Sara Lee North American Fresh Bakery

Headquarters: Downers Grove, Ill.
Distribution: 70 percent of U.S.
Number of bakeries: 42
Number of routes: 4,400
Number of employees: about 12,000
Website: www.saralee.com
Senior management: Brenda Barnes, chairman and CEO, Sara Lee Corp.; James Nolan, CEO, North American Fresh Bakery, and executive vice president, Sara Lee Corp.; Chris Finck, executive vice president, sales, North American Fresh Bakery; Tim Zimmer, vice president, U.S. Fresh Bakery
Annual sales: $2.2 billion (2009)
Product line: about 2,500 different SKUs of white and variety pan breads, hotdog and hamburger buns; specialty breads
Brands: Sara Lee and EarthGrains national brands, about 40 regional and local brands
Business channels: retail supermarkets and other food markets and foodservice.

Sara Lee Bakery, Dubuque, Iowa

Distribution: 27 depots and distribution centers Iowa, Wisconsin, Illinois and Nebraska
Number of tractors/trailers: 14/34
Production volume: 22 million loaves per year
Number of employees: about 100
Management: Alan Walters, plant manager; Tim Fetzer, distribution manager; John Shultz, production supervisor; Tracey Hager, quality and food safety manager
History: constructed in 1931 by Trausch Baking Co. and later purchased by Metz Baking Co.; acquired by EarthGrains Baking Co. in 1999 with purchase of Metz; included in Sara Lee’s acquisition of EarthGrains in 2001
Products: multiple Sara Lee and Earthgrains brands bread and hotdog and hamburger bun products, including bread in wide pans and 20-oz. round-top sizes
Mixing method: sponge and dough
Production lines: two bread, two roll lines with Lanham proof-and-bake conveyor system

Bread sales, volume slip; competitive pressures cited

Sara Lee Corp. released its second fiscal quarter results this month, which showed that Fresh Bakery branded and non-branded sales had slipped 7.5 percent from a year earlier to $499 million and that volume declined 4.2 percent. This was in contrast to gains of similar percentages in both categories posted during the last three years.

After the release, Brenda Barnes, Sara Lee chairman and CEO, spoke with securities analysts in a conference call. Following are excerpts of her comments:

“Fresh Bakery remains a challenging category with substantial competitive pricing pressure and some growth in private label. This is an area where we will recalibrate pricing to stimulate volume over the remainder of the year. . . We expect these actions to stimulate volume and allow maintaining our strong branded position in the industry.

“At the same time, we are focused on a powerful marketing campaign which partners Sara Lee Soft & Smooth breads with Disney’s most-popular TV show, The Wizards of Waverly.

“I am pleased with how this segment has managed a multi-year change in commodity pricing. For a three-year period, wheat prices soared to unprecedented levels, and while prices are falling now, they remain at high levels relative to historic norms. We’ll continue to do the right thing to manage our price points while focusing on delivering bottom-line results.”

In a question-and-answer session, Barnes noted that branded products are generating a large portion of competition.

“If you look at the private label business for the last 10 years, it has been in pretty steady range with no large change in market share. But, branded is very aggressive now. . . The net result is the price per loaf is down.”

She added that when adjusting prices down, “We will go surgically, market by market, where the volume needs to be restored,” and reaffirmed that company “will not back off on its brand-building efforts and will maintain planned levels of activities to market and promote its new branded products.”