Maple Leaf’s fresh bakery business, which operates exclusively in Canada, is heavily weighted towards whole wheat, whole grain and higher nutrition products, all of which are faster-growing areas of the bread market. We also own the premium brand in fresh bakery – Dempster’s – as well as leading regional brands. We span the country with bakeries and distribution depots that enable us to deliver fresh bread to all major population centres within hours. We have leading market shares and high capacity utilization at our facilities. In sum, this is an excellent business, with lots of opportunity for sales and margin growth.

Our North American frozen bakery operations provide frozen, partially or fully-baked artisan and premium breads and rolls to retail and foodservice customers. While this is a more fragmented industry, we have healthy market shares in the retail par-baked market. We have increased profitability through capital investments that reduce our costs and by focusing our plants and resources to meet the needs of more strategic customers. Premium and artisan breads are one of the highest growth segments of the bakery industry, and we plan to grow this business through investment and/or acquisitions.
 
     While the smallest operation in the Bakery Products Group, our fresh pasta and sauce business is on a growth trajectory. We have merged this business with our fresh sandwich operations as a new ‘Food to Go’ business. Our goal is to become a leading provider of fresh, nutritious convenience foods to Canadian retail and convenience channels. We are also identifying opportunities to capitalize on the strength of the Olivieri® brand by expanding it from pasta and sauces to other fresh prepared food categories.

Our U.K. bakery business has been affected by the deep recession in the U.K. and softer demand for premium bakery products. That said, this business produced high earnings growth rates in the past and will again. We have made large investments in plant infrastructure to reduce costs and improve production efficiencies. During 2010, we will increase our spend on marketing and brand building to reinforce our leadership in bagels, specialty hearth breads and morning goods, such as croissants and pastries.
  A VERY SUCCESSFUL RESTRUCTURING OF OUR PROTEIN OPERATIONS
The meat and meals side of our business has had a much more challenged earnings track record, as the five-year chart on the next page shows. The rise in the Canadian dollar since 2003 impaired our hog production and pork processing businesses and made them increasingly uncompetitive in global markets. Responding to this, we acted decisively. Over the past three years, we have restructured these businesses, which have the most exposure to commodity and currency swings to focus on more stable, higher-margin prepared meats and meals.