Bread Maker Sara Lee Challenged To Hike Profits, Have Larger Market Share

August 25, 2008 12:30 p.m. EST

Downers Grove, IL (AHN)- Despite its success in the bread business, Sara Lee is seeking a larger share of the market.

After the company reentered the bread business several years ago, Sara Lee has emerged the top three bread makers aside from George Weston and Flower Foods, each accounting for 9 to 10 percent market share.

Among the top three bread producers, Sara Lee has the widest coverage with 70 percent of its products sold in the U.S. This month, the firm's yearly bread sales topped $1 billion making bread the largest money maker for the company which had a $2.2 billion total sales last year.

Aside from retail bakery, Sara Lee also has retail meat and institutional food sales, which a stock analyst described as still challenged, from a profit margin perspective. But it is in bread production where Sara Lee has the largest opportunity to increase its margins, said Alexia Howard of Sanford Bernstein.

Rivals Flowers and Weston had higher profit margins compared to Sara Lee's 2.7 percent. The company's head baker admits it has more room for growth and is adopting a glass half-full approach to industry challenge to have more meaningful profits in the years to come.