While the expression "boom and bust" doesn’t usually pop to mind when thinking about the grain-based foods industry, it was applicable far too many times since the start of the 1990s. Many companies, both large and small, experienced difficulties in products like bagels, bread, donuts and pasta.
Among the harrowing stories that appear to have taken a marked turn for the better, American Italian Pasta Co. stands out. The company earlier this month reported quarterly earnings of $20.2 million, or 93c per share. The company’s share price has been trading in the low $30s, far closer to the all-time high of $52.56 in April 2002 than the low of $3 per share in January 2006.
Credit goes to the company’s new management for moving the business from beneath a dark cloud emanating from earlier legal problems. Most impressive is the company’s back-to-basics approach to rebuilding its business.
"Our strategy to focus on store brands and our strongest performing proprietary pasta brands continues to pay off," Jack Kelly, chief executive officer, said last week. It was this tack rather than a branded strategy that helped make AIPC such an impressive story for so many years.
Yes, the weak economy has boosted the pasta business generally and private label companies in particular. AIPC’s focus on private label is a further plus. Sure, innovation will be needed to generate growth in the years ahead. But the emphasis on the core business has sparked a dramatic recovery of investor confidence that was badly needed. Perhaps this outcome will be a model for other struggling companies in grain-based foods.