Milling & Baking News - November 11, 2014 - 17

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Sosland: Wheat flour milling is
'where the action' is
PALM BEACH, FLA. - The shifts
may only have been modest and gradual over the long term, but wheat flour
milling is "where the action has been"
over the past year, said Josh Sosland,
editor of Milling & Baking News, in
an Oct. 24 presentation at the North
American Millers' Association's annual meeting at The Breakers in Palm
Beach.
Citing data from the Grain & Milling Annual 2014 published by Sosland
Publishing Co., Mr. Sosland said total U.S. flour milling capacity was
1,620,253 cwts a day, which is up 32%
from 1989. Over this same period, the
U.S. population grew
28%, so the industry's
capacity has outpaced
population growth.
Mr. Sosland noted
that "the darker side" of
this statistic is that over
this same period, 1988- Sosland
2013, annual flour production only rose by 23%.
Still, milling has outperformed another leading mature industry.
"By way of comparison, car sales
between 1989 and 2013 climbed to 15.6
million vehicles, up 8% from 1989,"
he said.
Changing face of milling
How has the milling industry's roster changed? According to Mr. Sosland,
the change has been extraordinary.
"Today, 7 of the 10 largest milling
companies from the late 1980s either
no longer exist or no longer operate a
flour milling business," he said. "Essentially, looking at the earlier top 10,
the owners of 71% of the production
capacity a quarter century ago decided to sell or otherwise exit the flour
milling business."
Looking at a list of the current top
10 largest milling companies, Mr. Sosland pointed to a number of key differences. While the aggregate share of the
largest 10 milling companies is similar
today to 1989, 84% versus 81%, there
is a wider spread at the top, he said.
For instance, the three largest milling
companies accounted for 40% of total
milling capacity in the late 1980s, a figure that stood at about 50% a year ago
and 60% today.
Also in the late 1980s, the principal
focus of the leading companies of the
flour milling industry was quite different. Five of the 10 largest milling
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Industry Activities

predict with confidence where these
companies will be headed.
"Will the largest milling companies
remain focused principally on milling?" he asked. "Will their ownership
structure change? Will they expand
globally? Will they move into other

companies of 1989 were consumer
products companies - accounting for
half of the capacity. But today, he said
the percentage of Top
10 flour milling capacU.S. flour exports as a percentage
ity operated by companies that would describe
of domestic disappearance
themselves principally as
16%
consumer products com14%
panies would be only 8%.
12%
"I'm sure that's the
10%
smallest percentage since
World War II," he said,
8%
adding that approxi6%
mately 70% of the Top
4%
10 milling capacity in the
United States is operated
2%
by companies predomi0%
'66 '70 '74 '78 '82 '86 '90 '94 '98 '02 '06 '10
nantly or exclusively in
Source: U.S. Department of Agriculture
the milling business.
"It's an amazing and
important transformation," he said. areas of grain processing? Will the dif"Given the many challenges the indus- ferentiation in the industry continue
try faces, this singular focus could not to depend overwhelmingly on service
or will innovation offer opportunities
have come at a better time."
Mr. Sosland also drew attention to for true added value? Will flour millthe fact that a large proportion of the ing companies dedicate production
industry's capacity is owned by enti- capacity to specific customers in ways
ties that either didn't exist even two they have not done so much in the
years ago or were overwhelmingly past? These are among the questions
different businesses at that time, in- that we will watch most closely in the
cluding Ardent Mills, Grain Craft and years ahead."
One area of the milling business
Miller Milling, which now account for
unlikely to be a focus for the milling
56% of the Top 10 capacity.
industry of the future is flour exports,
Mr. Sosland said. In 1989, flour exNew direction?
The proportion of U.S. flour milling ports totaled about 29 million cwts,
capacity operated by publicly traded a level that has not been eclipsed
entities is at the smallest level in de- since then. As recently as 1965, flour
cades, and Mr. Sosland indicated that exports equated to 13% of annual
it is because the profile of the indus- production. For most of the 20th centry's largest players has changed so tury, maintaining flour milling export
radically in recent years it is difficult to levels was considered crucial for the

Ten largest U.S. flour milling companies
1988

2014

Total daily capacity (cwts)
ConAgra Inc.
193,000
ADM
167,700
Cargill
142,400
The Pillsbury Co.
131,700
International Multifoods
82,100
Cereal Food Processors
68,300
General Mills, Inc.
62,250
Bay State Milling Co.
58,350
Dixie-Portland Flour Mills
55,000
Nabisco Brands
28,000

Total daily capacity (cwts)
Ardent Mills
513,600
ADM
281,100
Grain Craft
164,000
Miller Milling
94,600
Bay State Milling Co.
81,900
General Mills, Inc.
80,500
The Mennel Milling Co.
41,500
Bartlett Milling Co.
40,900
North Dakota Mill & Elevator Association 34,800
Mondelez International
33,000

Total
Per cent of U.S.

988,800
81%

1,365,900
84%

Source: 1988 Milling Directory

Milling & Baking News November 11, 2014 / 17

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Milling & Baking News - November 11, 2014

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