Milling & Baking News - October 5, 2010 - 10

Business 

Sara Lee describes strategy to
become stronger, simpler, better
DOWNERS GROVE, ILL. - Stronger.
Simpler. Better. The three words that
grace the cover of Sara Lee Corp.'s
2010 annual report issued Sept. 16 describe where the company has been,
where it is today, and where it plans to
be in the future.
In a letter to shareholders, Marcel
Smits, interim chief executive officer,
offered perspective on the ways Sara
Lee hopes to achieve its long-term
growth, beginning with its drive to become "stronger."
"We are winning in the marketplace
behind the strength of our brands,"
Mr. Smits said. "Market share performance is a good indicator of our progress. In North American Retail, share
grew in 10 of our 12 core categories in
fiscal 2010. In North American Fresh
Bakery, we saw branded share gains
recently in spite of a highly competitive environment. And, in International Beverage, behind on-trend new
products, we successfully grew and
defended our strong share positions
in the face of challenging economic
conditions."
Mr. Smits said Sara Lee's ability to
succeed is predicated on a complementary set of strong capabilities, including supply chain, marketing, customer management and innovation.
Sara Lee's ongoing portfolio rationalization, which during 2010 included the process of divesting the
company's International Household
and Body Care businesses, stands out

as its most apparent move to become
"simpler," Mr. Smits said.
"Simplification is not only about our
portfolio, but also about how we run
our business," he explained. "By streamlining processes and improving our systems,
we have a leaner, more
effective approach to
managing Sara Lee. In
particular, Project Accelerate - a companywide cost reduction
and productivity initiative with simplification at its core - continues to make meaningful contributions to
both the bottom line
and the quality of our
operations."
Through the implementation of Project
Accelerate, Sara Lee now has the standardized processes and integrated IT
infrastructure in place to further reduce costs through business process
outsourcing, continued simplification
of the business and corporate cost reduction.
In order to become "better," Mr.
Smits said Sara Lee is relying on great
people, brands and plans.
"Over the course of fiscal 2010, we
raised our adjusted earnings per share
guidance three times and ultimately
exceeded it at year-end," he said. "We

Sara Lee joins children's healthy food initiative
DOWNERS GROVE, ILL. - Sara Lee
Corp. late last month joined the Children's Food and Beverage Advertising Initiative (C.F.B.A.I.), a program
established in November 2006 by the
Council of Better Business Bureaus
(B.B.B.) to shift the mix of advertising
messaging directed at children to encourage healthier dietary choices and
healthier lifestyles.
In joining the initiative, Sara Lee
has pledged that all television, print,
radio, Internet and other C.F.B.A.I.covered advertising directed primarily to children under 12 will be for
products that meet government standards defining the term "healthy" or
the American Heart Association's
HeartCheck program criteria. For
example, the company's Sara Lee
bread meets the Food and Drug
10 / October 5, 2010 Milling & Baking News

Administration
definition
for
"healthy" in part because it contains
8 grams of whole grain per serving.
"Sara Lee is showing its commitment to the health of our nation's
children by joining other industry
leaders in only advertising to kids
products that meet widely-accepted
nutritional guidelines," said Elaine
D. Kolish, vice-president of the B.B.B.
and director of the C.F.B.A.I. "Under
the C.F.B.A.I., the participants' voluntary use of solid nutrition standards
has steadily improved the nutritional
profile of foods and beverages being
advertised to children under 12."
In addition to Sara Lee, 16 other
companies are part of the initiative, including ConAgra Foods, Inc.; General
Mills, Inc.; Hershey Co.; Kellogg Co.;
and Kraft Foods Inc. MBN

saw adjusted operating segment income increase in most of our segments,
highlighted by strong improvement
in our two largest businesses: North
American Retail and International
Beverage. And, cash from operations
was up $52 million to $952 million, in
spite of the fact that we made a $200
million voluntary pension cash contribution
to reduce future obligations and mitigate
volatility.
"We also announced
a new capital plan that
will return significant
value to our shareholders by repurchasing
$2.5 billion to $3 billion of our stock over
a three-year period,
while gradually increasing our dividend.
And we will continue
to evaluate the best opportunities for value
creation, including potential acquisitions."
Looking specifically at North
American Fresh Bakery, adjusted
operating income in the unit during
fiscal 2010 totaled $60 million, down
4% from $62 million in fiscal 2009.
The decline reflected lower volumes
and unfavorable sales mix shift to
lower margin non-branded products, partially offset by the favorable
impact of lower costs for key ingredients net of pricing actions.
Sales in the segment fell 3% to
$2,128 million from $2,200 million,
due in part to a decline in unit volumes and price reductions, in response to lower commodity costs
and competitive pressure.
While Sara Lee is constantly looking
for a better approach to everything it
does, the company also said it is focused on its cost structure at the business segment level, including within
North American Fresh Bakery.
"We are working on improving the
profitability of our North American
Fresh Bakery business, for instance,
by increasing our local market scale
and reducing business complexity,"
the company said. "We lowered the
number of different breads, buns
and rolls we produce and sharpened our sales and operations planning. And we continue to introduce
innovative, value-added products,
such as Sara Lee Soft & Smooth Plus
breads made with DHA Omega-3
and EarthGrains breads made with
Eco-Grain wheat." MBN
bakingbusiness.com / world-grain.com

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Milling & Baking News - October 5, 2010

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