Food Business News - Sep 13, 2005 - (Page 1)

FoodBusinessNews September 13, 2005 NEWS, MARKETS AND ANALYSIS FOR THE FOOD PROCESSING INDUSTRY Katrina upends energy price outlook Additional disruptions could drive prices even higher F.D.A. considering trans fat extension 10 Determining nutrient density 22 Struggles with organic standard changes 26 Hurricane Katrina has made a bad situation worse. In the wake of the storm, already high energy costs have increased, and food processors are struggling to deal with the fallout. Key factors that may determine whether the situation stabilizes are how quickly recovery occurs in the Gulf of Mexico and the severity of the coming winter. Prior to Hurricane Katrina, U.S. petroleum prices, including gasoline, were setting new records as crude oil prices climbed. Gasoline prices as of Aug. 29 were $2.61, which was 73c per gallon higher than a year earlier, and, on average for the 1 month, were 58c per gallon higher. "Hurricane Katrina has significantly exacerbated the near-term supply tightness, especially in the U.S. market for gasoline and diesel fuel," said Guy F. Caruso, administrator of the Energy Information Administration (E.I.A.) of the U.S. Department of Energy, before the U.S. Senate's Committee on Energy and Natural Resources. "Even after production and refinery operations fully recover from the effects of Katrina, capacity increases will be needed throughout the supply chain to keep up with demand. Until the world returns to more spare capacity, particularly in crude oil supply, crude oil and petroleum product prices will remain high." If that news was not bad enough, there Continued on Page 32 MARKET WATCH Sara Lee: Diamonds in the rough Retail gasoline prices exceeded $3 a gallon for the first time. When thinking about growth in consumer packaged foods, fresh baking and meat likely are not the first sectors that pop to mind. To the contrary, both segments have been dogged for years by sluggish growth, sub-par margins and a lack of innovation. So when Sara Lee Corp. announced earlier this year it was cleaning house, disposing of 40% of its portfolio of businesses (as measured by sales), it may have come as a surprise to some that the core North American businesses to be retained were meat and baking. But in the eyes of the man who will lead them, the food businesses of Sara Lee are unpolished gems with extraordinary potential. "I'm tremendously excited about the opportunities here," said Christopher J. (C.J.) Fraleigh, senior vice-president and chief executive officer, Sara Lee Food & Beverage. Mr. Fraleigh offered his thoughts on the Sara Lee business in an interview with Food Business News last week. Together with the smaller Senseo coffee operation, the businesses Mr. Fraleigh manage amount to a $4.5 billion retail group with brands that include Jimmy Dean, Hillshire Farm, Sara Lee and Ball Continued on Page 28

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Food Business News - Sep 13, 2005