Innovative new products commanding higher margins, increased marketing investment and better cost controls will help Sara Lee “unleash the potential” of Hillshire Brands Company, the new name for its North American food business, claims the firm.
Sara Lee, which will split into two publicly-traded companies this month, yesterday introduced the market to Hillshire Brands Company, which will come into being on June 28 following the spin-off of its international coffee and tea business, recently rebranded as D.E Master Blenders 1753.
Sean Connolly, who will take the helm at Hillshire Brands at the end of the month, said the new approach should deliver annual revenue growth of 4-5% and an operating margin of 10% by fiscal year 2015.
“Our entire organization is excited about unleashing the potential of our employees as a more-focused and agile company, and releasing the potential of our brands with superb consumer and shopper insights and strong retailer positions,” he said.
“We envision making Hillshire Brands Company the most innovative meat-centric food company in the US.”
More innovation, more brand support
The business, which has four mainstream brands – Jimmy Dean, Ball Park, Hillshire Farm and State Fair – plus two artisanal brands – Aidells and Gallo, would also expand into adjacent food categories, said Connolly.
The Jimmy Dean brand, which had originally been built around roll sausages, for example, has recently expanded into breakfast bowls, croissant sandwiches and a range of other products and is now worth almost $1bn at retail, said president, retail, Andy Callahan in a presentation to investors yesterday.
The Jimmy Dean fully cooked sausage range is growing very fast, along with croissant sandwiches and the Delights 300-calories or fewer range, he said.
"Today Delights [which was launched in 2007] represents 7% of total [Jimmy Dean branded] sales and there is significant upside in this business. We're also optimizing the advertising behind Delights specifically."
New packaging will also drive significant growth for the Jimmy Dean brand, he added. "New packaging wil contemporize the brand and drive sales."
There are also significant opportunities for the Ball Park brand in the $18bn 'guy food' (fully cooked beef patties, hot dogs etc) category, which is growing at 3% year-on-year, said Callahan.
"The mini meal platform [sliders, bakery-wrapped franks etc] is the next evolution of guy food."
State Fair, meanwhile, is a "hidden jewel" of a brand worth almost $200m in sales, he said. "It's always been a corn dog brand, relatively flat since 1953. We haven't really supported it at all. But we have a very strong foundation to build upon.
"We belive we can tap into the upside of this brand...at the end of the summer we'll be launching Fiesta corndogs and wholegrain dogs."
Finally, the Hillshire Farm brand - worth $1bn at retail and consumed by half of American households - also had tremendous potential, he claimed, with new on-trend flavors, healthier formulations and more impactful advertising in the pipeline.
New, higher margin products
Maria Henry, who will become Hillshire Brands’ chief financial officer after the spin-off, outlined Hillshire Brands’ four drivers of profitability:
- Higher revenues through innovation and increased brand support.
- Improved gross margins through new, higher-margin products, brand strength differentiation, and productivity.
- Increase marketing, advertising, and promotion to 5% of revenue by fiscal year 2015.
- Further cost and productivity programs including a three-year plan to save $100m and investment in insights and innovation to manage selling, general and administrative expenses.