Baking&Snack - September 2011 - 20

NEWS

of US consumers who consider the Nutrition Facts important mention total calories as their top concern. are concerned with total fat but only worry about trans fat.

FDA launches food safety tools
The Food and Drug Administration (FDA) released the Food Related Emergency Exercise Boxed (FREE-B) set, a web-based collection of scenarios designed to help members of the food industry test their readiness to react to food-related emergencies. Scenarios include regulatory traceback investigations, epidemiological investigations, early signal detection with clinical illness reports and intentional contamination by an insider. The FREE-B files are available for download at www.fda.gov/food/fooddefense/training.

pay attention most to sodium content

look for sugar and

are concerned about ingredients and preservatives.
UNITED SOYBEAN BOARD

Looking back at Sara Lee
The announcement that Ralcorp Holdings will be acquiring the refrigerated dough business of Sara Lee Corp. presents a different perspective for reflecting on what has transpired in the 10 years since Sara Lee acquired The Earthgrains Co. The Ralcorp deal prompts questions about the principal strategic initiative pursued at Sara Lee over the past decade — the building of the Sara Lee brand in the bread aisle. This focus was anything but a foregone conclusion when Earthgrains was acquired. Announcing the deal in July 2001, C. Steven McMillan, then Sara Lee chairman and CEO, spoke at some length about the potential to turn Earthgrains’ profitable private label refrigerated dough business into a worthy competitor of the dominant brand in the category — Pillsbury. Mr. McMillan said he was confident Sara Lee could succeed in refrigerated dough. “When we do focus groups and ask people what categories we should participate in, people already assume we’re in the refrigerated dough business,” he said at the time. “…This is not like Earthgrains having to go out and try to build a brand from scratch.” Despite these musings, Sara Lee never entered the branded frozen dough business in the United States, focusing instead on the bread and rolls category. At first blush, the decision seems to have been sound. In very short order, Sara Lee was catapulted into the top-selling bread brand in the US. A difficult achievement in any category, this meteoric rise, built on the strength of the Sara Lee name in baked foods and product innovation, was especially impressive in a category as mature and established as bread. Still, in hindsight, it is difficult to see what this achievement produced in terms of shareholder return. In part by design, Sara Lee bread and roll sales cannibalized sales of its existing company brands. Overall company bread sales were flat, at best, in the years Sara Lee has owned the business. The growth of the Sara Lee brand appears to have done little to build value, given that Sara Lee agreed to accept $959 million for the business that generates $2.1 billion in annual sales, versus the $2.8 billion it paid for $2.8 billion overall in Earthgrains sales. The $545 million Ralcorp has agreed to pay for a refrigerated dough business with $300 million in sales raises the question of whether Sara Lee would have been able to build the profitability of this smaller division with a branded strategy. Even with the benefit of hindsight, it is impossible to imagine Sara Lee would have neglected the opportunity to attempt growing the Earthgrains fresh baking business. The sales multiple Ralcorp will pay suggests Sara Lee managed the business well, but one wonders what may have been possible had Mr. McMillan’s comments been pursued in the years that followed. — L. Joshua Sosland, editor, Milling & Baking News

BCMA focuses on commodities and global markets
Member companies of the Biscuit & Cracker Manufacturers’ Association (BCMA) will gather at the annual convention Nov. 6-8 at the historic Gasparilla Inn and Club in Boca Grande, FL. An executive-level meeting for cookie and cracker manufacturing professionals and allied supplier companies, the convention focuses on prominent influences in the cookie and cracker industry such as commodities, consumer behavior, health and wellness, and industry outlooks. “The cookie and cracker industry is witnessing global changes in terms of emerging markets and the ever-shifting commodities landscape,” said convention planning committee chair Rich Koulouris, Ralcorp Holdings, Inc. “The BCMA Annual Convention intends to address management strategies for these developments.”

BAKING & SNACK / September 2011

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Baking&Snack - September 2011

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