(FNS) CHICAGO -- Sara Lee Corp.'s test of a branded baked goods line for the commercial rack has been a success in southern California and has been expanded to the Chicago area.
"This is not a small idea. This could be considerably bigger than the frozen baked goods line," said John H. Bryan, Sara Lee chairman and chief executive officer at a press conference after Sara Lee's annual meeting here Oct. 27.
"We think there is a good opportunity for a fresh brand that stands for the Sara Lee quality, but the logistics have to be worked out," he said. The need to establish a distribution system will make any rollout of the line gradual, however, he emphasized.
The line of Sara Lee bagels, English muffins and crumpets was launched in California earlier this year by International Baking Co., which Sara Lee acquired in its 1993 fiscal year.
"Our fresh sales are already at a larger level than our frozen sales in California," C. Steven McMillan, executive vice president, told shareholders.
Sara Lee made the fresh line available in Chicago about six weeks ago at the request of Jewel Food Stores and Dominick's Finer Foods, he said. "The issue," noted Janet Bergman, vice president of investor relations and corporate affairs, "is distribution; how to profitably and effective distribute a fresh product."
Bryan noted the need for bakery distribution could even mean some acquisitions for Sara Lee, though in general the company is reducing its pace of acquisitions in favor of pursuing worldwide marketing opportunities for the brands and products it already has.
While the fresh baked line is currently limited to bread products, Bryan said, "If I were a betting person, I would bet we would have sweet goods, as well."
McMillan said sweet goods were in the works. Responding to a stockholder's suggestion during the meeting that Sara Lee develop low-fat or no-fat baked goods, McMillan commented the company was working on such products to sell with the fresh line. In frozen baked goods, however, both McMillan and Bryan indicated Sara Lee had not been able to develop low-fat products that met the company's taste standards.
"Over the years we have introduced a number of products with lower fat levels. Generally speaking, they have been less successful than we would have liked," Bryan told the shareholder.