SIC 2098
MACARONI, SPAGHETTI, VERMICELLI, AND NOODLES



This category covers establishments primarily engaged in manufacturing dry macaroni, spaghetti, vermicelli, and noodles. Establishments primarily engaged in manufacturing canned macaroni and spaghetti are classified in SIC 2032: Canned Specialties, and those manufacturing fried noodles, such as Chinese noodles, are classified in SIC 2099: Food Preparations, Not Elsewhere Classified.

NAICS Code(s)

311823 (Pasta Manufacturing)

Industry Snapshot

In the two decades from 1975 to 1995, Americans increased their pasta consumption by 90 percent. Pasta was manufactured almost exclusively in the United States from durum semolina wheat. A growing consumer preference for nutritious, low-fat foods boosted the health of the industry, nearly doubling mean annual per capita consumption in the last 20 years to 24 pounds. In 1995, the typical consumer ate pasta an average of 2.7 times a week. The increased consumption was also due to a shift in consumer perceptions: it gained popularity among middle class and affluent adults and seniors, rather than beingviewed as a meal for children or the working poor, as was the case during the 1960s. However, a shift toward low-carbohydrate diets in the late 1990s began to under-mine dry pasta sales.

The value of industry shipments declined steadily in the late 1990s, falling from nearly $1.8 billion in 1997 to $1.2 billion in 2000. During this time period the number of employees in this industry declined from slightly more than 6,000 to roughly 4,300.

Organization and Structure

Approximately fifty companies produce virtually all the pasta made in the United States through 266 establishments. Half of those firms were divisions or subsidiaries of larger companies. The bulk of dried pasta and noodles was sold through retail outlets such as supermarkets, convenience stores, and gourmet shops, for personal consumption. A scant 5 percent was sold to the food service industry.

Pasta Manufacturing. Dried pasta was manufactured from coarsely ground durum wheat, or "semolina." Durum was a hard, winter wheat, known for its high level of gluten, which made a stiff dough appropriate for pasta. Farina, a softer wheat, was sometimes added, as were powdered flavorings such as tomato or spinach. Gluten was also sometimes added to the dough, and "enriched" pasta received nutritional supplements such as thiamin, niacin, riboflavin, and iron. Most pasta was made without eggs, but noodles were formed by adding eggs to the dough before processing.

Prior to the formation of pasta into its characteristic shape, the wheat was harvested and tested for moisture content, volume, color, insects, chaff, and bran. Once the wheat was determined to meet sufficient standards, the process of milling began. Wheat was first "tempered," or soaked in water, to separate the bran from the berry. Tempering also gave the berry enough moisture to prevent shattering when it was ground—the next part of the process. Once ground, the wheat was sifted numerous times to create semolina—coarsely ground flour, with particles about the size of sugar crystals. A byproduct of this repeated sifting was durum flour, which was sold for other uses. The semolina was added to water and any other ingredients, such as dyes, to create dough, which was then extruded through machines that formed the pasta into its ultimate shape. The pasta was then dried, packaged, and distributed.

In 1996, the United States produced 1.65 billion pounds of dry pasta for retail purposes, 0.64 billion pounds for industrial purposes, and 0.34 pounds for food service use.

Background and Development

Although pasta was generally associated with Italy, and indeed many of the varied shapes originated from that country, the first pasta was actually Chinese. The development of an agricultural civilization led to pasta, possibly around 3000 B.C. ancient Greeks considered pasta "marcus"—meaning "divine food." An Etruscan tomb created around 400 B.C. depicted the making of the grain product. Horace, a poet who lived in the first century B.C., described lasagna as one course of a Roman banquet.

Pasta was also a part of the cuisine of the Middle East. The Jewish and Arabic cultures, as well as that of Persia, discussed pasta as well as noodles. Germans consumed it, and the Genoese ate it in the thirteenth century. All of this took place before Marco Polo's legendary expedition to China, which led to the widespread consumption by Italians, who added red tomatoes to the recipe.

Noodles were consumed in the New World, prepared in the manner popular among the British—accompanied with a cream sauce and cheese. Thomas Jefferson was the first prominent American to embrace pasta, when he purchased a "macaroni" machine in Italy and shipped it to the United States. An Italian restaurateur in Richmond, Virginia, served pasta to his influential clientele, which included Jefferson.

By 1848, French miller Antoine Zerega opened the first macaroni factory. He followed both Chinese and Italian traditions, drying strands of spaghetti on the rooftop of his Brooklyn factory. The subsequent immigration of large numbers of Italians to New York helped bring pasta into the mainstream of American cuisine.

A subtle wheat flavor was considered the ideal taste for pasta, since blandness prevented the pasta noodle from competing with the flavor of the sauce. The ideal texture of pasta was obtained when it was cooked "al dente." This translated from Italian literally as "to the tooth," but it described a noodle that was firm when chewed.

Regulatory Challenges. Like much of the food industry, pasta manufacturers faced increased regulation under new federal laws. The Nutrition Labeling and Education Act (NLEA) of 1990, which took effect in May 1994, required that pasta packaging list nutrients in greater detail than in the past. In addition, the NLEA provided for the Food and Drug Administration to determine the serving size on which nutritional information was based—something that had previously been determined by the manufacturers themselves.

Another trend in regulation in the early 1990s was based on concern over the effects of fumigants on the ozone layer. Many pasta manufacturers employed methyl bromide to rid storage areas of weevils and other pests that consumed wheat. One bill considered in 1993 declared methyl bromide a class one ozone-depleter and called for its production to be discontinued by the year 2000.

Competitive Challenges. The greatest challenge to the dry pasta and noodle industry was expected to come from competition with other types of pasta. For example, the sales volume of frozen pasta grew at an annual rate of 19.1 percent from 1980 to 1985 and 13.4 percent from 1986 to 1991. Although growth was expected to slow to about 6.7 percent per year in the latter part of the 1990s, the popularity of frozen pasta was expected to continue throughout the remainder of the decade, with consumption estimated at 62 billion pounds in 1995.

This growth was attributable to the convenience of frozen pasta, which came with a variety of sauces and required nothing more than heating in the microwave or the conventional oven. While cooking dry pasta was simple and required little time, preparation of the sauce could be more complex, and working individuals were increasingly reluctant to create meals from intricate or lengthy recipes.

Shelf-stable pasta was yet another product that eroded market share of dry pasta, and was expected to continue to do so. The shelf-stable category included dry packages like macaroni and cheese, pasta and noodle side dish mixes, add-meat dinner mixes, and soups or other meals that came in microwaveable containers. Shelf-stable pasta sales grew 6.7 percent annually in the early 1980s, but its popularity grew during the latter part of the decade by about 10 percent. Sales of this product were expected to grow at an annual rate of better than 10 percent through the remainder of the 1990s.

Fresh pasta, which showed an increase in sales volume of 60 percent annually from 1988 to 1991, experienced a decrease in the latter half of the 1990s. Initially, fresh pasta gained market share among the affluent at the expense of its dry counterpart, as it was perceived to be more flavorful and nutritious. It was sold in gourmet shops, as well as restaurants and supermarkets. The drawback of fresh pasta was its perishability, a result of its high moisture content. The greater ease of distribution enjoyed by dry pasta manufacturers was believed to be a primary reason that dry pasta held its own in market share.

Canned pasta posed no competitive threat to dry pasta and noodles. Despite attempts to upgrade its image to a premium food product, canned pasta was still perceived to be most appropriate for children or for lower income individuals. Canned food was also viewed as having depleted nutritional value, and the health value that drove much of the rise in pasta consumption was perceived to be lacking in canned dishes. Moreover, canned spaghetti with sauce was not believed by consumers to be as flavorful as that of either fresh, frozen, or dry pasta.

New Jersey-based Campbell Soup Company, a leader in the canned pasta market under the name Franco-American, continued to introduce new children's dishes—including teddy bear shaped pasta and sporty shapes, like bicycles, in sauces—and an upscale variety called Superiors targeted at adults. Despite such innovations, canned pasta market analysts did not anticipate that this product would pose a threat to dry pasta's market share. After sales volume of this product grew 3.3 percent annually from 1980 to 1985, and 5.3 percent per year from 1986 to 1991, it was projected to increase less than 1.0 percent annually through the mid- and late 1990s.

The industry faced challenges entering the mid-1990s, however, as foreign producers flooded the market and the nation's durum wheat was attacked by Karnal Bunt disease. Additionally, tougher labeling requirements, made effective in 1994, affected pasta industry profit levels, as did environmental protection and laws designed to protect employees, such as mandatory health care provisions.

Industry shipments of dried pasta were $1.8 billion in 1997, a 38 percent increase from 1992. Retail sales of dried pasta were $2.3 billion in 1995, a 50 percent increase from 1991. One reason for this dramatic trend was research about cancer and heart disease prevention combined with the nutritional qualities of pasta. Numerous public and private studies during the 1970s and 1980s linked diets high in fat content with various types of cancers and heart disease. During this same time period, separate research of individuals in developing countries demonstrated the benefits of a diet high in fiber—a nonnutritional substance found in whole grains, vegetables, and fruits. In addition, studies revealed the importance of complex carbohydrates, which were also found in grains such as durum wheat. Consuming complex carbohydrates helped to provide a steady flow of energy because they took longer to digest than simple carbohydrates.

All of these findings rippled throughout the food industry, causing consumer preference to shift away from meals high in fat toward foods low in fat. Americans reduced their consumption of meat and dairy products as part of a healthier overall diet. Simultaneously, consumers embraced diets with a higher percentage of whole grain foods—including pasta. In fact, the popularity of pasta among athletes led to the term "carbo-loading," which was frequently accomplished through the ingestion of pasta or other grains. The consumption of foods high in complex carbohydrates prior to a marathon or other athletic endurance event was widely believed to boost performance.

In addition to being high in carbohydrates, pasta products became widely recognized for their nutritional value and relatively low levels of fat. A 10-ounce serving of cooked pasta contained 420 calories, 14 grams of protein (although wheat protein was considered incomplete), and only 1 gram of fat. It also provided one-fifth of the iron, niacin, and riboflavin, and one-third of the thiamin, needed for one day.

Current Conditions

The general perception of pasta evolved over the last three decades of the twentieth century. In the 1960s, consumers thought of meatballs and spaghetti as a child's meal, too unsophisticated for adults. With the introduction of pasta varieties—lasagna, fettuccini, manicotti, linguine, ravioli, cannelloni, tortellini, and angel hair pasta—the age-old grain food gained acceptance among affluent adults, for both dining out and eating in. Moreover, the typical marinara, or tomato-based, sauce served with ground beef or meatballs gave way to a multitude of flavored toppings—ranging from basil and pine nuts to Alfredo or cream sauces. Another popular accompaniment to the noodle was a mixture of vegetables, often in a marinara sauce, known as "pasta primavera."

As the popularity of pasta grew in the mid-1990s, so did the market for value-added, or flavored, varieties. By the end of the decade, popular flavors included smoked salmon, porcini mushroom, tomato basil, lemon pepper, and chili pepper. Other factors contributing to pasta's popularity included its convenience, durability, and economy. A box of dried pasta lasted up to seven years on the shelf. It was a relatively good food value, at a cost of about a quarter per 10-ounce serving. The nationwide availability of prepared sauces added to the ease with which a pasta meal could be prepared. Pasta could be cooked on the stove top in about 10 to 15 minutes. It could be reheated—along with the accompanying sauce—in a microwave oven in half of that time. Thesefactors had significant appeal to the increasing numbers of dual-income and single-parent households in the United States.

Most pasta was served for dinner (approximately 75 percent in the mid-1990s), but the trend went toward more frequent pasta lunches, with a 20-percent increase in consumption at this meal. The most popular shapes were macaroni, which saw a 33-percent increase in consumption, and lasagna, which showed 31-percent growth. Pasta products also dominated the side dish market, with 669 varieties offered in 1995, far exceeding the amount of rice dishes (137), salads (41), potato products (17), and stuffing mixes (14).

In the late 1990s, some health experts began to question the conventional wisdom of low-fat, high carbohydrates diets. High protein diets, such as the Atkins diet, began to gain in popularity, undermining the perception of pasta as a healthier choice than protein, such as beef or chicken. As consumption began to fall, pasta production began to slow down as well. Another factor impacting pasta production by U.S. manufacturers was foreign competition. Italy-based Barilla Group, for example, began selling its pasta in the United States in 1996. Thanks to aggressive advertising efforts, Barilla had captured a 15 percent share of America's $1 billion retail pasta market by 2002.

Industry Leaders

Hershey Foods Corporation, a $3 billion company located in Hershey, Pennsylvania, was the largest pasta manufacturer. The company's Pasta Division produced approximately 600 pounds of pasta in 1995 through such brands as Ronzini, Skinner, American Beauty, and Delmonico. In 1999, the company divested itself of New World Pasta, a product line that generated $400 million in sales for 1997, choosing to focus more on its confectionery and grocery products. Hershey Foods made $450 million on the deal.

Minneapolis-based Borden Incorporated's Pasta Division, also manufactured 600 pounds of pasta in 1995, primarily through its Creamette and Prince lines. That same year, Borden Incorporated, which posted sales of $5.9 billion, became a privately owned company when it was purchased by partners of the investment firm Kohl-berg, Kravis, Roberts, and Co. In 1998, Borden Foods Inc. generated $706 million in sales and employed 1,800 people.

The America Italian Pasta Company (AIPC) had 1999 sales of $220.1 million and employed 562 people. With the leading pasta brand, Muellers, and several other private and branded labels, AIPC was able to control 25 percent of the market. Its major customers included Wal-Mart, Sam's Club, SYSCO, and a number of major food processors and grocery stores.

Workforce

Due to technological advances in the pasta industry, including the use of computers in the manufacturing process, the number of workers declined from the early 1980s to the mid-1990s. About 8,400 people were employed in the manufacture of dry pasta in 1982; by 1997, that figure dropped to 6,300. Production workers accounted for 77 percent of the workforce and earned an average hourly income of $12.36. New Jersey led the country in employment with 662 people, and California was second with 576.

America and the World

Until the 1990s, the United States imported a negligible volume of manufactured pasta. That situation changed drastically as foreign producers moved to take advantage of the expanding U.S. pasta market. U.S. pasta distributors complained about the inferior quality of some pastas from Italy and Turkey, charging that those countries were purposely dumping inferior products on the U.S. market at lower-than-market prices. The outcry prompted the International Trade Commission and the Commerce Department to impose stiff tariffs on the imported products. The targeted importers were expected to appeal the tariffs.

The durum wheat from which pasta was made grew steadily as an export beginning with the 1959-60 growing season. Exports of this wheat variety were zero that year, but climbed to peak annual levels of 80 million bushels during the 1980s. By the 1990s, the United States was exporting 50 percent of its annual production. Algeria was the largest importer of U.S. durum wheat, with Tunisia second. Trade with those countries was part of the Export Enhancement Program, an incentive program to facilitate U.S. exports to North African nations.

As domestic pasta consumption skyrocketed, durum farmers were hard-pressed to meet the demand. In 11 of the 15 years from 1981 to 1996, domestic use of durum for pasta production combined with export sales exceeded domestic production. The shortage of durum wheat drove prices up to $7.50 per bushel, a substantial increase from the $4.50 price of the late 1980s.

After the passage of the Canada/United States Free Trade Agreement (CUSTA), in 1988 U.S. farmers in Minnesota, North Dakota, and Montana voiced concern over the growing volume of Canadian wheat sold in the U.S. By the 1990s, Canadian wheat accounted for 14 percent of U.S. durum production. The situation was exacerbated when U.S. durum wheat fields were hit by Karnal Bunt disease, which reduced the wheat to a powdery soot. Canada banned imports of all U.S. durum and many U.S. producers refused to accept durum from states where infected wheat was reported.

The United States ranked fourth in the world in mean annual per capita pasta consumption. Italians consumed over 59 pounds per capita annually and Venezuelans nearly 28 pounds, while Americans ate 19 pounds apiece annually. With popularity of pasta on the increase due to its perceived convenience and nutritional value, however, per capita consumption in the United States was predicted to surpass that of every nation in the world except Italy by the year 2000.

In 1997, the United States imported 583.7 million pounds, up nearly 11-fold from 1975.

Further Reading

"Annual Consumer Expenditures Survey." Supermarket News, September 1996.

"The Bunt Bonanza." Alberta Report/Western Report, 16 April 1996.

Darnay, Arsen, J., ed. Manufacturing USA. 5th ed. Farmington Hills, MI: Gale Group, 1996.

Dornblaser, Lynn. "Pasta Garnishes More Meals." Prepared Foods, Mid-April 1996.

"Hershey Foods Announces Agreement to Sell U.S. Pasta Business." Hershey Foods News Release, 15 December 1998.

Hoover's Company Capsules, 20 March 2000. Available from http://www.hoovers.com .

"Industry Statistics," 20 March 2000. Available from http://www.ilovepasta.org .

"Making Tons of Pasta Helps to Form Northland's Economic Foundation." Kansas City Business Journal, 1 March 1996.

"Milling & Baking News," 27 October 1998, p. 28.

Orr, Deborah. "A Passion for Pasta." Forbes.com, 25 November 2002. Available from http://www.forbes.com .

Tagliabue, John. "Pasta Makers of the World Unite." The New York Times, 28 October 1995.

Turcsik, Richard. "Stiff Tariffs Expected on Imports of Pasta." Supermarket News, 7 August 1995.

"The United States-Canada Durum Wheat War." Choices: The Magazine of Food, Farm & Resource Issues, 1995.

United States Census Bureau. 1997 Economic Census—Manufacturing. Washington, D.C.: GPO 1999.

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .

"U.S. Food Consumption." Food Review, May-August 1995.



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