February 1, 2006
By Barbara Young, Editor-In-Chief
Sara Lee is reshaping its global business affairs. Meanwhile, its meat-and-bread business is enjoying marketshare gains and margin growth.
When Rich Armstrong looks back over his 36-year career with the Sara Lee meats segment, he does not dwell on the company’s past as a collection of fragmented and decentralized manufacturing businesses.
“Improving in the future is no indictment of the past,” Armstrong affirms.
As chief executive officer of Sara Lee’s newly formed $4.5-billion food and beverage segment, 42-year-old Christopher J. Fraleigh, whose business card identifies him simply as “CJ” Fraleigh, may spend more time evaluating the company’s past than Armstrong, but his sights are definitely pointed on the company’s future growth and profit capabilities.
“Sara Lee is a company that has made significant progress in a plan laid out as a bold transformation,” Fraleigh says. “We are moving toward an organization that will provide innovative products, process distinction, and a culture inhabited by people who make things happen.”
Meanwhile, Kim Feil, one of the newest members of the Sara Lee food and beverage team in charge of North American marketing efforts, brings a fresh perspective to the business with her 20 years of experience working on behalf of the consumer-packaged-goods industry.
“There is something very crucial in what Sara Lee is doing around trying to better understand consumer needs that will have quite a ripple effect on the entire [food and beverage] industry,” Feil says.
Headquartered in Downers Grove, IL, Sara Lee Corp. is a $19-billion global marketer of branded products in 200 nations, with operations in 58 countries.
In their trade press media debut with The NATIONAL PROVISIONER, these key executives over the food and beverage segment discuss the strategies behind “the new” Sara Lee restructuring initiative beginning in 2005, especially concerning operating-efficiency programs, business-integration maneuvers, and product-development plans.
In a press release last August updating the overall transformation plan, Brenda Barnes, Sara Lee chief executive officer and chairman of the board, reviewed the strategy and underscored the company’s commitment to full implementation of its five-year timetable.
“We knew that our plan was a bold and ambitious one, but one critical to Sara Lee’s long-term success,” she affirmed at the time. “We are moving aggressively to execute this plan and are ahead of schedule. Within the first six months, we realigned our business around our consumers, customers, and geographic markets, and we are using continuous process improvement methods in a disciplined way to drive efficiencies and enable growth. We are investing in our high-potential brands and products, and we have put talented people in place to achieve our goals. Our company is tightly focused on driving growth in big categories with strong brands, such as Sara Lee, Jimmy Dean, Sanex, and Senseo, to deliver substantially better future results.”
Barnes, former president and chief executive officer of PepsiCola North America, with several prominent corporate board seats to her credit, became the leader of Sara Lee’s audacious transformation platform upon her promotion to the company’s posts of chief executive officer and chairman of the board. Joining Sara Lee in 2004 as president and chief operating officer, Barnes inherited a global marketer of branded packaged products, whose path to financial success during its 65-year history was marked by product innovation, smart marketing moves, key acquisitions at home and abroad, and corporate citizenship.
Until recently, its family of independent operating companies represented Sara Lee’s enduring strength and the cornerstone of its core corporate value. In the face of less-than-thrilling profit margins in recent years, however, that same strength became a weakness, prompting a grandiose plan to not only reset the company’s profit-making thermostat, but to also position it to reach even higher financial capability.
Although overall net sales for Sara Lee’s second quarter of fiscal 2006, ending Dec. 31, 2005, decreased 1 percent from $4.51 billion to $4.45 billion, the results did not reflect a decline in the performance of its individual segments that replaced the independent operating company strategy. Second-quarter sales and unit volumes grew in four of the eight business segments for a 1 percent gain, Barnes reports in a recent press release concerning performance in the second quarter of fiscal 2006.
The eight business segments now comprising the Sara Lee global organization include retail meat, bakery, and coffee products in North America. International business comprises beverage, European meats, bakery, and the global household and body care segment.
“We believe our transformation initiatives are beginning to have an impact, particularly for foodservice and food and beverage businesses, which delivered substantially better results in the second quarter than the first,” Barnes says in the second-quarter report. “I am encouraged that these businesses are showing an upward trend. We have been especially pleased with the success of the Sara Lee fresh bread brand, which became the U.S. market leader in the fresh bakery category during the quarter.”
The segments not faring as well in international markets include household and body care, beverage, European meats, and bakery.
Meanwhile, the North American segments yielded strong financial results in the second quarter, up 4 percent due to an 8 percent increase in unit volumes, driven by new product success and strategic pricing actions.
Thanks to net sales gains for Jimmy Dean Skillets, breakfast sandwiches, and breakfast sausage, the brand enjoyed double-digit growth. Hillshire Farm sales grew on the strength of smoked sausage and Deli Select Ultra Thin lunchmeats performance.
Retail bakery net sales in North America increased by 3 percent based on overall unit volume growth and a favorable sales mix in the U.S. fresh-bakery business.
Although the numbers tell the story concerning financial performance, administrators of the “new” Sara Lee know the business is about more than its quarterly earnings capability.
“The transformation is a huge undertaking in itself, the focus really is on the Sara Lee we want to become: an innovative, agile, consumer- and customer-focused company that’s delighting consumers and customers every day and rewarding shareholders,” Barnes says in the company’s 2005 Annual Report. NP