We will strive to be the number one or number two brand in every category in which we compete. We will develop innovative products that drive growth in our key segments," declared Sara Lee's CEO C. Steven McMillan in the company's 2000 annual report.

Sara Lee is working to meet these goals in its renovated 50,000-sq.-ft. building near its headquarters in Chicago. Opened in October 1999, the new facility is home to R&D, engineering, packaging, supply chain management, marketing, sales and finance for Sara Lee Branded Foods. "The purpose of this new facility is to emphasize new product and technology development," states Paul Bernthal, senior vice president, R&D.

In the past year, Sara Lee Refrigerated Foods introduced sliced deli meats and cheeses. Sara Lee Bakery introduced Sara Lee Carrot Cake Bites and Sara Lee Calzone Creations. "This new facility fosters an environment that results in increased speed to market and more creative, efficient product development," says Bernthal.

Uniting R&D

The new facility houses various R&D functional groups and two pilot plants that contribute to the development of Sara Lee Branded products (i.e., frozen bakery products and deli meats and cheeses).

Sara Lee's R&D staff develops new products and manufacturing processes and refines existing lines in its manufacturing facilities. In the Product Performance Laboratory, the staff determines baking and cooking temperatures for serving directions for Sara Lee's baked and refrigerated products.

The Bakery Product Development Laboratory contains ovens that simulate in-store bakeries and foodservice operations. The laboratory is equipped with proofers, steam ovens and a pilot unit for making toppings, fillings and icings.

Within the bakery group, product development focuses on key categories: pies, cakes and cheesecakes, and breakfast and breads. Sara Lee Bakery products include Sara Lee Bites, Sara Lee Premium Desserts and Cheesecakes, Chef Pierre pies, Par-Baked Bagels, Sara Lee Pastry and the Sara Lee Oven Fresh line. Sara Lee's Bistro Collection for foodservice offers desserts that are customizable and available in individual portions.

The Process Innovation Group develops new manufacturing processes/platforms for the Sara Lee Branded Foods division. Equipment such as impingement ovens, continuous aeration equipment and scraped surface heat exchangers are available for scale-up and potential test market samples.

The Applied Research and Ingredient Technology division conducts tests on new raw materials and reviews ingredients from new and preferred suppliers. The group also works on reformulations and ingredient substitutions.

Within the Technical Instrumentation Laboratory, scientists evaluate mix times, elasticity and extensibility of doughs as well as conduct physical and texture studies on finished products. In the Packaging Development Laboratory, engineers develop packaging concepts and subject packages to a series of tests, including compression, vibration and drop testing.

The Meat Pilot Plant is capable of making samples for customers, developing prototypes and simulating what can be done at Sara Lee's manufacturing plant facilities. The meats division is responsible for such products as Sara Lee Premium Meats. Sara Lee's Carver's Collection includes Hardwood Smoked Skinless Whole Breast of Turkey and USDA Choice Prime Rib. The Briar Street Market meats are geared for the growing foodservice market. Turkey, beef and pork are offered in versatile application styles: carving, slicing and shaving. "Our Meat Pilot Plant provides Sara Lee Refrigerated Foods with a great platform to work with Deli and Foodservice National Accounts in the development of unique products that may have broad market appeal," observes Bill Klump, president, Sara Lee Refrigerated Foods.

The meat pilot plant consists of a raw processing area, which houses injectors, tumbling equipment, grinders, stuffing equipment and coolers and freezers; a cook room; and a ready-to-eat packaging area.

End product testing for Sara Lee's refrigerated and frozen products takes place in the Sensory Laboratory. The sensory department keeps a database of more than 2,000 consumers for sensory testing. "Being in Chicago is a great advantage for our sensory team because of the diverse population we can recruit from," comments Sandy Glatter, director, Bakery, R&D. "We also have people within this facility who do discriminative testing for us."

Sara Lee's R&D efforts culminate in the Customer Showcase Room. R&D, marketing and/or sales can display Sara Lee's products for both retail and foodservice customers. "You can't underestimate the importance of the customer showcase," comments Bernthal. "We bring in our current as well as potential customers and show them our whole range of products, whether it's in the Sara Lee Branded Foods portfolio or from other Sara Lee Food Companies. We review product lines and meet with our customers' culinary and technical people directly. This helps us move quickly in the development process."

Cross-Functional R&D

"One of our core competencies is the diverse background of our R&D group. Our staff has backgrounds in culinary arts, food science, meat science, grain science, animal science, package engineering and chemical engineering, with varying degrees, including BS, MS, MBA and Ph.D.," says Bernthal.

The various R&D groups work with sales, marketing, finance and supply chain in cross-functional teams. "As a development company, cross-functional teams help bring us to market more quickly. And with all of us under one roof, there is a greater understanding of each group's functions," observes Bernthal.

Sara Lee's Calzone Creations is an example of the effectiveness of cross-functional teams and utilizing the diversity within the R&D department. "We utilized our meat products group and combined their expertise with the bakery side to enter a category that we were not competing in--hand-held sandwiches," explains Glatter. "We leveraged our refrigerated folks to help determine the types of meats that should go inside and truly differentiate our product, making Calzone Creations live up to the Sara Lee name."

This collaborative effort also entailed the assistance of the bakery applied research and ingredient technology team. "We focused on the dough. Since this is a microwaveable product, we looked at several formulations to find which one yielded the best texture. It had to be microwaveable and taste great," says George Henry, director, Applied Research and Ingredient Technology Group.

Relevant Technology

"Technology by itself is not good enough, products must meet key consumer demands, which for the retail bakery is immediately consumable, individually portioned and indulgent. These are our three I's," says Bernthal.

Using proprietary out of the freezer (no-thaw) technology, Sara Lee met the three I's with its Cheesecake Bites. "Our traditional, full-sized cheesecake products taste great, but take five hours to thaw. That's why we came up with the no-thaw technology. It has more than doubled our cheesecake business in the three years since we launched Cheesecake Bites," says Glatter. The project utilized a team of three product developers, project and process engineers, a package engineer and a sensory scientist. It took approximately nine months from the time of concept to launching the product.

"On the meat side, post-pasteurization and our slicing technology has answered the call for food safety and convenience," adds Kevin Myers, director, R&D. "This offers convenience for the consumer and operator. The post-pasteurization of our bulk products in the deli and foodservice helps us provide another hurdle for food safety in our products," he says.

Whether it's foodservice or retail, Sara Lee reigns in delivering convenience. But there is more to satisfying the consumer than offering convenience. Superior taste and premium quality are essential.

"What's happening in both the deli and bakery categories is a move up the premium scale," observes Ed Haft, president, Sara Lee Bakery. "What was considered premium five years ago is now considered a value product because people continually want higher quality taste. Our Signature Selection line of pies answers that call. We developed this retail line of upscale pies by selecting the top performing pie items from our foodservice Hi-Pie line, which caters to white tablecloth establishments."

New Product Success

R&D has proven that they are capable of keeping Sara Lee brands in the top positions of their categories. But how do they specifically measure success? "For retail bakery, our definition of success is to have 20% of our volume from products that have been introduced in the last three years. This year, we will be higher than that, about 25%. On the foodservice side of the business, our goal is to achieve 10% of our volume from products that have been introduced over the last three years," explains Haft.

"Sara Lee Refrigerated Foods shares the same success targets as Sara Lee Bakery in both Deli and Foodservice. Our focus has been to create new product introductions in significant protein segments and drive distribution broadly," notes Klump.

"R&D's overall goal in new product development is to develop the best-tasting foodservice, retail and deli products," says Bernthal. To attain this, Sara Lee R&D follows a stage gate process for prioritizing and managing projects:

• Concept documentation
• Concept approval
• Product/process development
• Go/no-go decision
• Launch
• Post-launch review

Following this philosophy enables Sara Lee's R&D team to face its future challenges and prioritize opportunities. "Business growth and increased speed to market are priorities. In addition, we want to create new processing platforms that insulate us from our competitors," comments Bernthal. "We want to continually optimize processes and take costs out of manufacturing our products. It's a significant challenge, but it's one that we need to be continually focused on."

Channeling R&D

Sara Lee's R&D team can create successful products for both retail and foodservice. But knowing which distribution channels to target and with what products are also keys to success.

"For Sara Lee Bakery, C-stores and vending are the channels requiring changes in our product and packaging approaches in order to be successful," says Ed Haft, president, Sara Lee Bakery. "For bakery goods, shelf life and individual wrapping are the two keys to having a real strong branded presence in C-stores and vending. On the individual wrapping side, I think we're getting there with many of our products. Regarding shelf life, we have certain technological breakthroughs, but we need to continue to push the envelope on extending shelf life on our individually wrapped products."

Sara Lee's deli division, which is approximately ten years old, faces different challenges in its distribution channel. "Since we are a younger business, we still have a significant opportunity to grow our distribution in the deli channel," comments Brent Schmiegelow, vice president/general manager, Deli Division. "Sara Lee is in the two fastest and most dynamic categories in the whole deli area of the store with our bulk and pre-sliced meat and cheese line. Our job is to grow this distribution channel with innovations such as pre-slicing and zipper packaging."