News Feature | June 4, 2014

Campbell's Continues To Grow Through Expansion And Diversification

By Karla Paris

Campbell’s Growth Through Acquisiton And Expansion

The soup maker sees sales gains in the U.S. thanks to its portfolio of sauces

Campbell Soup Company, the world's largest producer of soup, reported quarterly sales on May 19 that fell short of Wall Street expectations and cut its forecast for the year. The company noted that net income rose 2 percent for its fiscal-third quarter as expenses declined and revenue edged up slightly. Campbell’s also says it expects adjusted earnings to be on the low end of its previous projections for its fiscal 2014.

Sales for the company’s Simple Meals in the U.S. were $672 million for the third quarter, an increase of 7 percent compared with the period a year ago. U.S. Simple Meals operating earnings for the third quarter increased 12 percent to $175 million. The increase is linked to lower marketing and administrative expenses, partly offset by a lower gross margin percentage. For the first nine months, sales for U.S. Simple Meals increased 3 percent to $2.426 billion. A breakdown of the change in sales follows:

  • Volume and mix added 1 percent
  • Price and sales allowances added 2 percent
  • Increased promotional spending subtracted 2 percent
  • The acquisition of Plum Organics added 2 percent

The announcement was not all bad for the soup giant. Denise Morrison, Campbell’s President and CEO, notes the company is “pleased with its double-digit sales growth in U.S. sauces including Prego, Pace, and Campbell’s Skillet and Slow Cooker dinner sauces.” Morrison adds the company “remains encouraged by the growing platform Bolthouse Farms provides in the packaged fresh category with juices, salad dressings, and carrots.” As Campbell’s tries to maintain its nearly 60 percent market share in the $4 billion soup market, it is continuing to expand and diversify its soup offerings.   Fortunately, Campbell's owns a diverse portfolio of food brands including V8 beverages, and Pepperidge Farm, in addition to the previously mentioned brands.

Campbell’s has been focused on consumer-driven innovation in products and packaging as its primary driver of organic growth. In 2013, Campbell’s grew its organic portfolio of products by acquiring Plum Organics, a brand of organic baby food and simple meals for children. With the acquisition of Plum Organics, sales of U.S. sauces increased 25 percent versus the prior-year quarter, contributing 14 points of growth. Excluding the acquisition, sales increased 11 percent primarily driven by gains in Prego pasta sauce, new Campbell’s dinner sauces, and Pace Mexican sauces.

Campbell’s is recalibrating and transforming itself with the aim of expanding its market size and growth shares. The company is focused on delivering breakthrough products in new growth spaces, sustaining innovation to strengthen its core business, and maintaining market share of its current product lines.