Wholegrain bolsters Sara Lee bakery sales
sales rise for the first quarter of fiscal 2005 and highlighted its
bakery business as a strong contributor to company growth. But the
praise hides a relatively average performance in this sector, as
Chris Mercer reports.
The Sara Lee Bakery Group was praised by the company after it increased its net operating income by 59 per cent to $64 million during the first quarter of 2005 compared to the same period last year.
Yet bakery sales only crept up by 0.8 per cent to $843 million, by far the lowest increase among the Sara Lee's five business lines, despite the company boasting some excellent individual performances such as crustless bread in Spain, frozen baked goods in Australia and strong pie sales in the company's US foodservice bakery division.
Sara Lee's bakery sector brands include the eponymous Sara Lee brand, Earth Grains, IronKids and Bimbo.
Across its other businesses, Sara Lee announced a 4.5 per cent increase in meat sales up to $1,040 million, a 9 per cent increase in beverage sales up to $754 million and a 5 per cent and 3.4 per cent rise in its Household Products and Branded Apparel divisions to $567 million and $1,659 million respectively.
But the company is confident it can boost its bakery sector sales with healthier products and clever restructuring. The Sara Lee bakery brand alone posted a 45 per cent sales increase for the quarter and the company has pinned the brand's success on five new wholegrain products launched in the US during this period: three Sara Lee wholegrain bagels and two Sara Lee Delightful wholegrain breads.
Such rapid innovation is now seen as the key to Sara Lee's success, according to company president and chief operating officer, Brenda Barnes: "With new, innovative products such as Sara Lee Delightful breads and bagels and the Senseo single-serve home gourmet coffee system, we are ensuring that our brands not only meet the needs of today's consumers, but also are positioned to drive future growth."
In bakery, a restructuring strategy is also running alongside product innovation in the US, according to Richard Noll, chief executive officer of the Sara Lee Bakery Group.
Noll recently told a meeting of finance analysts in Chicago that Sara Lee's baked goods sales were rising as the company strove to shift its business focus away from private label and regional brands to nationally branded products.
And Sara Lee is looking to expand its fresh bakery business in Florida by establishing new 'direct-store delivery routes' to get products from the bakery to the shops in the shortest time.
The company must hope all this will serve to bolster sales in the bakery sector, currently the only one of the Sara Lee's five businesses where sales are not forecast to rise in the second quarter of the 2005 financial year.
Overall the company has given a steady performance so far in fiscal 2005, with total net sales now standing at $4.9 billion at the end of the first quarter, although net operating profit for the meat sector was hit by increasing raw material prices.
Another steady performance is predicted for the second quarter, with higher raw material prices and packaging costs continuing to impact profitability.
