Milling & Baking News - November 20, 2007 - (Page 1)

THE NEWS WEEKLY OF GRAIN-BASED FOODS NOVEMBER 20, 2007 / Flour output hits seven-year high with increase of 4.6% FEATURE Promotional oil options Consumers become more savvy about variety of oils. Story on Page 21 LATE NEWS Retail bread prices post wide gains WASHINGTON - The national average price of white pan bread surged 6.2c in October, marking its largest month-to-month increase since May 2005. At the same time, the price for whole wheat bread rose 7c to a record 177.1c per lb, according to the Bureau of Labor Statistics of the U.S. Department of Labor. The October price for white pan bread was 127.4c per lb, up 17.7c from a year ago. Meanwhile, the Consumer Price Index for baked foods and cereal products moved up 0.6% in October while the index for all foods at home gained 0.5%, according to the B.L.S. The October index for Cereals Continued on Page 8 WASHINGTON - Flour production by increases, the longest in recent memory, U.S. mills in the third quarter of 2007, ap- followed four successive quarterly deproaching an all-time high, creases from a year earlier Whole wheat flour increased 4.6% over the with those changes rangproduction is up 21% same 2006 quarter to set a ing from 533,000 cwts to in 2006-07 (story on seven-year peak, according 2,163,000. In turn, that pePage 10). to the Bureau of the Census riod of reductions came afof the U.S. Department of Commerce. ter five successive quarterly rises from a Output in the quarter totaled 108,637,000 year earlier, varying between 6,000 cwts cwts, up 4,759,000 from 103,878,000 in and 939,000. July-September 2006. The impressive 4.6% increase folThe quarter was the first since early lowed a 5.2% gain in the second quarter 2000 in which U.S. flour mills operated of 2007, which was the largest year-toabove 90% of daily capacity based on the year quarterly gain in eight years. six-day week. Most of the significant year-to-year The gain over July-September 2006 fluctuations in both 2001 and 2002 were marked the ninth consecutive quarter- decreases with the changes ranging from ly year-to-year increase, ranging from only a single gain of 55,000 cwts to a 677,000 cwts to 5,268,000. This stretch of Continued on Page 11 Kraft's Post cereal business to be merged into Ralcorp Holdings ST. LOUIS - In a transaction that would dramatically increase its size, Ralcorp Holdings, Inc. on Nov. 15 announced it has reached an agreement under which it will acquire the Post cereal business of Kraft Foods Inc., Northfield, Ill. The all-stock, tax-free, transaction, valued at $2.6 billion, would more than double Ralcorp total profits and would raise the company's profit margins and sales by about 50%. It would transform the company from its private label focus (the company's tagline is Ralcorp - A Leading Store Brand Company) to a blend of private label and branded businesses. Post is the nation's third largest ready-to-eat breakfast cereal maker with a number of prominent brands, including Honey Bunches of Oats (the industry's No. 3 brand), Pebbles, Post Selects, Spoon Size Shredded Wheat, GrapeNuts and Post Raisin Bran. "This is a transforming event for Ralcorp," said David P. Skarie, co-chief executive officer and president of Ralston Holdings, Inc. "The addition of Post cereals gives Ralcorp a truly distinctive line of branded cereal products plus a branded infrastructure and platform that we can build on through organic growth and acquisitions." Mr. Skarie, who oversees Ralston Foods cereal business, together with Continued on Page 15

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Milling & Baking News - November 20, 2007