Sara Lee Acquires Tea Forte, an Ultra Premium Tea Maker

As much as I like tea personally, I seldom cover things like that in our blog since it doesn't have much to do with food ingredients or manufacturing.

This acquisition merits some attention here for a few reasons.

First of all, it shows one of the more interesting places where large manufacturers are looking for growth these days: the ultra premium market segment.

The interesting thing about that market segment is that in many way it's--at least largely--recession-proof. For consumers available to afford regularly purchasing Tea Forte's teas, they're a steady source of business.

However, there are another couple of interesting groups who're purchasing items like this, too. First, there are many curious consumers who aren't necessarily in the expected target market, but they're very curious what makes a product that's that much more expensive than competitors and if it's worth it.

The second segment are people giving gifts. Small as the segment may sound to be at first, it really does represent a lot of people, and not just at the traditional end-of-year holiday season.

There are all sorts of other occasions year 'round when people give food and food-related products as gifts. Birthdays, graduations, and congratulations celebrations are just a few examples. Often on occasions like these people buy things as gifts they wouldn't buy for themselves. And, Sara Lee profits.

So, even though the Tea Forte acquisition may not seem to make complete sense on the surface for Sara Lee, it actually may be pretty smart. Among other things, since it is largely recession-proof, Sara Lee is likely to be adding a revenue source that, especially over time, should prove to be reliable for them.

Further, because of Sara Lee's size and buying power, they're likely going to be able to cut costs and make the new division quite a bit more profitable. Everything from machinery to packaging to shipping may all benefit without having any effect on product quality.

This doesn't even count the various ways Sara Lee might be able to cross-sell to consumers.

The bottom line: in spite of economic pressure throughout, there are a lot of ways clever manufacturers can increase profits and bring in new revenue. One of the best ways of helping the bottom line: smarter ingredients purchasing, which is where we can help.

Getting manufacturers the best prices and delivery on all sorts of wholesale food ingredients has been our specialty for over 40 years.

Labels: food manufacturer acquisitions, food manufacturers, wholesale food ingredients