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Sara Lee plans coffee kick to beverages

By Neil Merrett , 12-Sep-2007

Food and beverage group Sara Lee has announced plans for the future growth of its hot beverage operations with an increased focus on premium brands and emerging markets like Russia.

The strategy, outlined yesterday by group chief executive officer Frank van Oers and senior vice president Marleen Vaesen, forms part of plans to improve margins throughout the company's entire operations.

 

 

 

The move will result in the firm, which is already a global leader in baked goods, extend its presence in processed coffee production, particularly in the high growth markets for the beverage of Latin America and Eastern Europe.

 

 

 

During the 2008 financial year, the group says it expects to focus its Russian operations in St. Petersburg before, depending on market results, extending its reach nationwide by the following year.

 

 

 

The company said it hoped in particular to tap into the increased consumer demand in the country for affordable luxuries, with the launch of the Moccona premium coffee brand.

 

 

 

Sara Lee also revealed its intentions for Brazil, which the group said was now the world's second largest market for coffee. The company says that although it already holds a leading market share in the country, it will continue to build on its dominance by extending its focus from higher volumes to higher value products.

 

 

 

Along with geographic expansion, the company said it will also increase the number of products available through its international portfolio, particularly for its Senseo espresso machine range.

 

 

 

This will include the launch of Senseo Café Choco, which will combine coffee, milk and chocolate together into a single product. With the debut of a new system called Flavorit during the year, the company claims that consumers will also be able to customize specific flavours in coffee through their machines.

 

 

 

The drive for both greater revenues and margins will be aided by Sara Lee's recent shaking up of SAP software for trade management of its food and beverage operations, according to the company's estimates.

 

 

 

Introduction of the SAP system in the US and other markets including the UK, Germany, the Philippines, Malaysia and Singapore is expected by the group to generate savings of $50m.

 

 

 

A second phase of introductions for the system will focus on Sara Lee's US supply chain, procurement and human resources operations, along with further expansion abroad into Hungary, Indonesia and Hong Kong.