Campbell Soup Company

About Campbell Soup Company

Soup boils down to M'm! M'm! Money! at the world's #1 soup maker Campbell Soup. The company's most popular selections among its 90-variety soup portfolio in the US include chicken noodle, tomato, and cream of mushroom. Campbell also makes and markets meal kits, SpaghettiOs canned pasta, Pace picante sauce, V8 beverages, and Pepperidge Farm baked goods – more... (including those popular Goldfish crackers). Campbell's Australian division produces snack foods, such as the Aussie favorite Arnott's biscuits. The food manufacturer, which sells its products in more than 160 countries, boasts facilities throughout the world. In addition to North America, its principal markets are Australia, Belgium, France, and Germany.

Strategy

The company is working to boost profits by focusing on three categories worldwide: simple meals, baked snacks, and healthy beverages. Campbell is working to increase product innovation and consumer marketing initiatives for products in the Campbell's, Swanson, Pace, Prego, Liebig Erasco, Pepperidge Farm, Goldfish, Arnott's, and V8 lines that fall under the three categories. Currently, the company looks to stabilize and boost the profitability of its North American soup and simple meals businesses. For its healthy beverages unit, it's pursuing fast-growing product segments, such as energy drinks and juices, while also growing this business outside the US. To set up its baked snacks for growth, Campbell is building a 34,000-sq.-ft. innovation center at the Pepperidge Farm headquarters. Funding the initiatives will negatively affect financial performance for that year but help set the stage for profitability in 2013 onward.

Geographic Reach

The company operates manufacturing facilities in 14 US states and 10 foreign countries. Campbell is focused on boosting its presence in international markets with existing products in Europe and Asia Pacific. It also hopes to capture market share in fast-growing markets in Asia and Latin America through acquisitions and strategic alliances, such as joint ventures. With China having one of the world's highest rates of per-capita soup consumption, Campbell has been focusing its efforts on the Guangdong province and Shanghai. Campbell formed a joint venture with its Chinese distribution partner Swire Pacific Limited in 2011 to chase after the commercial soup market. Named Campbell Swire, the venture is controlled by Campbell, which retains a 60% interest, and based in Campbell's Shanghai offices.

Sales & Marketing

Wal-Mart is Campbell's largest customer, accounting for 17% of sales. Addressing changing consumer tastes, the company has been reducing the salt content of its foods across some of its best-selling brands, including its iconic tomato soup, along with V8, Healthy Request, Chunky, and Goldfish products. Challenged in quality and sales by rival General Mills' Progresso-brand soups, Campbell has enhanced the taste of its products by adding more vegetables to its vegetable soup and making its cream soups creamier.

Mergers & Acquisitions

Meanwhile, Campbell has expanded its brand portfolio through acquisitions. The soup giant in 2012 purchased Bolthouse Farms for about $1.55 billion from Madison Dearborn Partners. Bolthouse, known for selling fresh carrots, beverages, and salad dressings, is expected to further fuel Campbell's US beverage division, which has benefitted from the rising popularity of the V8 juice brand. Campbell also acquired Ecce Panis, a maker of artisan breads, in 2009; it has since been folded into its Pepperidge Farm operations and has given Campbell entry into the growing higher-margin artisanal bread sector. Previously, Campbell acquired the Wolfgang Puck soup label from Country Gourmet Foods in 2008 and inked a licensing deal with Wolfgang Puck Worldwide to use the celebrity chef's name on additional broth and stock products.

Divestitures

Campbell simultaneously has shed non-core lines; it sold its premium chocolate maker Godiva to Turkish food company Ülker. Campbell pocketed $850 million from the 2008 sale and used the proceeds to repurchase shares. The company also divested its French sauce and mayonnaise business, which was marketed under the Lesieur brand, for $42 million and axed some of its Australian salty snack brands including Cheezels, Thins, Tasty Jacks, French Fries, and Kettle Chips. The French and Australian divestitures were cited as part of Campbell's operational-efficiency and long-term restructuring initiative, which began that year. Whittling down manufacturing costs, Campbell in mid-2010 also sold its German Village Products pasta facility in Ohio to Philadelphia Macaroni, which has in turn agreed to supply pasta to Campbell.

Financial Analysis

Campbell has grown slowly during the past few years. Revenue has remained relatively flat as net income dipped some 5% in 2012 vs. 2011. It's also down $379 million in cash in 2012 as compared to 2011. The company points to International Simple Meals and Beverages and US Simple Meals (due to US sauces) for the sales decreases as it logged increases among its Global Baking and Snacking (due to Pepperidge Farm offsetting Arnott's declines), US Beverages (V8 Splash beverages and V8 V-Fusion beverages), and North America Foodservice (due to refrigerated soup) units. Campbell cites increases in marketing and selling expenses for its net income boost, as well as a $3 million impairment charge associated with the (Swedish) Blå trademark used in the International Simple Meals and Beverages segment.     

Ownership

The descendants of John Dorrance, the inventor of condensed soup and founder of the company, own approximately 42% of Campbell. – less

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