THE STATE OF THE PASTA INDUSTRY: GLOBAL TRENDS

AND PROSPECTS
JARED KOERTEN
US RESEARCH ANALYST
WORLD PASTA DAY 2012
INTRODUCTION 2

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PASTA MARKET OVERVIEW
GROWTH DRIVERS
COMPETITIVE LANDSCAPE
LOOKING FORWARD
 PASTA MARKET OVERVIEW 4

Pasta Continues to Grow

The Global Pasta Market: Retail Volume

Sales and Growth 2006-12
11,0 4,0
10,8 3,5
10,6
3,0
10,4
2,5
Million tonnes

10,2

% growth
10,0 2,0
9,8 1,5
9,6
1,0
9,4
9,2 0,5

9,0 0,0
2006 2007 2008 2009 2010 2011 2012
Pasta retail volume sales Pasta year-on-year sales growth

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PASTA MARKET OVERVIEW 5

Consumer Expenditure Varies by Region

1) $3.7bn 2) $3.4bn 3) $2.1bn

Italy USA Brazil
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PASTA MARKET OVERVIEW 6

Underdeveloped Markets Driving Growth

Top 10 countries – Total Volume

 Recent growth driven by
Sales Growth, 2007-12 small pasta markets
Iran
India  Consumers increasingly
Egypt discovering pasta’s
numerous benefits
Malaysia
 Affordability
Vietnam
 Convenience
Indonesia
 Versatility
Algeria
South Korea  Prepared according to local
U. A. E. taste preferences
China

0% 20% 40% 60% 80% 100% 120%

Total Volume Growth

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PASTA MARKET OVERVIEW 7

Unit Prices Increase

 Strong global demand has had Global Pasta Average Unit Prices and
an upward effect on the global the Price of Wheat, 2007-12
price of wheat 50%

40%
 Both manufacturers and
retailers pass cost increases to 30%

Unit Price Growth

consumers to an extent, with
20%
average retail prices up 33%
from 2007-12 10%

0%
  Higher-priced premium 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
options also serve to drive up -10%
average unit prices -20%
 Chilled pasta
-30%
 Health/Wellness varieties
-40%
Pasta Wheat

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PASTA MARKET OVERVIEW
GROWTH DRIVERS
COMPETITIVE LANDSCAPE
LOOKING FORWARD
$3.0 bn
2012 GLOBAL VALUE
SALES OF HEALTH &
WELLNESS PASTA
INCLUDES GLUTEN-FREE, ORGANIC, HIGH-FIBER,

FORTIFIED/FUNCTIONAL, AND REDUCED

CARBOHYDRATE PASTA

11%
OF TOTAL PASTA VALUE
SALES IN 2012 WERE OF
HEALTH & WELLNESS
VARIETIES

IN 2012, SALES OF
HEALTH & WELLNESS
PASTA WERE

2x
LARGER THAN THEY
WERE IN 2006
GROWTH DRIVERS 10

Health/Wellness Pasta

 Health & Wellness pasta

Health & Wellness Pasta vs. Total
outperforming the general
Pasta Value Sales Growth, 2002-12 pasta market
30%

 H&W pasta value sales have

25%
nearly tripled over this
period
20%
Growth Rate

15%  High-fiber and fortified

pastas are most prominent
10% varieties

5%
 Organic and gluten-free
varieties expected to grow
0%
strongly in the future
-5%
Total Pasta Health & Wellness Pasta

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GROWTH DRIVERS 11

Eat Your Veggies

Obesity and Overweight  High obesity rates are one factor

Rates by Country, 2011 driving health& wellness trends
80%
70%  Diet is primary focus
% of total population

60%  Vegetables as healthy

50%
 USDA suggestions

40%
 The global pasta market responds
30%
 Vegetable pastas
20%
 Pasta sauces
10%
0%

Obese Overweight

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GROWTH DRIVERS 12

Pasta “Premiumization”
Pasta Retail Volume Sales
Growth by Category: 2002-12
 Premium options like Chilled/Fresh 10%
Pasta have outperformed others
8%
 Fresh/healthy/gourmet
 Opposite of canned 6%
 Examples of organic, natural,
preservative-free, renewable 4%

Growth Rate
packaging
2%

 Limited to developed countries 0%

 Much higher unit price
 Dried pasta a low-price staple in -2%
poorer regions
-4%

-6%
Canned/Preserved Chilled/Fresh Dried

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PASTA MARKET OVERVIEW
GROWTH DRIVERS
COMPETITIVE LANDSCAPE
LOOKING FORWARD
COMPETITIVE LANDSCAPE 14

Retailers: Low Prices Winning Out

Pasta Global Retail Distribution:

2002 vs 2012
100%  Consumers seeking best value
7,7 6,8 for money with tight budgets
0,4 0,9
90% Others during the recession
80% 23,5 22,3
Non-Store
70%  Retailers that compete
% retail value

Small Grocery primarily on low-prices have

60%
seen share growth
50% 39,6 Supermarkets  Hypermarkets
41,9
40%  Discounters
Discounters
30%
7,7  Non-store retailing’s value
6,7 Hypermarkets
20%
share nearly doubles on the
10% 19,8 22,7 growth of internet commerce
0%

2002 2012

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COMPETITIVE LANDSCAPE 15

Other Staples Provide Strong Competition

 Pasta lags behind both rice

Comparing Staples: Retail Value and
and noodles in terms of
global retail value sales and Volume Growth: 2007-12
recent growth 6%

2007-12 Retail Volume Sales Growth CAGR

5%
 Both of these staples are Rice
primary calorie sources for
the Asia Pacific region 4%

3%
 New noodle launches in East Noodles
Asia have also driven growth
2%
through Health & Wellness
developments and
1% Pasta
premiumization
 New spices/flavors
0%
 Organic ingredients 0% 2% 4% 6% 8% 10% 12%
 Low fat/high fiber
2007-12 Value Sales Growth CAGR

Note: Bubble sizes correspond to proportionate retail value sales size in 2012
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PASTA MARKET OVERVIEW
GROWTH DRIVERS
COMPETITIVE LANDSCAPE
LOOKING FORWARD
LOOKING FORWARD 17

Future Growth from Underdeveloped Areas

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LOOKING FORWARD 18

Cooking at Home to Grow

How often do you do the following?

Cook a meal entirely from raw ingredients 15 14 16 25 30

Cook a meal using some pre-prepared ingredients 15 20 27 29 9

Order home delivery/takeaway for home consumption 32 31 22 12 4 Never

<once a month
Purchase ready meal for others 37 24 20 16 4
1-2 times a month

Purchase ready meal for own consumption 16 26 26 23 8 1-2 times a week

Almost every day

Prepare own meal to eat at home 7 6 7 14 67

Prepare own meal to eat away from home 38 19 12 14 18

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

 Consumers increasingly looking to cook/prepare gourmet meals at home

 New exclusive data from our newest product: Analyst Pulse survey
 Exciting new tool surveys our 800+ analyst pool in over 80 countries
 55% still cook meals entirely from raw ingredients on a regular basis

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LOOKING FORWARD 19

Cooking at Home to Grow

Cooking With Fresh vs. Packaged Ingredients
 A new gourmet home cooking
culture
 Celebrity chefs
 Cooking television shows

 New opportunities
 Licenses/endorsements
 Promote pasta as an
ingredient

 Potential for growth in Health Cooking With Fresh vs. Packaged Ingredients: Analysis
& Wellness pasta by Gender
 Cooking at home as part
of a healthy lifestyle

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LOOKING FORWARD 20

Foodservice Offers Potential

 Foodservice continues to Global Foodservice Growth: Pasta

grow globally, in terms of and Total Transactions, 2007-16
both general transactions
6%
and volume sales of pasta
5%
 Growth expected to

Growth Rate
4%
accelerate over the forecast
period 3%

2%
 Consumers looking for both
experience and convenience 1%

0%
 Pasta manufacturers to help
push growth

Pasta Foodservice Volume

General Foodservice Transaction Volume

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LOOKING FORWARD 21

Transformational Technology

Peapod in Chicago (right) and Yihaodian in Shanghai (top)

 Social Media as a way to interact

 Timeline feature
 Likes/Comments

 Smartphone Apps

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LOOKING FORWARD 22

Future Consumers

Consumers
looking for
convenience
Consumers
Consumers
better
looking to save
informed

Changing
Consumers Consumers
retail
increasingly environment living healthier
interconnected for pasta lifestyles

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LOOKING FORWARD 23

Key Findings

 Pasta has strong momentum

 Health & Wellness pasta is a growth driver

 Branded pasta manufacturers face strong competition

 The polarization of the pasta market

 Consumers relate to their food

 Technology will become even more central

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THANK YOU FOR LISTENING
Jared Koerten, US Research Analyst Jared.Koerten@euromonitorintl.com

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