Milling & Baking News - November 15, 2005 - (Page 1)

Theinewsweeklyiofigrain-basedifoods / NOVEMBER 15, 2005 Rising energy, packaging costs prompt Kraft to raise prices NORTHFIELD, ILL. - Kraft Foods Inc., the nation's largest food manufacturer, confirmed last week it is increasing prices on many of its products by an average of 3.9% because of rising energy and packaging costs. The maker of Oreo cookies, Kraft Macaroni & Cheese and many other grain-based foods sent a memo to retailers about the action on Nov. 4, said Kris Charles, a Kraft company spokeswoman. Ms. Charles said most of the price increases were to take effect immediately, although those on direct-store delivery products such as pizza won't be put in place until Jan. 2. While the company has not disclosed specifics of the pricing changes publicly, Ms. Charles said the increases apply to its cookies and crackers, Milk-Bone dog treats, beverages, numerous Oscar Mayer products, some pudding products and California Pizza Kitchen pizza. The leap in the price of oil has struck hard at packaged food companies' bottom lines, affecting plastic packaging expenses and the cost of energy involved in running plants and transporting goods. Kraft last month cut its estimate for 2005 profit, citing the higher packaging, energy and commodity costs. Chief executive Roger Deromedi alluded to the possibility of increases in the company's third-quarter earnings conference call Continued on Page 10 Flowers cuts earnings guidance for 2005; quarterly income off THOMASVILLE, GA. - After twice raising its 2005 earnings guidance since May, Flowers Foods, Inc. on Nov. 10 reversed course and lowered its projection of profits in the current year. The company also announced third-quarter earnings down from the same period last year. Flowers said 2005 earnings will range be- LATE Story on Page 23 tween $59.5 million and $61.5 million, down $3.3 million to $6.5 million from its previous guidance of $62.8 million to $68 million. Earnings have been adversely affected by increased production and distribution costs associated with damage caused by Hurricane Katrina. The Flowers baking Continued on Page 12 NEWS WASHINGTON - U.S. flour production in the third quarter of 2005, or July-September, totaled 101,734,000 cwts, a gain of 0.8% over 100,908,000 in the same quarter of 2004, according to the U.S. Department of Commerce's Bureau of the Census. It was the largest output for a quarter in two years, or since July-September 2003, when production was 103,071,000 cwts. This also was the first quarter in six where output exceeded a year earlier. July-September output was up 7.1% from 95,017,000 Continued on Page 8 Flour output largest in two years inside The quick and the crispy Hamlin, Merrill, Strongin as honorary NAMA members WASHINGTON - Members of the North American Millers' Association meeting at the Willard Intercontinental hotel in Washington Oct. 17-19 named as new honorary members of the association Craig L. Hamlin, Fred L. Merrill and Phillip N. Strongin. Mr. Hamlin joined ADM Milling Co. in 1975 and held a variety of positions, including vice-president, secretary and treasurer. Mr. Hamlin was named president of ADM Milling in 1989. In addition to his milling positions, he was named group vice-president of Archer Daniels Midland Co. in 1995 and senior vice-president in 2000. Before joining ADM, he was Continued on Page 20 THIS WEEK Ingredient Foundation celebrates 'joys of toast' Shoemaker confident on flour trends 15 18 Sara Lee earnings decline in quarter 38 Week 39

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Milling & Baking News - November 15, 2005