International Pasta Organization

Canada’s Durum and Pasta Industry

Annual Meeting Lisbon, Portugal

June 7, 2013

Earl Geddes CEO Cigi

Canadian Pasta Industry

  Current Pasta trends

  Current industry changes

  Current challenges

  Cigi (Canadian International Grains Institute)

Current Pasta Trends

  Companies

  Consumption

  New durum varieties

Canadian Industry

Company 2010 2011 2012

Ebro Foods SA 33.5 33.9 34.6

Italpasta Ltd. 9.5 9.8 10.1

Sun-Brite Canning Ltd. 10.0 9.5 9.2

Maple Leaf Foods Inc. 8.4 8.6 9.0

Heinz Co, HJ 6.4 6.3 6.1

Private Label 19.9 19.2 18.7

Source: Euromonitor International, 2013 * Note: Major companies are sorted based on the market share of more than 0.1% * Market share is broken down by company and the figures are based on the aggregated sales of their brands

Pasta consumption growth

Country 2007 2012 Dried pasta 465.3 647.2 Chilled/Fresh pasta 102.3 140.0 Canned/preserved pasta 71.7 84.4

Country 2007 2012 Dried pasta 133.3 159.8 Chilled/Fresh pasta 9.4 10.4 Canned/preserved pasta 23.8 25.4

Source for both: Euromonitor International, 2013 *CAGR: compound annual growth rate

Canada’s Pasta and Couscous Market, Retail Volume Sales Thousand Tonnes

Canada’s Pasta Market, Retail Value Sales in US$ Millions

Country 2007 2012 2007-12

CAGR Pasta total 270,909.9 401,955.0 8.2%

Couscous total 2,775.4 4,339.9 9.4%

United States 188,627.4 271,378.4 7.5%

Italy 36,568.2 43,316.8 3.4%

China 19,410.7 35,561.3 12.9%

Thailand 8,524.5 14,311.3 10.9%

South Korea 7,177.3 11,792.9 10.4%

Country 2007 2012 2007-12

CAGR

(Pasta total) 136,169.9 171,753.2 4.8%

(Couscous total) 3,840.8 6,749.2 11.9%

United States 137,966.0 176,797.3 5.1%

Israel 100.4 335.0 27.2%

Philippines 250.4 261.3 0.9%

United Kingdom 186.1 228.5 4.2%

Canada’s Imports of Pasta and Couscous

by Top 5 Countries, in US$ Thousands

Canada’s Exports of Pasta and Couscous

by Top 4 Countries, in US$ Thousands

Source for both: Global Trade Atlas, Statistic Canada, *CAGR: compound annual growth rate

Current Industry Changes

  Open market for durum

  New Processing?

  Multiple suppliers

  New Products

New Products/Processors

New Products

Industry Challenge

Healthy Grains Institute (HGI)

  Low Gluten Diet

  HGI Members

  HGI Objectives

Canada’s Food Guide -  Health Canada recommends six to

eight servings of grain based foods daily

-  50% of grains based foods should be whole grain

-  10% of Canadians are eating enough grains

- Whole grains are nutrient-dense foods and a good source of iron, fiber, protein, B vitamins and minerals

-  Fiber can help curb appetite and achieve sustainable weight loss

-  Grain based foods lower risk of diabetes, cardiovascular disease and colon cancer.

Healthy Grains Institute (HGI)

– Canadian Pasta Manufacturers Association

– Canadian National Millers Association – Canada Bread, Weston Bakeries,

Bakery Association of Canada – Grain Growers of Canada

HGI Objectives –  Communicate scientific and medical studies on the

importance of wheat and whole grains to human health

–  Encourage influencers to provide legitimate information and tackle myths being advanced in fad diets and books

–  Establish readily available and understandable information through the Healthy Grains Institute

–  Proactively respond to media stories and social media that reinforce misconceptions about wheat gluten.

Cigi Pasta Process

  Pasta Technology

  Research

Cigi Pasta Technology

  Mill

  Extrudes

  Dryer

  Pulse Facility

Cigi’s Pasta Technology

Three Levels of Extrusion

Pasta Processing Dryer

Multiple drying cycles to match Commercial reality

Pulse Processing

•  Pulse Milling and Flour Utilization Project

•  New products with expanded use of pulse flour

Quality Testing in the Analytical Laboratory

Cigi Durum Research

New Durum Variety Evaluation

The End

•  No credible Canadian authoritative voice to counter unsupported/damaging health claims and provide truth about wheat grains.

– In 2011, Americans spent a record $2.6 billion1 on gluten-free products:

•  46% thought they were healthier •  30% bought them to manage their weight • Only 8% to 12% had a gluten intolerance

– Gluten-free products are made with refined flours/starches; are low in fibre, protein, iron, B vitamins and other nutrients and often higher in sugar, fat and calories

•  Markets–Major Trends •  Ebro Foods SA was the largest pasta company in Canada in 2012. The company’s major

brand, Catelli, accounted for 29.6% of brand share. The second-largest company was Italpasta Ltd. (Major Brand: Italpasta, 10.1% of brand share) and the third was Sun-Brite Canning Ltd. (Major Brand: Primo, 8.3%).

•  Health and wellness trends have continued to gain traction in 2012, with more grocery retailers carrying gluten-free and whole wheat pastas at premium prices.

•  Chilled/fresh pasta brands, such as Olivier, saw strong sales growth. Chilled/fresh pasta are also marketed as premium products.

•  Canada - Pasta and Couscous Market Share by Major Companies and Private Labels - % Breakdown Company 2010 2011 2012

•  Ebro Foods SA 33.5 33.9 34.6 •  Italpasta Ltd. 9.5 9.8 10.1 •  Sun-Brite Canning Ltd. 10.0 9.5 9.2 •  Maple Leaf Foods Inc. 8.4 8.6 9.0 •  Heinz Co, HJ 6.4 6.3 6.1 •  Barilla Holding SpA 2.5 2.4 2.4 •  Eden Foods Inc. 0.3 0.3 0.3 •  Les Aliments O'Sole Mio Inc. 0.1 0.1 0.1 •  Private Label 19.9 19.2 18.7