from $8,923,000, or 50c per share, in
the ﬁrst quarter of ﬁscal 2003. Revenues
totaled $101,499,000, down 5%.
A 13-week quarter in ﬁscal 2004 compared with a 14-week quarter in ﬁscal
2003 represented an implied "hurdle"
rate of 7.7% to achieve sales growth,
AIPC noted.
Also affecting results was a delay in
receipt of the continued dumping and
subsidy offset payment from the U.S.
government. AIPC was inadvertently
excluded from the payment in the quarter, which reduced revenues and proﬁt
by $600,000. The payment is expected to
be received in the current quarter. MBN

MGP Ingredients, Inc., which partnered
with AIPC in developing the new pasta,
has been working on reduced-carbohydrate
formulations for some time, said Michael J.
Trautschold, MGPI executive vice-president
of marketing and sales. "Between our two
research and development groups, we've
developed formulas they are enthusiastic
about," he said. "We're very impressed by the product. We think
it's going be a great success, and
we're proud to be part of a team
that helped formulate it."
Specialty wheat-based ingredients have been popular among
food companies because of the
clean ﬂavor proﬁle they possess,
Mr. Trautschold said. "We've been
talking to all the major food companies," he said. "Several companies
have been and are using FiberStar 70, which
is a modiﬁed resistant wheat starch (allows
70% of the carbohydrates to be counted as
ﬁber) and our Arise line of wheat protein isolates. This line has broad-based applications
in bakery goods and other food products. It
is a more pure form of protein than regular
wheat gluten and allows lower carbohydrate
levels to be acheived than regular gluten." MBN
bakingbusiness.com/world-grain.com

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Milling & Baking News - February 3, 2004

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