The American Italian Pasta Company (AIPC) and World Finer Foods (WFF) have signed a long-term deal whereby AIPC will become the sole supplier of WFF's imported DaVinci pasta brand and WFF will exclusively distribute AIPC's portfolio of speciality and natural pastas, including the Eddie's and Mrs Leeper's brands.
AIPC, which recently called 2004 "the most challenging year in the company's history" after operating profit slipped 77 per cent, hopes to rejuvenate itself in the US pasta market through DaVinci's position as a premium brand and market leader.
The firm also wants to tap into WFF's good direct store delivery network, one of the strongest in the US. Indeed, both companies said they wanted to use this to expand and profit from AIPC's range of 'alternative' pastas, including organic, soy, corn and gluten-free, as well as improve market coverage for new products developed jointly.
Factors like efficient distribution, product variety and added value have taken on much greater importance in the US pasta industry in the last year, after what AIPC described as "continued and accelerated consumption declines".
The group cited independent figures stating that on average Americans had eaten four to five per cent less pasta in the three months up to 4 October, and the decline was worse at around seven per cent in the last four weeks of this period; helping to push AIPC, North America's largest dry pasta producer, $12 million into the red for its fourth quarter.
Sue Perram, market analyst at US-based Avondale Partners, said the pasta industry was unlikely to recover any lost ground in the near future and that a main problem was a growing low-carb mindset making people biased against higher carb foods like pasta.
"Even though someone might not be following a low-carb diet they may still be in a low-carb mindset. For example, they may choose not to have a bowl of pasta in the evening because they are watching their carbs," said Perram.
Even low-carb pasta has struggled, AIPC only just pushing sales above introductory marketing costs in 2004, and Perram said competition would be especially fierce in this area as consumers chose who stayed and who went.
AIPC and WFF will now try to defend their position by moving up the market to sell less for more, whilst also attempting to tap into growing niche market trends for organic, wheat-free and gluten-free products across North America.
The companies aim to use this diverse portfolio to capture retailers by persuading them that they can use AIPC-WFF as a 'one-stop shop' for all their pasta needs.
The deal is set to begin in April this year and AIPC plans to begin manufacturing products at its modern Pasta Lensi factory in Northern Italy.