CEO John Sheptor’s Remarks Before Shareholders

Remarks by John C. Sheptor, President and CEO of Imperial Sugar Company, at annual shareholder’s meeting, January 29, 2010:

I welcome everyone to Imperial Sugar Company’s annual shareholder meeting.

2009 was a year of rebuilding and recovery for Imperial Sugar Company. We completed the reconstruction of our Port Wentworth, Georgia refinery and began supplying customers once again from our largest production facility. Many new technologies have been incorporated into the design of the new refinery to mitigate combustible dust risks and to modernize how we package. We have in many ways achieved a state-of-the-art facility setting new standards for our industry. The start up of our new operations, however, has required more time than we planned. Although this has been disappointing, our customers have collaborated with us and they and we look forward to the resumption of normal production rates during this quarter.

We completed a long journey with our grower partners in Louisiana in November with the formation of the Louisiana Sugar Refining joint venture. This vision began eight years ago with preliminary conversations between us and has now culminated in the formation of a sugar production and marketing company that will construct and operate one of the largest refineries in North America. The three-way venture between the grower and miller cooperative that supplies us raw sugar, Cargill and Imperial Sugar Company has financed the construction of a 1 million ton refinery slated for start up in the fall of 2011. Production will be focused to the industrial sales channel with Cargill leveraging its distribution network to market the sugar on behalf of LSR. The new refinery will be constructed on our Gramercy property adjacent to our existing refinery taking advantage of site infrastructure. We will continue to operate our small bag packaging facility on that site servicing southwest retail and foodservice customers under a long term supply agreement for bulk sugar with LSR. This venture and the future refinery ensure Imperial Sugar Company participation in Louisiana sugar cane for decades to come.

Our Mexican joint venture, Comercializadora Santos Imperial, finished the crop year with substantially improved profitability year over year. During our 2nd year of operation, we optimized our distribution network, achieved U.S. American Institute of Baking certification for our partner’s Mexican white refined sugar refinery and most importantly strengthened confidence with our broadening customer base. This has been rewarded by our U.S. customers with the status of a substitute supplier for U.S. sourced sugar without discount and by our Mexican sugar customers with premium pricing. We look forward to another successful year by our CSI team with favorable industry conditions.

Results from Wholesome Sweeteners, our organic and fair trade sweetener joint venture, were remarkable in 2009 with 19% sales growth and strengthening retail appeal in spite of a weak economy. New product launches including club store agave packaging, honey squeeze bottles for retail, numerous new private label contracts and flavored agave syrups are contributing materially to current year results.

2010 has been characterized by a tight sugar supply globally. Raw sugar prices have set 29 year highs as countries compete for import requirements. We have raised our refined sugar prices in an attempt to sustain our margins but have needed to do so conscious that domestic beet sugar producers do not share this increasing cost. Domestic refined sugar also is in tight supply due to a modest 2009 beet harvest and lower projected Mexican imports, giving some support to higher refined prices. The new Farm Bill restricts the USDA from increasing the minimum quota until April 1st and no indications have been provided publicly by the government regarding their intended actions. An over correction of supply could lead to lower pricing in our last two quarters. A constrained action could lead to continued pricing at current high levels. Independent of USDA short term actions, 2010 spring beet plantings will significantly impact our fiscal year 2011. Global raw sugar supply and demand will not likely correct itself in one crop cycle, leading to higher than normal raw sugar prices, and a large domestic beet crop could lead to lower refined prices compressing our margins. GMO varieties of sugar beets have been contested in federal court casting some doubt upon the potential size of this year’s beet crop. Actions by both plaintiffs and defendants are in the news regularly as this legal debate is played out.

Sugar substitution for HFCS continues to grow leading to increased sugar demand particularly in the beverage sector. This trend is picking up momentum as large name brands are announcing the conversion of existing products or new line extensions. Consumers are acting positively to the availability of natural sugar alternatives and this is further encouraging this transition.

The strength of Imperial Sugar Company to sustain our business in the face of these highly volatile times is our participation in all major sales channels and our ability to source from Mexico if economics favor. Our brands are household names within our sales regions and our reach nationally is growing as Wholesome Sweeteners expands. Natural and organic sweetener appeal continues to grow with consumers and this favors our Imperial and Wholesome Sweetener product offerings.

Thank you for joining us today and for your continued interest in and support of Imperial Sugar Company.

John C. Sheptor
President and Chief Executive Officer
Imperial Sugar Company