Chapter 02 “Snack Foods Processing: Extruded Snacks and Tortilla Chips” Practical Short Course Chapter 02 fees |PERDC PROCESS ENGINEERING RESEARCH & DEVELOPMENT CENTER ‘TEXAS ABM ENGINEERING EXPERIMENT STATION, Process Engineering Research and Development Center Texas A&M Engineering Experiment Station The Texas A&M University System College Station, TX 77843 Page 1 of 23,Chapter 02 David Walsh has worked for SNAC International (SNAC) in a marketing and membership services capacity since September 2011. David manages marketing efforts for member programs, coordinates outreach to recruit new members, and acts as point of contact for general member relations. He also coordinates SNAC’s government advocacy efforts in Washinglon DC, administrates grassroots campaigns, and works with members and SNAC staff to develop educational programs to ensure members are updated on various reaulatory and food safety laws. David also manages the content for SNAC’s weekly industry e- newsletter, the Snack Report, along with SNAC's quarterly magazine, Snack World, as well as SNAC's website and social media outlets. David graduated from the Unversity of Virginia in 2010 with bachelor's degrees in both History and Economics. He currently lives in Arlington, Virginia with his fiancée, Jennifer; they are both natives of Virginia. The SNAC is the international trade association of the snack food industry representing snack manufacturers and suppliers. SNAC represents over 400 companies worldwide. SNAC business membership includes, but is not limited to, manufacturers of potato chips, tortilla chips, cereal snacks, pretzels, popcorn, cheese snacks, snack crackers, meat snacks, pork rinds, snack nuts, party mix, corn snacks, pellet snacks, fruit snacks, snack bars, granola, snack cakes, cookies end various other snacks. Every year, the SNAC hosts their annual SNAXPO trade show and equipment show. The Process Engineering R&D Center coordinates/schedules their annual Snack Foods Processing short course with SNAXPO so the two coincide together; the short course will be held either the week before or the week after SNAXPO. This provides the opportunity to attend both in a convenient short window of time. Page 2 of 23SNAC International State of the Industry David Walsh, Director, Government Affairs SNaC> INTERNATIONAL Ficeaten conranio ani Industry Facts and Figures 2 Categories as denoted by Mintel: 1.Salty snacks = cheese snacks, popcorn and pretzels 2.Chips, tortillas, salsa & dips Chapter 02 Page 3 of 23,Chapter 02 Savory Snack Sales Forecast to Reach $6.8 Billion in 2019 anf "Snacc Food Pees: ude rac Tata Cir Pras Sot Course Fideaten Conran ani Process Engineering ener steven Caner “the ean Al Unest Sy ‘TOTALUS SALESAND FAN CHART FORECAST OF CHES, SALSA AND DIPSAT CURRENT PRICES, 2008-19 2000 roafest) 218 Page 4 of 23,Chips: Moderate Growth Driven by Snacking Trend ‘The US chips, salsa, and dips category is forecast to grow 17.6% from $14.8 billion to $17.4 billion between 2014 and 2019, driven by the continued growing snacking trend. Sales are also driven by expanding consumer palates toward new ethnic and international flavors. Concerns about the healthiness of chips and dips are likely to hamper sales somewhat, even as brands offer low fat/salt/calorie variations. Consumer preference for fresh, unprocessed food will drive demand for chips/dips free from artificial ingredients and those perceived as more natural. Pin eoten copra zat? Process Engineering ener steven Caner She Tare aii Uneey Sse SUV Fz, nl Lo Chapter 02 Page 5 of 23,Chapter 02 A Bright Forecast for Snacking * Snacking Redefined * Meal infrequency = Snacking Frequency Pin eoten copra zat? Process Engineering eserth pd Cxslomen Caner Shean aii Uneety See lillennials Love to Snack {: How many tines por wook do you typically buy and consume a snack ouside the home? i — a a a msn. Page 6 of 23,Chapter 02 What Factors Are Driving Sales? * Busier Lifestyles = More Frequent Snacking * Product Innovations *A Bold New Flavor Frontier Process Engineering ener steven Caner So teare a Une Se Turning Up the Heat Condiment Sales: 2000-14 fsa armani ry Page 7 of 23,Chapter 02 Snack Industry at a Glance neat e063 12k mo, as90 01 seats au 55% «mC Ou ooo same a6 a7 ame emo 8 owns $047 54% 5s 49 7748 fomemexsma: 4039 6,39 1S WSK 3S cen a a2 aay a8 ws 50 reaper 52g ggg MRA SR Health-Conscious Consumers * Increased awareness to nutritional claims * Yogurt / yogurt-coated snacks show exceptional growth * Trail mixes * 62% of healthy snack / “better-for-you” categories grew in volume sales Peer ery Page 8 of 23,Chapter 02 Non-GMO, Organic, Natural t * Natural snacks up 12.7% over past year * Organic snacks up 15% *Non-GMO Verified snacks are up almost 31% SNeC> Process Eien Rich se evelyn Cater She Teate sii Unwsty Se Tortilla Chips * More families dining in = “put the restaurant in the bag” * More “authentic-style” tortilla chips. ory ron Tortillas) 3.8572 3.9% 3473 3.99% 1050 4 70% bee! SNoC: Page 9 of 23,Tortilla Chips * Boldness Abounds * Healthy Movement remains prevalent Wav per WAY BETTER Ficeaten conranio ani Prot Engining ess and Developmen anes he tere a Uno Sew Cheese Snacks ea a a sales |sales% |sales | sales% | sates (Co ect oc eso Cheese 131810 g 504 65750 7.596 2869 Snacks " - Chapter 02 Page 10 of 23Chapter 02 State of the Snack Food Association SNACK FOOD ASSOCIATION cogent ae giment catr & an Snyder's ? 3 —/ Lances TZ. Gee BSP [aTE}uty Seer Page 11 of 23Associate Members ropa “KY Ba cme) fa Sur LifeSpice PGA AP veces resets mm Gos Compete a Calbee BokadeS Vind North America os enor Chapter 02 Page 12 of 23Chapter 02 rue Stk Kin at tne Saeder’ cons & Tances wo m ey Pin eoten copra zat? Process Engineering eserth pd Cxslomen Caner So tecre ait Uneey Sa SNAC Mission To create resources which fuel and reinforce value for SNAC members by offering services and relationship building forums for members in support of industry growth and dynamic relevance Through the 3 Pillars of the SNAC: Government Relations Eduction Networking Access Page 13 of 23Chapter 02 Legislative & Regulatory Issues of Importance + Recent SNAC Member Wins + SNAC Takes an Industry Lead on GMO Labeling + Issues to Keep an Eye On in 2016 S Pron nie ing th rv Cre Se teare Aa Uneay Sa Recent SNAC Member Wins As the Omnibus Appropriations Bill passed at the end of 2015, there will several wins for the snack food industry included: * Partially Hydrogenated Oils * Sodium * Dietary Guidelines Advisory Committee (DGAC) * County of Origin Labeling (COOL) SNaC> Page 14 of 23Issues to Keep an Eye on in 2016 GMO’s * Nutrition Facts Panel Sodium Reduction SNAP Choice Food Safety Modernization Act (FSMA) Implementation Defining Natural Pin eoten copra zat? Process Engineering ener steven Caner So teare a Une Se SNAC Takes an Industry Lead on GMO Labeling S As many states begin to take GMO labeling laws into their own hands, SNAC has strongly advocated for Congress to take a federal approach. + Apatchwork of state laws will NOT work. + Snack Industry open to mandatory disclosure of GMO’s, but must have menu of options for small/medium companies to comply with. + SNAC President & CEO Tom Dempsey testified before Congress on food industry supported GMO bill H.R. 4432, the "Safe and Accurate Food Labeling Act" which pre-empts state GMO labeling laws and creates one federal standard. Passed House last year. + SNAC Member Daryl Thomas of Herr Foods testified before the Senate Agriculture Committee last November about how damaging a patchwork would be; + URGENT Situation: Vermont's Law enforced July 1, 2016. SNOC> Chapter 02 Page 15 of 23Chapter 02 Dietary Guidelines for Americans + New Guidelines every 5 years by Dietary Guidelines Advisory Committee + DGAC expanded its scope this year, making policy recommendations such 2s taxing snack foods, negatively portraying snacking, and recommending. further sodium reductions. + Final 2015 Guidelines Released early this year. SNAC successful in ensuring they remained within scope eosin essrh sn eveonment Gre Dietary Guidelines (Cont’d) * Overall focus on dietary patterns rather than on meals or snacks * Focus on foods to include rather than nutrients to encourage + Suggested limiting several nutrients: = Consume less than 10 percent of calories per day from added sugars = Consume less than 10 percent of calories per day from saturated fats — Consume less than 2,300 milligrams (mg) per day of sodium SNaC> Page 16 of 23Nutrition Facts Panel Fideaten Conran ani Process Engineering ener steven Caner She Tare aii Uneey Sse Sodium Reduction FDA expected to release “voluntary” category sodium reductions sometime this year. While no exact substitute for sodium currently exists, SNAC member companies have taken the lead in offering a variety of products that are lower sodium Dietary Reference Intake (DRI) necessary What is SNAC Doing? SNAC-formed coalition to educate Congress and FDA on science as it relates to sodium. DRI UPDATE BEFORE GUIDANCE Expensive to reformulate products SNaC> Chapter 02 Page 17 of 23Chapter 02 SNAP Choice Ba Proposals to limit choice require expanded bureaucracy, camplex food code While supporting efforts to educate consumers about nutrition, SNAC opposes any revision to the Supplemental Nutrition Assistance Program (SNAP) at the federal or state level which would limit food choice for participants. Chairman Conaway, House Ag. Committee Chairman, plans to do 2 year review of SNAP program and what works, what doesn’t. GNIAGy Fideaten coprante aut? Pree Engineingeseich nd Dee Se teare Aa Unrey 9 Partially Hydrogenated Oils (PHOs) In November 2013, FDA made a tentative determination that partially hydrogenated oils (PHOs) are no longer considered "generally recognized as safe" (GRAS) for use in food. The removal of an ingredient from the GRAS list for reasons linked to increased risk of diet related diseases sets the precedent for other ingredients such as salt and sugar to be removed due to similar data in which SNAC strongly opposes. June 2018 FDA Compliance Date, but: litigation concerns. Litigation through Omnibus policy rider: PHOs still deemed safe until June 2018 enforcement date. Page 18 of 23Food Safety Modernization Act (FSMA) FSMA was signed into law January 4, 2011 and aims to ensure the U.S. food supply is safe by shifting the focus of responding to contamination to preventing it. + The law required FDA to issue 7 major regulations: -Preventive Controls for Human Food * -Produce Safety * -Foreign Supplier Verification Program (FSVP) -Accreditation of Third-Party Auditors Preventive Controls for Animal Food* “Intentional Adulteration (i.e., Food Defense)* -Sanitary Transportation of Food and Feed* + FDA has finalized 5/7 final rules + Preventive Controls Qualified Individual (PCQI) Requirements — May 17-19 PCQ! Workshop ia Baltimore, MD SNEC> Fideaten coprante aut? Pron ning thr Dwg Cvte FDA to Define Natural + USDA definition already exists; lacks specificity. * FDA requesting comments on how to define natural. * Will help decrease consumer confusion. + Help our industry with litigation. * SNAC working with its Nutrition Working Group to develop comments to submit to the FDA by lay. * Focus on product sourcing and ingredient processing to maintain natural status. SER Chapter 02 Page 19 of 23Chapter 02 Education SNAC provides a broad curriculum of education and training to help member companies stay abreast of new developments for executives, management, and technical personnel. SNAC launched a free education initiative in 2014 to encourage increased member participation and boost the return on your membership investment. Fideaten coprante aut? Process Engineering ener steven Caner So teare a Une Se Annual SNAC Legislative Summit + Every year, SNAC Members from around the country visit Washington, D.C. to meet directly with federal policymakers. + SINAC staff and consultants provide in-depth issue summaries, background information, and strategies for meeting with federal legislators enabling members to effectively discuss how key issues impact their business. * In June 2015, SNAC scheduled meetings with 80 Capitol Hill offices + Attend 2016 Legislative Summit June 7-8 Page 20 of 23Chapter 02 Executive Leadership Forum (ELF) — Networking and Education for Industry Execs ~ ELF 2014-2015 featured an all-star panel of retailers who discussed the future of their businesses and how various snack food categories play a role; Emerging Leaders Program — Management development program ideal for emerging leaders in the snack food industry. — Leadership, communication, team-building, communication skills building — Georgetown University Partnership — Nov. 2-4, Washington, DC @® — Free of charge for SNAC members f — First 50 to sign-up get in. Geongerone womransrry Pin eoten copra zat? Process Engineering eserth pd Cxslomen Caner So tecre ait Uneey Sa Quality & Innovation Management Course — Feb. 24-26 — Technical training program tailored for quality assurance personnel, line production supervisors and production management, provides technical snack manufacturing training and quality assurance training — Demonstrations of equipment, QA instruments — Free of charge for SNAC members. Preventive Controls Qualified individual / HACCP Certification = Partnership with International HACCP Alliance to offer accredited HACCP Certification. = PVQI Workshop May 17-19 in Baltimore. APPROVED Page 21 of 23Online Education & Webinars Free for members, monthly SNAC webinars provide timely information that is ‘easy to access. Past topics include: = Farts tip Front taheling Initiative = Genetically Modified Organisms: The Issue and its Impact on the Snack Food Industry = Shack ingredients and Naturally Occurring Chemicals, such as PHO's ~ Schoo! Wellness lesues and Smort Snacks in Schools = Nutrition Facts Panel Labeling Reform = Vending Labeling Issues = 2015 Dietary Guidelines for Americans — The Food Safety Modernization Act: How to Prepare for Implementation = From Misbranding to Natural Claim Lawsuits, What Snack Makers Need to know SNeC> “Sack Fond Peer Exute Sass 8 Tora Ope Pract Shot Cowes Fideaten Conran ani Process Engineering ener steven Caner So teare a Une Se April 1-4, in Savannah, Georgia at the Savannah International Trade and Convention Center Chapter 02 Page 22 of 23SNAC Communications Revamped SNAC website coming soon to foster member networking access and educational resources. + Snack Report -weekly e-newsletter keeps members updated on the most pressing industry issues and trends. * Snack World -quarterly magazine includes annual State of the Industry Report, breaking dovin sales data and trend analy: for all major snack food categories. + Executive Insights- a monthly top-level executive summary including 2-3 issues that snack industry executives need to know with recommended actions items. SNeC> Fideaten coprante aut? Process Engineering ener steven Caner So teare a Une Se Questions David Walsh Director, Government Affairs SNAC International 703-836-4500 ext. 213, walsh @snadintlorg http://snacintorg/ Chapter 02 Page 23 of 23