Milling & Baking News - November 3, 2009 - 32

Pasta Perspective 

The power of pasta
New World Pasta c.e.o. launches World Pasta Day celebrating
industry's U.S. resurgence
Continued from Page 1

lbs, or about 19.8 lbs per person. The
category, which consists of frozen,
fresh, canned, sides and dry, is led
by dry pasta. With compound annual
growth of 13%, dry pasta sales are outperforming the overall pasta category,
Mr. Smith said, citing Nielsen Strategic Planner data for 2006-09.
"What is a remarkable metric is,
yes, we've benefited from inflation,
but from a tonnage perspective we're
actually up 3%," he said, pointing to a
14% gain in dollar sales and 3% gain in
unit sales in the 52 weeks ended Aug.
9, 2009, as tracked by Nielsen. "There
has been no negative pricing elasticity
in this business."
Within the dry pasta category,
Mr. Smith said both white pasta and
"healthy" (whole wheat, whole grain)
pasta have performed well.
"The positive news is that both of
these segments are very robust," he said,
citing a 13.9% gain in white pasta dollar

sales and 12.8% gain in healthy pasta
dollar sales. "We have double-digit on
the whole grain, whole wheat segment,
and then white pasta is also doing very
well. So this is a very healthy business
within the United States right now."
Most (72%) of the dry pasta sales are
in the grocery channel, Mr. Smith said,
with super centers - led by Wal-Mart
Stores, Inc. - accounting for an additional 15% of the sales.
"That is where we need to be very
focused as an industry," Mr. Smith said
of the 90% share controlled by grocery
and super center channels. He added
that dry pasta generated the highest
unit growth rate among the top 100
categories in grocery stores during
2009, and was the No. 2 performer in
terms of dollar sales. What this shows,
he said, is that pasta is "critically important" to retailers in terms of its
ability to draw traffic into the stores,
to create price impression and to build
the entire basket. The performance is

Greater convenience, culinary adventurism, more healthy offerings
and diverse ethnic offerings are some
of the trends expected to play out in
pasta innovation in the near future.
32 / November 3, 2009 Milling & Baking News

something he expects the industry to
replicate in 2010.
What's driving the growth?
Looking at possible growth drivers,
Mr. Smith said industry still has work
to do to draw some of the pre-Atkins
pasta consumers back into the business, as household penetration in the
52 weeks ended May 30, 3009, was up
0.5%. Purchasing frequency, on the other hand, was up 3.5% year over year.
"So we have the same number
of households, but in today's tight
economic environment they're buying pasta more frequently this year,"
he said. "They're buying the same
amount per transaction, but they're
buying more frequently, and that is
what is driving the growth."
The inflationary impact on food
during 2008, and on the pasta category specifically, was remarkable in that
while the average food company took
an 8% price increase and lost 4% of
tonnage, the dry pasta category took a
24% price increase and grew unit sales
by nearly 1%, Mr. Smith said.
"I have never seen that before in my
entire career, that lack of elasticity," Mr.
Smith said. The reasons, he said, include
pasta being a great value, pasta being rediscovered by consumers on a budget,
and consumption migration from "out
of home" to "in home" dining.
The inflationary impact dynamic
has continued in 2009, with the dry
pasta selling price up nearly 4% and
unit sales up almost 5%.
"Consumers are telling us this is a
great value, we rediscovered it and we
need to build upon this momentum,"
he said. "We need to continue to drive
this business."
In order to continue driving the
business, Mr. Smith said pasta manufacturers must focus on the incremental aspect of the business, including
promotions, aggressive pricing, front
page features and huge displays.
"The trade has clearly got behind
pasta, saying, in this recession ... we're
going to use pasta to drive people into
our stores," he said. "As an industry,
this is something we need to continue
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Milling & Baking News - November 3, 2009

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