The Sara Lee brand was once famous for cheesecake and frozen baked goods—and that was about it.
In the mid-1980s, however, it became the fan-friendlier nameplate that replaced the clunky Consolidated Foods Corp. That mega-firm, which grew from a humble Chicago bakery in the 19th century, came to prominence as a prototypical ’70s-style conglomerate reflecting the business mantra of the day: Bigger is better, the more the merrier (in terms of acquisitions) and volume trumps margins.
Although it was but a generation or two ago, that approach to business success seems as if it were hauled from some moldy dustbin of history.
Like several other “highly diversified” companies from that decade—the once-powerful LTV, which owned companies in aerospace, electronics, sporting goods, meatpacking, pharmaceuticals and steel, comes to mind—Consolidated expanded exponentially, acquiring supermarket chains, dairy plants, drug stores, beverage brands and foreign food processors, along with manufacturers of leather goods, car care products, underwear and cosmetics.
One little-noticed acquisition at the time was the 1971 purchase of Hillshire Farm, a regional processor of deli meats and pre-packaged processed meats. Hillshire’s CEO, John Bryan, however, quickly moved up the corporate ranks and just five years later was named Consolidated’s chairman of the board.
His ascension presaged a shift in the company’s long-term direction, away from horizontal growth and toward a more strategic series of food and beverage acquisitions, including Hygrade Food Products (makers of category leader Ball Park hot dogs) and Jimmy Dean Meats, marketer of the No. 1 branded breakfast sausage line.
In 1985, the company’s name officially became Sara Lee, and although it took another couple decades, the divestiture of its clothing lines, leather goods, international operations and health and beauty lines began in earnest.
A new way of eating meat
Fast forward to 2012, when Sara Lee announced a bold plan to split the company in two: A North American division that included its core brands and meat and deli lines—which became Hillshire Brands—and an international food company called D.E. Master Blenders 1753.
Talk about a clunky name.
Since the reshuffling, Hillshire Brands made a conscious move toward a “carnivorously focused strategy,” as its new chief executive, 47-year-old Sean Connolly, began remaking the product lines.
Connolly, a former Campbell Soup executive, told the Wall Street Journal this week that he hopes to “rev up growth” by marketing more sandwiches and snacks aimed at consumers seeking healthier foods that still offer convenience. Recent new product launches include flatbread sandwiches, heat-and-eat burger sliders and lower-fat hot dogs.
None of those, quite honestly, are top-of-mind as “healthier fare.”
Nevertheless, the company is currently exceeding analysts’ profit projections, earning $58 million in the most recent quarterly report, versus $10 million a year ago. To further support Hillshire’s flagship brands, Connolly said Hillshire would increase its marketing and advertising budget to more than $215 million a year by 2015.
“We need a continuous pipeline of innovation in our categories . . . to keep the image of the brand contemporary,” he told WSJ. “Consumers are hard-wired to crave meat, but the way they are eating today is different. Now they're eating five smaller meals during the course of the day and that creates opportunities to fit into these smaller ‘mini’ meals.
“We're no longer focused on selling bulk meat solutions—we're focused on recognizing meat as the ‘hero ingredient’ in food products.”
How heroic Hillshire’s new strategy may prove to be is open to debate. Of late, the firm has experienced a swing-and-a-miss with recent rollouts, including a Jimmy D’s brand extension that bombed in the marketplace.
But already, Hillshire’s ambitious re-structuring—and even gutsier name change—offers a stark counterpoint to the firm’s former reputation as a risk-adverse, play-it-safe marketer that preferred to grow by buying up other companies.
It was considered a shrewd business strategy 30 years ago when Consolidated Foods decided to dump its stodgy nameplate.
In the long run, this latest reinvention of the firm’s once-sprawling portfolio may prove to be even smarter.
The opinions expressed in this commentary are solely those of Dan Murphy, a veteran food-industry journalist and commentator.