US: NPD focus for Sara Lee meat arm Hillshire Brands
Improving NPD will be central to Sara Lee's plans to drive growth at its North American meat division, to be renamed Hillshire Brands, the company has revealed.
After the spin off of Sara Lee's Europe-based tea and coffee business, Hillshire Brands will be based in Chicago and will encompass Sara Lee's North American retail, foodservice and speciality meats business. The company will market consumer brands including Jimmy Dean, Hillshire Farm, Ball Park, Aidells, Gallo Salame and State Fair.
Hillshire management outlined how it intends to drive growth at the company after the spin off during an investor meeting yesterday (5 June).
"We envision making Hillshire Brands the most innovative meat-centric food company in the US," said Sean Connolly, chief executive officer of Sara Lee's North American retail and foodservice business,
Connolly, who will take over as Hillshire CEO after the spin off, told investors the company expects to drive top-line growth through innovation and increased brand support.
He said the new management team at Hillshire would be focused on "shoring up weak spots", such as NPD. While new products have made up about 9% of sales over the last four years, Connolly said that he aims to increase this figure to 13-15% by 2015.
Connolly admitted some of Sara Lee's meat brands have been "under-managed and have under-delivered". However, he added: "We will fix that".
The company will increase its marketing and promotional expenditure to 5% of sales by 2014, the group revealed.
These investments will be underpinned by improved gross margins, which will be achieved through a shift in product-mix and cost cutting.
Connolly said there was a "tangible" opportunity for growth in value-added products and Hillshire will refocus its business on higher-margin branded products, such as prepared meals, and away from a commodities meats business.
The company said its investments in branding and product development will further enable it to command a price premium and differentiate its offering.
Management has also developed a three-year plan to generate US$100m in cost and productivity initiatives.
The group expects its strategy to deliver annual revenue growth of 4-5% and an operating margin of 10 % by fiscal year 2015 and have a near-term dividend payout ratio of 30-35%.
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