Milling & Baking News - November 15, 2005 - 10

B U S I N E S S

Rising energy, packaging costs
prompt Kraft to raise prices
Continued from Page 1
last month, saying Kraft had been unable to raise prices enough to offset the
soaring cost of coffee, nuts, energy and
other commodities. But he acknowledged the risk involved, since retail
customers also are taking a financial hit
from rising energy prices.
"We're cognizant and watchful of consumers' spending power as they're having
to spend more on filling up their tanks of
gasoline," Mr. Deromedi said in the Oct.
18 call. "The important thing for us is to
maintain and continue to build the value

they see in our brands in the face of these
other pressures."
Morningstar Inc. analyst Greggory Warren
said the increases will
cut into Kraft's sales
volumes but it is taking
a calculated risk with
its strongest products.
The company wouldn't
raise prices on cheese
items, he said, because
of stiff competition from
private label companies

Loders Croklaan expands palm oil
processing facility in Illinois
CHANNAHON, ILL. - Loders Croklaan
opened a new palm oil processing factory
Nov. 7 in Channahon that expands the existing plant there by 10,000 square feet and increases storage capacity by 200%. The new facility incorporates a bleaching line that boosts
capacity by 400%. A new oil in-line blending
capability increases bulk capacity by 100%.

"The pending F.D.A. requirement for
food manufacturers to label trans fat content
on all products has driven unprecedented
demand for functional palm oil-based alternatives," said Donald Grubba, president of
Loders Croklaan North America.
With global headquarters in Wormerveer, The Netherlands, Loders Croklaan

Associated Grain Terminals agrees to buy
Louisiana grain transfer facility from Cargill
CONVENT, LA. - Associated Grain Terminals, L.L.C., a subsidiary of Associated
Terminals, has agreed to buy Minneapolisbased Cargill, Inc.'s "K-2" grain transfer
facility, located on the Mississippi river
near Convent.
Opened in 1981, the K-2 is used to transfer
commodities such as corn, rice and wheat
from river-traveling barges to ocean-going

ships for export. The K-2 has been located
in Convent since its opening.
"It is always difficult to sell a longtime Cargill asset," said Brian Silvey, vice-president of
Cargill Sweeteners North America. "But the
K-2 has faced some business challenges in recent years, and we felt that Associated's core
competencies matched up with the facility's
needs better than ours do. We are confident

S.&P. ups outlook on Kellogg to 'positive'
NEW YORK - Standard & Poor's Ratings Services has revised its outlook on The Kellogg Co. to "positive" from "stable," reflecting Kellogg's continued improvement in operating performance and market share gains in fiscal 2005 despite industry challenges
pressuring gross margins. At the same time, S.&P. affirmed its ratings on the company,
including its "BBB+" long-term and "A-2" short-term corporate credit ratings.
Battle Creek, Mich.-based Kellogg had $4.8 billion in lease-adjusted total debt as of
Oct. 1.
"Strong cash flow and an aggressive debt reduction policy have contributed to ongoing improvement in credit measures while the company maintained a conservative
financial policy," said Ronald Neysmith, credit analyst.
With improved cash flow, the company has been able to increase its investment in
brand building, and thus achieve market-share gains, S.&P. said.
S.&P. noted that while the majority of industry players have experienced unit volume
declines, Kellogg has gained about 2.1% in volume. Third-quarter results for the company's U.S. snacks business posted a strong 6% growth primarily from Pop-Tarts toaster
pastries and fruit snacks and crackers, while cookie sales declined during the quarter. MBN

10 / Milling & Baking News, November 15, 2005

that already has weakened results.
"The consumer is very price sensitive,
so we'll have to see what happens," he
said. "I think it's going to be a tough
winter for food and retail in general."
General Mills, Inc. and
Campbell Soup Co. both
were burned by putting
through price increases
that their competitors
didn't follow, Mr. Warren noted. If the same
happens with Kraft, the
company will be forced to
launch more promotions
that would wipe out the
financial benefit of price
increases, he said. MBN

refines and distributes palm oil, a natural
oil extracted from the fruit of palm trees
that is semi-solid at room temperature.
Palm oil is an alternative to partially hydrogenated fats, which include trans fat that
raises L.D.L. (bad) cholesterol and reduces
H.D.L. (good) cholesterol. Palm oil contains
saturated fat, which raises both L.D.L. and
H.D.L. cholesterol.
The F.D.A. has set Jan. 1 as the day food
manufacturers will be required to list the
amount of trans fat on food labels. MBN

that we are placing the asset in good hands."
Associated Terminals is one of the largest
marine cargo transferring companies on the
Mississippi river. The company transloads
cargo at nine mid-stream anchorage facilities in the lower Mississippi, as well as other
dockside and on-site locations.
"The K-2 is a first-class rig and an excellent fit with our family of southern Louisiana facilities," said Gary Poirrier, senior
vice-president of Associated Terminals.
"This acquisition will unquestionably
enhance us in our mission to be the lower
Mississippi's premier provider of cargo
transferring services. We're excited at the
opportunity this presents to expand our offerings as well as our customer base." MBN

Fleischmann's Yeast
to raise prices on
propionate products
ST. LOUIS - Fleischmann's Yeast last week
said it will implement an average price increase of 10c per lb on its AB Mauri calcium
propionate and sodium propionate products effective, Jan. 1.
"This action is necessary due to the
continued and dramatic increase in raw
materials, energy and distribution costs,"
the company said. MBN
bakingbusiness.com / world-grain.com

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Milling & Baking News - November 15, 2005

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