Processing Magazine

Sara Lee to Raise Prices to Cope with Cost Squeeze

February 9, 2011

According to the Associated Press, Sara Lee Corp. will raise prices further to cope with higher ingredient costs that squeezed its profit margins in its second quarter. Sara Lee, like many packaged food makers, is struggling with higher prices for ingredients such as coffee beans, meat and wheat. The maker of frozen desserts, Hillshire Farms lunchmeat and Senseo coffee says the price it is pays for coffee alone is up 60 percent from last year. The company, which recently announced plans to split in two, said that its second-quarter net income more than doubled on the sale of its household and body-care business. But adjusted earnings fell and missed expectations, largely because of higher ingredient costs. Sara Lee, based in Downers Grove, Ill., said it earned $880 million, or $1.37 per share, in the quarter, compared with $371 million, or 53 cents per share, a year ago.