After 50 years of manufacturing frozen cheesecakes, pies, crumbles and ice cream in Australia, Sara Lee Holdings has gone into voluntary administration.
Well, I never used any of their products, so I can't say if it's gonna be a sad loss or not.
As of Tuesday, Vaughan Strawbridge, Kathryn Evans and Joseph Hansell of FTI Consulting have been appointed as voluntary administrators of Sara Lee Holdings Pty Ltd.
That would mean Smiths, Kellogg's, Arnotts, Pepsi, Coke, Tip Top, Cadbury almost every brand sold in Coles/Woolies is in trouble. It's just dodgy marketing they are forced into.
They literally have no choice.
Coke stood up to it once, and well…..you didn't see them in catalogs for a bit 🤣
Are you saying those half price discounts ain't coming from supermarket but instead offered by the manufacturer themselves?
Likely they also have to pay for the space in the catalog and any extra display space at the end of the aisles. I expect it's all packaged up though to mess up any transparency.
Supermarkets will push manufacturers to promote heavily but the manufacturers are the ones cutting their margins for the promotions, not the supermarkets. And good lord if you want space in a catalogue then get out the big bucks. Colesworth is an abusive duopoly
@milkabuck: I'd like to see the impact of all the dodgy pricing on inflation figures. Is it an unsustainable model that's now ripping profit into bank investors through interest rates. This behavior is now so entrenched at Colesworth I expect they would ride many suppliers into the ground before they managed to pivot.
@tonka: This is why manufacturers welcome new competition!
This is also why manufacturers dropped the volume of products.
As in 200g>175g.
They can't control pricing, however they can decrease costs to increase profit.
@[Deactivated]: I heard once that IGA would get deals they really didn't have the purchase power for as industries were nurturing them.
@milkabuck: So really if you wanted flip perspective you could look at Colesworth as a buyers agent, getring the lowest prices from manufactures for their customers.
@t_c: Haha they get the lowest price from the suppliers to line their own pockets. I have family and friends that have worked for suppliers all around the country and the message is the same again and again. Colesworth are a market controlling duopoly that are not doing the average punter any favours.
@t_c: They would have to be passing any savings to the buyer but we all know they will be taking any negotiated savings for themselves.
I got a cousin that works for a brand that is stocked in Colesworth. Those big 1/2 price promotions actually cost them a fair bit and they lose money on them. They give a rebate to Colesworth for the number of units sold + they pay for the advertising space. It grows the brands popularity and they say its worth it for them.
Similar home brand products improving in quality swayed me away from buying more expensive Sara Lee products.
Coles baked cheesecake is very addictive.
I'd be surprised if the homebrand isn't made by them under contract
And screwed down by the multi nationals to bugger all profit.
Most home brand products are actually manufactured by these companies.
Yep - mentioned this before on here. I visited the factories of the manufacturing clients I worked on previously - finished product is identical except for the labelling.
Yesterdays news, and OP isn't a customer.
Ok.
OzNews - OP just want this to be highlighted forum
MMmm going to miss the,
- bavarian chocolate cake
- sticky date pudding
- cheese cake
- and most of all the pound cake.
last chance for me to take it to poundtown
It's never too late to go to poundtown my friend.
Only because of viagra
.
What about after kids?
Are we still talking about cheese cake?
I feel like it hasn’t been the same in years
yeah,
i remember as a kid i would get my mum to take out the whole pound cake from the foil tin, and i would use a spoon to scoop out the crusty bits stuck to the container, and sometimes chucking in some vanilla ice cream as well.
i've done the same with my kids..
yeah for me it was the apple pies, and bavarians as a kid. just dont taste the same.
though i will also say, i am also a bitter middle aged man now. so idk, that prob has something to do with it too.
@Jimothy Wongingtons: I too tried their chocolate bavarian recently to relive my fond childhood memories.
It ruined my childhood.
@Guybrush57: When I was a kid they made this big ice cream cake they called celebration gateu, it was kind of a chocolate ice cream and glacae cherries version of a black forest. They made a black forwat also but it was smaller. It was the cake we got for every birthday, that was really shelling out for my old, and it became our go to birthday cake. They just disappeared from shop freezers one day probably circa 1995?
did they go well with vanilla ice cream too?
Wut?
Ok grandpa back to bed.
…and take your meds.
oldmanyellsatcloud.jpg
Ease up on that pipe old man.
Aldi should buy the brand. Instead of just ripping off the Sara Lee design.
Username Czechs out
Now I'm Hungary.
Don't be Russian for the cheesecake.
Haha the design…
That's what Aldi does, they clone the branding of Aussie products. Not quite homebrand level, but full glossy printed packaging and stuff so it looks like a clone and not just a ripoff. I'd be furious if my family spent decades building up trust with the public in some food brand, only for Aldi to capitalise on that brand association and clone my packaging design.
My family's brand is in supermarkets all over Australia except Aldi and they've yet to rip it off. It would seriously be one of the worst things to happen. Sales would plummet overnight.
Lol clone. Large manufacturers are making "clones" of their products for Aldi. Same production line, same people - just a different recipe and ingredients.
I didnt mind their ultra choc…thoguht they were good.
The cakes are not great but they are part of my childhood.
Lots of mornings sitting on the floor in front of the telly watching cartoons while cutting slices off a frozen cheesecake.
Hanging for the edges, corners WOW, with their icing buildup on the rectangular cakes, and licking the foil afterwards.
I suspect we are both of the same age group. :)
The sticky date pudding is alright for what it is. I thought the frozen cheesecakes were a cut above homebrand. But… its a still a frozen cheesecake. Will be a loss for sure. But I'll get over it.
OP is starting to care now :)
I hope they keep making the sticky date pudding.
aunt bettys seems ok
Thankyou!!
Can’t be sure from the lack of details, but a report yesterday said they made $27m profit the year before private equity bought them.
So this is likely a case of PE taking on more debt than they paid for the business. Paying themselves a dividend with all that borrowed money.
Screwing the lenders over with a receivership.
Selling the scraps.
Another win for capitalism making the world a better place.
Sometimes you are so sexy and I'm straight.
Looks like they missed the opportunity to cook the books and float it on the sharemarket for a huge price like Dick Smith.
We live in the worst timeline.
As long as they didn't try to float and sell it to the Australian public, and kept the losses within the private equity firm and their financiers, I'm okay with that. It's actually a plus for capitalism - rich people taking the brunt of the losses, as opposed to the reverse which happens far too often.
Waiting for "the largest creditor is the ATO, owed $6.2m, followed by worker's superannuation and entitlements, expected to be covered by government scheme assuring these payments."
If the problem was that the owner had too much debt, and the underlying business itself was sound, shouldn't the receivers be able to find a buyer for the assets? In any case, I can't see how PE made money out of an investment that went into receivership, so they can't have been winners in this.
@falcine: Buy a business for $95m. Cut some costs, lift a few prices, looks a little more profitable.
Borrow $140m with the business as collateral.
Pay a dividend to the PE stockholders of $65m the first year, $70m the second year.
Oh no, in the third year profits are down because interest is going up, no dividend this year.
Calamity, the forth year things get so bad they can’t pay interest or tax or entitlements, better call in the receivers. Poor private equity lost their $95m investment, except they got paid $135m in dividends in the first two years.
@mskeggs: That sounds like a fairly extreme hypothetical. My finance knowledge may be limited to what I read in the financial media, but every time a PE deal goes sour it seems the PE firm loses big time because of the leverage involved. E.g. In 2007, PE bought Channel 9 for $5b, funded half by debt. Channel 9 subsequently halved in value to $2.5b but PE lost virtually all its money because of leverage. Seems like PE only wins when they can sell their investment at inflated values.
There are times when private equity make out like bandits - e.g. Myer float in 2009. That's deserving of criticism. I'm not sure the same applies with Sara Lee.
@falcine: The article I read said the expectation was it would get a new owner. There's no report that their Sara Lee asset isn't profitable.
I would take those profit numbers with massive grain of salt. They only paid 36m for it, no way mccain would sell a business with that level of profit for 36m.
@mskeggs if you think that is bad, have a look at what HLF has done…..
Purchased Healthy Mum for 14m and sold for 500k a year later. Now they are also on administration, the top guy take home 1.5m in salary in one year as well
There's not many things I wouldn't sell for a 27 million dollar payday.
They were good at what they did, but what they did wasn’t good
I wasn’t surprised this happened - the number of fresh options available that countered their frozen was growing and a lot more people kept up baking after the pandemic
It may not be over just yet… Just waiting for a possible buyer.
Unfortunately in order for the company to survive under a new owner they will likely move production overseas and keep selling in Australia to keep up with demand.
Having a quick look at alternative products, not only do they provide a better $/gram ratio but are made overseas (eg. Germany). Lets face it, our labour costs, cost of ingredients etc aren't business-friendly so you can imagine if Sara Lee is doing it tough with their ingredient buying power then small businesses (bakeries ,cake shops etc) are doing it 10x as worse and personally I'd rather support them.
I can't even remember the last time I had any Sara Lee products, but then again I don't really indulge in cakes often.
I guess Germany must have famously low costs and shipping is free?
I don't buy "our labour costs, cost of ingredients etc aren't business-friendly" as true any more, at least not against developed world competition.
Especially with the business making a $27m profit 2 years ago. Very easy to get in a kick at workers and suppliers as being the problem, but there doesn't seem to be any evidence of that.
Okay then, why would they produce overseas if it's cheaper or even the same (or thereabouts) to produce here?
I'm not saying places like Sara Lee aren't making a profit but obviously there's a business related reason to why all of these other companies are sourcing their cake-related products overseas vs local…. I'm going to place my bets that it has something to do with overseas production being cheaper (including importation) while maintaining (or even surpassing) quality
I'm going to go out on a limb and say that Woolworths and Coles combined their buying power, approached a large producer (that likely supplies cakes and other relating products to other supermarkets in the world) in Germany and were able to negotiate a better deal then producing in Australia with their own buying power or even opening up their own facility via a 50/50 cost-split, thus chasing the $$$$ - Yes that's a massive assumption but take for example Woolworths French Style Cheesecake 450g and Coles French Style Cheesecake | 450g, both made in Germany, both are 450g, both are 6 serves…. yes the nutritional specifications are slightly different but it's not difficult to ask the producer to make one slightly different in the attempt to circumvent accusations of the big 2 supermarkets working together (which would open up a can of worms regarding price manipulation). We have seen it previously too, for instance if you remember when Coles had Woolworths juice on their shelves alongside their product
Who knows for sure? The German supplier might be prepared to make just 3% profit to break into a new market, hoping to drive existing suppliers out of business.
Or maybe there is a conspiracy among Coles and Woolies.
But German wages are 12€, about $20 and hour, comparable to ours.
The ingredients for the products are dairy, wheat and sugar, all produced locally and sold at global prices, and it sounds like 200 people at the factory produced enough Sara Lee stuff for a country of 26m people, so labour isn’t a big input.
Maybe being an Australian product is enough to keep a slice of the market. I don't see a lot of products cheaper than the Sara Lea line though, so maybe international freight costs on a bulky refrigerated low cost product add a bit.
At some point production automation vs freight cost and our market size should make this stuff viable in Aust.
made overseas (eg. Germany).
Maybe we'll be able to get Bavarian Bavarians.
Private equity was involved. How am I not surprised?
How so? A European private equity owns majority of Peters Icecream. They are doing incredibly well
I don't know whether you just read the "good news" but here you go, from AFR
In the US, more than 50 private-equity-owned retailers filed for bankruptcy between 2015 and 2020, including major chains and brands such as Neiman Marcus, J Crew, True Religion, Lucky Brand and Toys R Us.
The cheese cake of Sara Lee is like tim tams of biscuits of arnotts.
Going to miss the alfoil tray of so called dessert
I didn't even know they were Australian.
Founded in Chicago in the 30s. I assume at some point they split off and made an Australian only arm? I can’t find any details other than they opened an Australian bakery about 50 years ago.
They weren't. They were a big international conglomerate. The bought out Nicholas Kiwi (Aspro, Kiwi shoe care and many other brands), then split them up and sold them off.
They are not. It was once a listed US company and they sold off the Sara Lee operations in Australia to McCain Foods. The rights to the brand in other countries are owned by different companies. I would see it more of a licenced agreement to use the brand in Australia.
This might explain why their products are constantly on discount in supermarkets next to the frozen pizza section. Never tried them either though. Maybe it's time before they disappear.