Ferré & Consulting Blog (English Version)

Despite mounting speculation that Sara Lee Corp. is exploring the sale of its fresh baking business, a Wall Street analyst whose comments in May helped spur the speculation warned that “separating the Sara Lee bread brand from Sara Lee Corporation will be messy.”

The analyst, Robert Moskow of Credit Suisse, issued the comments 20 July in the midst of a flurry of press reports stating that Sara Lee has hired an investment banker to explore the possibility of selling the baking unit.

Contacted by Milling & Baking News last week, Sara Lee declined to comment on the reports that it has hired an investment banker or that its baking business is for sale.

“We think this is the right strategic move for Sara Lee,” Moskow said of the possibility the baking business could be on the block. “The bread business is low margin, zero-growth, and running at a competitive disadvantage in our opinion because of its high labor and benefit costs. In addition, bread has its own direct-to-store distribution network, so Sara Lee would not suffer any loss of scale with customers if it disposed of it.

“Separating the Sara Lee bread brand from Sara Lee Corporation will be messy. Sara Lee would have to license the Sara Lee brand to the buyer, and thus lose quite a bit of control over the brand equity. As a result, we think a sale process would take a long time.”

The rush of coverage began last week with a 19 July story in Crain’s Chicago Business stating that Sara Lee was looking for buyers. Other news outlets, including The New York Times, The Wall Street Journal and Bloomberg News followed with stories.

Crain’s and many of the articles last week based their stories on a 25 May investment report from Moskow in which he noted, after a meeting with Sara Lee corporate management, that the baking business was now being led by a turnaround specialist and wondered whether the parent company may be looking to sell the division. Milling & Baking News first covered the 25 May report in a 1 June, Page 1 story (see Milling & Baking News of 1 June, Page 1) that prompted inquiries at Sosland Publishing Co. from certain news outlets, including Crain’s, in the weeks that followed.

While a number of news stories specifically mentioned the largest other U.S. baking companies as potential buyers of the Sara Lee baking business, Wall Street analysts have suggested that finding a strategic buyer could be difficult.

Moskow said that a selling price for the baking business of US$1.5 billion posed by Bloomberg News as a possibility, “sounds too high.”

“Recall that Sara Lee paid $2.8 billion for the bread business in 2001,” Mr. Moskow said. “But sales have fallen to US$2.2 billion since then and EBITDA is only US$150 million. Why would anyone pay 10x EBITDA for this strategically challenged business?

“We believe private equity and Bimbo are the likely targets. We can’t imagine a scenario where Campbell’s Pepperidge Farm would ever consider it.”

Companies baking business, Sara Lee

The European Commission (EC) is reviewing consumer goods giant Unilever’s acquisition of the Personal Care and European Laundry business at Sara Lee.

Under the deal, Unilever will acquire more than 90 different brands from Sara Lee in 19 European countries.

These products include Radox, Brylcreem and Sanex.

However, the EC has said it needs “more time” to consider the full implications of the deal in terms of the competition aspect that could be affected by the takeover.

Unilever has said it “welcomes the opportunity to engage more fully with the commission’s competition authorities”.

Recently, Unilever has announced it is increasing the marketing of a number of the food and beverage products in its range.

It is launching a new innovative sampling campaign for Lipton Fruit and Herb Infusions, which is geared towards women aged between 25 and 35.

In the run-up to the summer, it is also set to give a major advertising boost to its ice cream Cornetto.

Cornetto is left lagging behind its sister brand Magnum in terms of sales, which has persuaded Unilever to increase Cornetto marketing, Marketing Week reported.

Companies European Commission, Sara Lee, Unilever

First Nationally Distributed Bread of Its Kind Provides New Way to Incorporate DHA-Omega 3 into Children’s Diets

Sara Lee North American Fresh Bakery today announced the expansion of its successful Soft & Smooth bread line with the introduction of its new Sara Lee® Soft & Smooth Plus breads Made with DHA Omega-3. Based on a growing body of scientific evidence, docosahexaenoic acid (DHA) Omega-3 helps to support healthy brain development1. Sara Lee Soft & Smooth Plus breads provide moms with a nutritious and simple means to ensure their children continue to receive the benefits of DHA Omega-3, together with other sources of DHA in their the diet, beyond infant formula and jarred baby food.

“While moms recognize that DHA Omega-3 is important to their child’s diet, it can be difficult to incorporate, especially with picky eaters who turn their nose at one of the most common sources – fish,” said Dr. Alanna Levine, Fellow of the American Academy of Pediatrics and parenting-expert. “If parents can add small portions of DHA into their child’s diet from a variety of sources – especially in something as palatable as a mild, soft-textured bread – it’s easy for their child to get the daily nutrition they need.”

Available in 100% Whole Wheat and Made with Whole Grain White, Sara Lee Soft & Smooth Plus Made with DHA Omega-3 breads are the first nationally distributed breads of its kind in the United States. The new breads provide moms an option for their little ones that contains a portion of their daily recommended whole grain intake along with the mild taste and soft texture inherent in the Sara Lee Soft & Smooth line, now with DHA Omega-3. life’sDHA™, the algae-based ingredient that provides Sara Lee Soft & Smooth Plus bread with DHA Omega-3 nutrient, is produced by Martek Biosciences Corporation (Martek).

“We understand the need to ensure proper nutrition through all stages of life especially in younger children,” said Tim Zimmer, vice president, Sara Lee North American Fresh Bakery. “Bread with DHA Omega-3 is an excellent and simple way to provide moms with a great-tasting, nutritious option their little ones will love.”

Both varieties of Sara Lee Soft & Smooth Plus Made with DHA Omega-3 breads contain 12 mg of DHA Omega-3 per two-slice serving, which is at least 10 percent of the Institute of Medicine’s suggested daily amount for kids, depending on age, ranging from 1-13 years old2. Years of research show a role for DHA in the normal development and functioning of the brain1, especially in supporting healthy brain development during those early years when it makes a difference.

“Martek continually aims to provide resources to companies like Sara Lee so together we can promote health and wellness throughout all stages of life,” said David Abramson, president of Martek Biosciences Corporation. “Combining our life’sDHA with the Soft & Smooth product is a natural partnership.”

About DHA Omega-3/life’sDHA™

DHA Omega-3 is a long-chain Omega-3 fatty acid that serves as a primary building block for the brain and the eyes and supports brain, eye and heart health. Scientific reviews highlight the importance of DHA Omega-3 in proper brain and eye development and function, as well as its importance in cardiovascular health. Yet despite its importance, most consumers do not get enough DHA in their diets.

Fish are often incorrectly thought to be the only source of DHA Omega-3. However, life’sDHA™ offers a trusted, vegetarian form of DHA. Fish are sources of DHA because of the DHA-rich microalgae in their food chain; life’sDHA is derived directly from microalgae, a renewable, sustainable source of DHA that does not deplete ocean resources.

Companies bread, DHA Omega-3, omega 3, Sara Lee