Milling & Baking News - April 20, 2004 - (Page 1)

Theinewsweeklyiofigrain-basedifoods Enrich or fortify In these diet-conscious days, changing the nutrition profile of a food can be a powerful strategy. Story on Page 23 Interstate girds itself for difficulties after quarterly loss KANSAS CITY - In announcing a loss during the third quarter ended March 6 and not long after suspending its cash dividend, Interstate Bakeries Corp. said it needed to take additional steps to stabilize its financial situation. I.B.C. sustained a loss of $6,607,000 in the third quarter ended March 6, compared with a loss of $6,749,000 in the third quarter of last year. The loss was slightly greater than the company projected when issuing an earnings warning in late March. I.B.C. said that while it was in compliance with the financial covenants in its senior secured credit facilities at the end Continued on Page 18 APRIL 20, 2004 / NAMA firms up commitment to product promotion program KANSAS CITY - "NAMA members will make a significant contribution to the product promotion program for grainbased foods," John Gillcrist, chairman of the North American Millers' Association, said last week. Mr. Gillcrist, who is president of Bartlett Milling Co., affirmed the industry's commitment to the program following an April 13 one-day meeting of the NAMA board of directors conducted at the Hilton hotel in Kansas City. At the meeting, the millers committed to the concept of contributing to a product promotion program 1c per cwt of flour milled for baking into bread and rolls, or between $1 million and $2 million per year in total. The miller meeting followed by several weeks a vote in favor of a program by NAMA's partners in the effort, the American Bakers Association (see Milling & Baking News of March 23, Page 1). Underpinning the industry's consistent commitment to product promotion has been dramatic losses in demand in recent years, Mr. Gillcrist said. "The flour milling industry has lost 100 million cwts of production in the six years since per capita consumption peaked," he said. "That is over $100 million in lost margin contribution. For bakers, the losses have been in the many hundreds of millions of dollars. A product promotion program that minimizes this Continued on Page 9 AIPC faces deteriorating pasta market, profit/sales picture KANSAS CITY - Marking a dramatic reversal from forecasts earlier this year, American Italian Pasta Co. is projecting earnings to decline slightly in fiscal 2004 from last year. In revising its earnings guidance April 12, the company said volumes would be flat to slightly above fiscal 2003 and that revenues would edge up from last year. LATE AIPC cited a number of factors darkening its financial picture. Prominent among these is the accelerating pace at which U.S. pasta consumption has declined. The company cited ACNielsen retail consumption data indicating a 7% volume drop for the 13 weeks ended March 20, double the 3% to 4% decline experienced in all channels in Continued on Page 12 NEWS PURCHASE, N.Y. - Frito-Lay North America turned in strong results in the first quarter ended March 20, according to parent PepsiCo, Inc., as volume growth in the core salty snack business was boosted by several factors, including the high singledigit volume growth in Lay's Classic Potato Chips, which was re-launched during the quarter with an improved product, new packaging and focused advertising support. Operating Continued on Page 8 Frito-Lay strong in quarter inside THIS WEEK New labeling leader named at C.F.S.A.N. 9 Ingredient Flowers purchases Georgia baking plant 16 McDonald's expands health initiative 17 Week 39

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Milling & Baking News - April 20, 2004