Food Business News - Aug 22, 2006 - (Page 1)

FoodBusinessNews ® August 22, 2006 NEWS, MARKETS AND ANALYSIS FOR THE FOOD PROCESSING INDUSTRY Fast casual sales climb Sara Lee guarded on guidance after couple of tough years 20 Water with taste 22 Nooyi to lead PepsiCo 55 CHICAGO - Stepping back from goals established her first day on the job as chief executive officer, Brenda C. Barnes on Aug. 8 lowered long-term forecasts for Sara Lee Corp. sales growth to 2% to 4% (from 4% to 5%) and shelved plans to achieve a 12% EBIT margin by fiscal year 2010. In announcing financial results for the year ended July 1, the company also announced a new dividend policy and issued earnings guidance for fiscal 2007. "The management of Sara Lee still views the company as having the capability to achieve a 12% operating margin and $14 billion in sales," the company said. "However, due to weakerthan-anticipated performance in the core business in fiscal 2005 and 2006, the company no longer expects to achieve those targets in fiscal 2010. Management's current outlook is for sales growth of 2% to 4% per year, somewhat in excess of anticipated market growth, with margins increasing annually over the next several years." The objective of a 12% EBIT margin was announced in February 2005 in connection with a major corporate Continued on Page 16 MARKET WATCH U.S. on-highway diesel price in $ per gallon Aug. 14, 2006 Dec. 9, 2005 3.065 2.425 Oct. 28, 2005 3.157 Source: Energy Information Administration Average diesel price highest since October 2005. The persistent problem of obesity Effective efforts to curb obesity have yet to yield results Health and wellness has been a focal point of food manufacturers for the past few years, but research conducted by Indiana University, Bloomington, indicates Americans are getting heavier and unhealthier. The results have garnered the attention of politicians who are struggling to craft wellness initiatives that may curb the continually rising costs of health care related to obesity. The Indiana study, which appeared in the August issue of the Journal of the National Medical Association, found increasing rates of diabetes among U.S. adults and more direct links between excess weight and serious health conditions. When statistics were adjusted for a variety of factors, including race, gender, age, etc., adults who were obese or severely obese were still, respectively, 26% and 50% more likely to report also having a serious health condition such as heart disease, diabetes, cancer, arthritis, hypertension, stroke, lung disease, asthma, thyroid disorders or kidney disease. "Our findings indicate that overall, American Continued on Page 31

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Food Business News - Aug 22, 2006