STRATEGY

A BROADER BUSINESS BASE

In today's global economy, success means serving a multinational, multicultural consumer market. For over a quarter of a century, GRUMA has been doing just that. In 1972, GRUMA started corn flour and tortilla operations in Costa Rica. Years later, the company expanded its corn flour business to four other Central American countries. In 1976, GRUMA began expanding its business operations into the United States, though many doubted that it would be able to grow beyond its home borders. Today, however, the company's U.S. subsidiary, Gruma Corporation - the leader by a wide margin in the tortilla market - is thriving amidst rapidly growing demand for its products. In 1999, Gruma Corporation further strengthened its leadership in the United States through acquisitions in North Carolina and Texas and the construction of two new tortilla plants, one in North Carolina and another in Washington State. We consider Gruma Corporation's success a model for the continuing growth of GRUMA's operations into new and broader international markets.

MONACA is another example of GRUMA's strategy to broaden its business base. With this acquisition, the company has become Venezuela's second-largest corn and wheat flour producer.

In the third quarter of 1999, the company began construction of a tortilla plant in England, which is expected to begin operations in the third quarter of 2000. With the opening of this plant, the company, through its U.S. subsidiary, will become a local producer of tortillas and snacks rather than an importer - an important distinction in an industry where product freshness is key. With total annual tortilla and corn chip consumption of US$370 million, the European market represents a great growth opportunity for GRUMA.

Additionally, Molinera de México and Prodisa, two of GRUMA's operating subsidiaries in Mexico, have significantly expanded both capacity and market coverage throughout the year. Molinera acquired two wheat flour companies, one in the northwest region of Mexico and one in Puebla, which enabled it to achieve national coverage and become the country's largest wheat miller. In late 1998, Prodisa ventured into the bread business in the northeastern region of Mexico, in order to expand its existing product base, capitalize on distribution efficiencies with its packaged tortilla business, and build consumer loyalty toward its brands. Through focused efforts such as these, GRUMA continues to broaden the scope and extent of its business and furthers its long-term growth strategy.