Sara Lee administration: The ‘perfect storm’ that caused the Aussie icon’s collapse
The collapse of beloved frozen dessert company Sara Lee could be due to younger consumers seeking healthier treats, an economist has revealed.
Many Australians were shocked on Wednesday to learn that the company, which was founded in Australia in 1971 on the central coast of NSWhad gone into voluntary administration.
A desperate hunt is on to find a new buyer who can save Sara Lee from the brink of collapse, with 200 jobs at stake.
Behavioral and applied economist Dr Meg Elkins from RMIT University in Victoria said the current state of affairs is likely the result of a “perfect storm”.
Many Australians were shocked on Wednesday to learn that Sara Lee, which was founded in Australia in 1971 on the central coast of NSW, had gone into voluntary administration.
“The cost of products has gone up in recent years and it’s a year of inflation so people are cutting back,” she told Daily Mail Australia.
Sara Lee raised prices across the board in May this year.
Another potential downfall of Sara Lee may have been that the company did not evolve with the times, with younger generations becoming increasingly health conscious.
Behavioral and applied economist Dr Meg Elkins from Victoria’s RMIT University said the company’s demise was likely the result of a ‘perfect storm’
‘The challenge is: how does it appeal to a younger audience?’ said Dr. Elkins.
“We are witnessing the movement of young consumers towards healthier options and Sara Lee is truly a dessert brand.”
The addition of major supermarkets like Woolworths and Coles selling their own frozen desserts at low prices was also another hurdle Sara Lee would have to overcome.
“When inflation hits, you start looking for cheaper alternatives,” Dr. Elkins said.
“We end up paying the price… and losing these very iconic brands.
“The production costs of these goods have increased and we have also become more competitive with other brands,” she explained.
But one thing that could work in Sara Lee’s favor is its popularity.
“When brands like this collapse, there’s more and more thinking going on,” Dr Elkins said, as many Australians said they have since rushed to the nearest store to pick up a Sara Lee dessert.
“They could tap into that memory element, but they need to recapture young customers with healthier desserts.”
Meanwhile, Sunrise presenter Nat Barr said Australians themselves are to blame for the company’s collapse.
“Many of us haven’t bought one in a while. Let’s save Sara Lee. It’s all our faults.’
Vaughan Strawbridge, Kathryn Evans and Joseph Hansell of FTI Consulting have been appointed as volunteer administrators for Sara Lee.
Another potential downfall of Sara Lee may have been that the company did not evolve with the times, with younger generations becoming increasingly health conscious.
“The Australian Sara Lee company has a long history of producing desserts, including frozen cheesecakes, tarts, crumbles and ice cream, using high-quality, authentic ingredients,” the administrators said.
‘The Australian-based production company trades as Sara Lee under license from the global trademark owner, with rights to operate in Australia, New Zealand, South East Asia and the Middle East.
‘The Australian-based production company trades as Sara Lee under license from the global trademark owner, with rights to operate in Australia, New Zealand, South East Asia and the Middle East.
‘The appointment to the company is to pursue a restructuring and sale of the Sara Lee business while continuing to operate.’
Mr Strawbridge believes there will be strong interest from several companies to acquire the business, which once had TV star Sophie Monk as an ambassador.
“We are working with Sara Lee’s management team and staff to continue operations while safeguarding the future of the company,” he said.
“We are immediately commencing a process to sell or restructure the business and continue its long history of manufacturing in Australia.
‘We expect a lot of interest in the company and will work with these parties and stakeholders to achieve a result as quickly as possible, which will safeguard the current business and provide clarity to the loyal and committed employees and customers.’
The company, which employs around 200 people, was founded in 1971 in Lisarow on the NSW Central Coast.
The website states that ‘bakers and pastry chefs create delicious desserts and pastries for Australians and New Zealanders every day, using traditional baker’s flour, real eggs and fresh cream’.
The company was founded in Chicago, USA, by Charles Lubin, who named his first bakery after his daughter Sara Lee in the 1930s.