Sara Lee the latest looking to sharpen product focus
October 5 2009
Having been hinted at by management months ago, the announcement by Sara Lee Corp. that it is in the process of selling its International Household and Body Care segment was hardly a surprise. For the company’s baking division and for the baking industry generally the move represents continuation of the trend toward focused product lines and away from diversification.
This trend has been evident in fits and starts since the mid-1980s. When Sara Lee completes the sale, the Fresh Bakery business will account for 28% of the company’s total sales, up from 23% currently and only 16% in 2002, shortly after the Earthgrains business was acquired.
Sara Lee is not the only major baking business tightening its focus. The acquisition by Grupo Bimbo of the U.S. fresh baking business of George Weston Ltd., could be viewed in the same light. Similarly, it was anything but clear when Interstate Bakeries Corp. declared bankruptcy that the company would emerge as a free-standing business, but it has. Flowers Foods, Inc. tightened its focus earlier in the decade with the sale of cookie/cracker and pie businesses. Yes, baking remains a relatively modest part of the overall Campbell Soup Co. portfolio, but even Campbell has sharpened its business focus considerably in recent years. Questions about "focus" versus "diversification" came to the fore again when Cadbury P.L.C., having just spun off its beverages business, reacted negatively to the acquisition overture by Kraft Foods Inc. Regardless of how that episode evolves, baking’s direction is clear.