Sara Lee Corp. will keep relying on product launches to maintain its turnaround process begun last year.
The new-product pipeline is one of three “pillars” to Sara Lee’s turnaround plan. The company is also streamlining its portfolio, and is cutting costs by improving operations, consolidating offices and eliminating 1,400 jobs worldwide (900 have been cut so far).
“We are transforming this company to be a different company than you all knew it as,” CEO Brenda Barnes told analysts last week.
Sara Lee also is addressing pricing and trade spending, one of five priorities to improve efficiency this fiscal year. On the docket for fiscal 2007: customer management.
For now, R&D is the priority. “We’re taking a more disciplined approach to introducing products and driving growth in core categories,” Barnes said.
Product launches get a solid mix of advertising and promotional support, but Barnes gave no indication that Sara Lee will boost marketing spending significantly. The company spent $184 million on measured media in 2005, down slightly from $197 million in 2004, TNS Media Intelligence said.
Sara Lee hopes to build on the momentum of successful 2005 launches. Barnes detailed the launch of two brands for analysts last week: Sara Lee Soft & Smooth whole-grain bread in the U.S., and Ambi Pur 3volution air-fresheners, now rolling out in the U.K. and France.
Soft & Smooth, launched in July, bridges kids’ taste for white bread and parents’ desire for whole grains. Sara Lee launched Soft & Smooth with TV, print, sampling among kids, and product placement on talk shows. The bread garnered 100% distribution in three weeks and got in-store displays in 75% of stores in its first 12 weeks, Barnes said. Soft & Smooth leads the bread segment with a 5.7% share and is on track to hit $100 million in sales in its first year.
“The key to this success was knowing what consumers wanted so that this bread would appeal widely to mainstream consumers rather than to a niche segment,” said Bill Nictakis, president of Sara Lee Food & Beverage’s U.S. Fresh Bakery business, in a statement.
Meanwhile, Sara Lee’s new Breakfast Breads have pulled a 9% share of the $200 million breakfast-bread segment in its first two months.
Air freshener Ambi Pur 3volution—an appliance that “plays” up to three scent discs to disburse fragrance—is Sara Lee’s biggest launch ever in its air care business. Marketing support includes media ads and in-store demos; the brand has garnered 80% distribution in its first eight weeks.
Barnes credits “good planning and execution with retail partners” for the successful launch of Jimmy Dean Skillets frozen breakfasts, which has gotten 85% distribution and a 21% share since its January launch.
Downers Grove, IL-based Sara Lee projects its total sales will rise 4% to 5% by 2010. Sales hit $8.64 billion (down 1%) for the first half of fiscal 2006, ended Dec. 31, 2005. Fiscal 2005 net sales were $19.3 billion.
Separately, Sara Lee breaks new TV and print ads this week in its celebrity-studded “Look who we’ve got our Hanes on now” campaign for Hanes apparel. New spots feature actors Kevin Bacon and Christina Applegate; past ads have showcased Jennifer Love Hewitt, Matthew Perry, Damon Wayans and basketball legend Michael Jordan. (Jordan makes a cameo appearance in one new spot, blocking Bacon’s efforts to shoot a ball of paper, ring of keys and a basketball.) The Martin Agency, Richmond, VA, handles.
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