Uncertainty for Sara Lee Australia’s frozen desserts business

Posted by AFN Staff Writers on 12th August 2011

The future of Sara Lee’s Australian frozen desserts business is hanging in the balance. In its fourth quarter global report, just published, the consumer goods company states that the Australian arm of the business is “under strategic review”.

At the same time, Sara Lee announced it is divesting its Spanish bakery and French refrigerated dough businesses.

Sara Lee is one of the largest processors of fresh produce in Australia, consuming large quantities of butter, eggs, cream and cheese. In addition, substantial amounts of Australian flour, fruits and sugar are required to satisfy demand for Sara Lee products. The company’s Gosford plant in New South Wales employs over 500 people and has had an annual growth rate in excess of 10% per annum for the past 15 years.

The surprise news follows recent closures or imminent closures of food processing plants by other companies around Australia. These have included Heinz’s Wagga Wagga and Girgarre factories closed in May 2011, and Coca-Cola Amatil’s announcement this week of the closure of the Mooroopna tomato and fruit processing factory of its subsidiary, SPC Ardmona.

Sara Lee Executive Chairman, Jan Bennink said, “Through our strategic divestments, we are achieving our objective of streamlining the portfolios to provide the best foundation for strong and focused businesses moving forward.”

Earlier this week, Sara Lee signed an agreement to sell its North American refrigerated dough business to Ralcorp for $545 million. The sale is expected to close by the end of calendar year 2011.