Campbell eyes merger for “meal makers” range

Posted by Josette Dunn on 14th July 2010

Campbell Soup Co. has said it sees opportunities for M&A to add to its “meal makers” business as the US food group looks to ramp up growth in emerging markets.Speaking at a meeting with investors on Monday (12 July), Larry McWilliams, president of Campbell’s international business, said the meal makers sector, which includes stocks and sauces, is a “large but fragmented” category and that the firm plans to focus more on this part of its portfolio.

“We see many more opportunities for M&A activity,” McWilliams told attendees. “We are interested in businesses in current or adjacent markets that have strong growth profiles or are profitable. These meal maker businesses can help us drive soup conversion in developing markets by capturing cost synergies and then allowing more investment in innovation and marketing of our soup portfolio.”

Campbell entered Russia and China five years ago and has had product on shelves in the markets for over two years. McWilliams said that Campbell now sees a market, in China in particular, for full finished soups.

“We believe there is a market for full finished soups to capture the consumer that wants to have soup but only wants to heat and eat. We are going to test a line of condensed Chinese soups in a pouch and we have high hopes for this platform in the future,” McWilliams said.

In Russia, Campbell said it was “very pleased” with the distribution and initial consumer response of the Zapravka broth brand.

“We are pleased with our progress in both markets and are still very energised about the growth these two markets can offer in meal makers and soup,” McWilliams added.

Speaking about the group’s soup division, chief strategy officer Carl Johnson told attendees that soup is a large category in developed markets with lower growth rates, while in emerging markets, the category is small but growing fast.

“Campbell is the leading player with about a 25% global share in value terms and a 63% share in developed countries. The implications for us are clear,” Johnson said. “We must and will remain the global leader in soup and we intend to expand fully into emerging markets as we have done, as you know, in Russia and China.

“Given the concentration of our soup business in North America, we will continue to expand to new geographies and channels including away from home where we are under-developed,” he added.

Denise Morrison, president of Campbell’s North America soup, sauces and beverages business added that the company is committed to growing the soup category, with a focus on “emerging geographies”.

“Our marketing plans are competitive, we need to expand in new geographies and channels. Innovation will continue to create our future and improve margins. We are taking the necessary action to strengthen our competitiveness.”

Morrison said the firm plans to launch its classic recipes and regional soups in Hangzhou, China in a bid to drive homemade conversion behaviour in the soup segment.

“Hangzhou has 1.5m households and what we’ve learnt is that we must clearly explain the products. We will enter through concentrated soup platforms in pouches and cans,” Morrison said.

She added that in Mexico, Campbell will extend its soup line to include a ‘ready-to serve’ single serve can with “real Mexican flavours at an affordable price”.

just-food is the world’s leading portal for the global pre-packaged food and retail industries. Its daily mix of breaking news, views, analysis and research serves over 100,000 food executives each month.