- The Washington Times - Monday, May 10, 2004

The nation’s largest pasta manufacturer yesterday filed for bankruptcy as more food companies struggling against the low-carbohydrate diet craze roll out products to boost sluggish sales.

New World Pasta Co., a Harrisburg, Pa., company that makes San Giorgio, Creamette and Ronzoni dry pastas, filed for Chapter 11 bankruptcy protection at the U.S. Bankruptcy Court for the Middle District of Pennsylvania.

The company said low-carb diets, $450 million in debt and internal accounting problems led to the “voluntary decision” to file bankruptcy.

The company, with plants in Winchester, Va.; Fresno, Calif.; Omaha, Neb.; St. Louis; and Louisville, Ky., has not posted a profit since 2001.

The most recent estimate of unaudited results reported a loss of $14 million in 2003, before interest, taxes, depreciation and amortization, on sales of $450 million, said Cary Metz, vice president and general counsel.

In the most recent financial quarter, dry pasta consumption in the United States fell 7 percent from a year earlier, according to a recent study by research firm AC Nielsen.

More than 17 percent of America’s households have at least one person following a low-carb diet, AC Nielsen said in another report.

Food-industry analysts have compared the phenomenon to the low-fat frenzy in the 1990s. But that trend did not have the same impact the low-carb one is having on certain food categories, said John McIndoe, spokesman for Information Resources Inc., a Chicago market-research firm.

The low-carb diet is hurting sales of foods such as potatoes, pasta, cereal and bread, he said.

Mr. McIndoe estimated that, “on the low side” some 800 low-carb products would be introduced this year.

New World Pasta has a low-carb pasta line, but Mr. Metz said the company is holding off on introducing it because of “a lack of demand.”

“We aren’t seeing the sales for low-carb pasta, so we are instead focusing on our Healthy Harvest pasta line,” which is a whole-wheat pasta blend that has extra fiber, Mr. Metz said.

But other carb-rich food companies are hoping low-carb alternatives will return some lost sales.

New World rival American Italian Pasta Co., based in Kansas City, Mo., introduced a low-carb line in February to target dieters.

Krispy Kreme Doughnuts Inc., the Winston-Salem, N.C., franchise, plans to introduce a low-calorie doughnut by the end of the year. The company last week lowered its financial outlook for the first quarter and fiscal 2005, blaming low-carb diets for declining sales, particularly those for packaged doughnuts in grocery stores.

J&J; Snack Foods, a Pennsauken, N.J., manufacturer, is introducing a low-carb soft pretzel in the next few months. It will be available at snack bars inside major retail chains such as Wal-Mart and Target, said Michael Karaban, marketing senior vice president.

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