Milling & Baking News Corporate Profiles - 2019 - 14

expect a return on investment of between 5 times and 15 times of the program's cost.
Flour milling companies also have moved in new directions to adjust for
shifting consumer eating habits.
In July, Ardent Mills, L.L.C. acquired a grain storage facility in Klamath Falls,
Ore., to enhance its ability to source organic wheat and other organic grains.
To address changing tastes more broadly, Ardent Mills in 2018 established
The Annex as a separate business, offering a portfolio of heirloom wheats,
rye, barley, pulses and ancient grains. Earlier this year, the company added
specialty grains handling and cleaning capabilities at its Denver mill. Numerous
other milling companies, large and small, have announced initiatives around
specialty grains. Also dramatic have been steps taken by a new company, Panhandle Milling L.L.C., to make major investments in specialty grains opportunities while minimizing its exposure to more commoditized wheat flour milling.
Bay State Milling Co. has begun marketing a new product stemming from a
2017 partnership with Arista Cereal Technologies, which developed a wheat variety with 10 times more fiber within the endosperm than what is in most wheat
harvested today.The new variety has amylose content of about 85%, which compares to 20% or 30% in regular wheat. The higher amylose content leads to a
higher resistant starch content. Resistant starch functions like soluble fiber. Bay
State has contracted with farmers across a number of states to grow several
thousand acres of the wheat.The resulting flour is being marketed as HealthSense
high-fiber wheat flour. Arista Cereal Technologies, Bay State Milling and Arcadia
Biosciences reached an agreement in August 2019 under which Bay State will
become the exclusive commercial partner of Arcadia's high-fiber wheat under the
HealthSense brand. Arista received exclusive rights under Arcadia's intellectual
property in Australia, New Zealand, Europe, Japan and South Korea.

GENERAL MILLS, POST HOLDINGS, KELLOGG AND
©KRITCHANUT - STOCK.ADOBE.COM

INDUSTRY REVIEW: GRAIN-BASED FOODS

Notwithstanding volume declines, executives from the ready-to-eat cereal
market have remained optimistic their market will grow, with innovation.

"We don't think it's going to be in mid-single digit, but just grow a little
bit," said Jonathan J. Nudi, group president of North America Retail at General
Mills, Inc., during Barclays Global Consumer Staples Conference in Boston in
September. He attributed some of the weakness over the past year to inventory
draw downs by retailers rather than diminished consumer demand.
"We feel confident about our plans to be able to perform well, and it can ...
drive the category as well," he said. "In terms of inventory, I mean, we've been
pretty clear over the last year for sure. We've seen, as our retailers focus on
reducing working capital, they have drawn down their inventories. And for us,
in fiscal '19, it was about a point gap between Nielsen and what we reported
from a net sales standpoint. We expect that to continue into the coming year.
We hope it's not quite as big of a gap. But clearly, our retailers are still focused
on working capital as well."
At the same conference, Steven A. Cahillane, chairman, president and c.e.o.
of Battle Creek, Mich.-based Kellogg Co., acknowledged that R.-T.-E. cereal is
a challenging business for the company.
"It's a highly penetrated category," Mr. Cahillane said. "It's a profitable category

LEADING

R.-T.-E. cereal category eyes growth

ready-to-eat cereal vendors
1
2
3
4
5
6
7
8
9

General Mills, Inc.
Kellogg Co.
Post Holdings, Inc.
Quaker Oats Co.
Kashi Co.
Nature's Path Foods, Inc.
Small Planet Foods, Inc.
Bear Naked, Inc.
Kind L.L.C.
Private label
Total

Dollar sales
$2,625,568,905
$2,376,257,866
$1,678,197,537
$518,090,833
$139,018,138
$88,969,308
$74,353,786
$71,154,688
$56,078,680
$566,342,205
$8,372,500,828

% change
from
year ago
0.9%
-3.2%
1.6%
-4.5%
0%
-2.3%
-4.6%
-2.4%
5.4%
-6.8%
-1.2%

ready-to-eat cereal brands
1
2
3
4
5
6
7
8
9

Honey Nut Cheerios
Frosted Flakes
Cinnamon Toast Crunch
Honey Bunches of Oats
Cheerios
Lucky Charms
Froot Loops
Frosted Mini-Wheats
Fruity Pebbles
Private label
Total

Dollar sales
$460,881,494
$405,597,596
$389,536,486
$386,575,147
$297,820,639
$289,805,253
$263,996,544
$230,196,767
$187,200,106
$566,342,205
$8,372,500,828

% change
from
year ago
-3.1%
1.4%
3.7%
3.2%
8.1%
-2.7%
1.3%
-4.5%
9.0%
-6.8%
-1.2%

Data for 52 weeks ended Aug. 11, 2019
Total U.S. - Multi-outlet with C-Store (Supermarkets, Drugstores and Mass Market Retailers, Gas/C-Stores, Military Commissaries and Select Club & Dollar Retail Chains)
Source: Information Resources, Inc.

14 \ November 2019

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Milling & Baking News Corporate Profiles - 2019

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