Campbell Soup said Thursday it is selling its international and fresh food businesses as the 149-year-old condensed-soup maker struggles to regain its financial footing and refocus on its signature packaged foods.
Lauren Hirsch of CNBC.com had the news:
The company is unwinding efforts by former CEO Denise Morrison to branch into healthier and more fresh foods to double down on product lines it knows well — snacks, meals and beverages. Morrison’s surprise departure was announced in May when the company said it was conducting a top-to-bottom review of its holdings after releasing what executives called “unacceptable” earnings.
The board considered a “full slate of strategic options, including optimizing the portfolio, divesting businesses, splitting the company, and pursuing a sale,” Campbell’s interim CEO Keith McLoughlin said in a statement. The board concluded that the “best path forward” is to “focus the company on two core businesses in the North American market,” he added.
Executives said the company was chasing too many initiatives at once and had little reason or justification to get into fresh food, where it had little experience and no reputation.
Ciara Linnane of MarketWatch.com reported that some believe the company is making a mistake:
Some observers said the company may be making a mistake in abandoning fresh food, given the preference for it among millennials and Gen Z members. Morrison’s strategy aimed to respond to what she called the “seismic shift” in eating habits that other food companies are also struggling to address. In the past few years, the big food companies have worked to eliminate additives and chemicals from their supply chains, moving away from such ingredients as battery-produced eggs and processed meats.
“There is no doubt that the fresh food segment they are competing in is growing,” said Steve Stallman, president of Stallman Marketing, president of the Food Consultants Group and former president of the Direct Marketing Association of Southern California.
Clark Wolf, owner of food and restaurant consulting firm Clark Wolf Company, said Campbell may have confused customers and created an identity crisis by pushing freshness and health, alongside its traditional business of canned and packaged products.
Andria Cheng of Forbes.com wrote that the company still lacks a plan for the future:
But the problem is that Campbell Soup, despite saying it aims to make investments to innovate on products and packaging, is still short of a concrete plan to show how it can stoke growth in its flagship soup business — especially in a competitive marketplace where upstart brands are increasingly leveling the playing field against major giants, thanks partly to direct-to-consumer online sales. (Think of Dollar Shave Club and Harry’s eating into P&G’s Gillette market share as an example.)
Excluding sales from the newly acquired Pacific Foods, Campbell, which also owns Pepperidge Farm cookies and Prego pasta sauce, said Thursday that its U.S. soup sales in the fiscal fourth quarter ended July 29 had declined 14%, reflecting declines in condensed, ready-to-serve and broth categories.
For the 52 weeks ended July 29, Campbell’s share in the “wet soup” category declined 2.4 percentage points, to 59%, even as the category itself saw growth. This is in contrast to other brands and retailers’ own private labels, which have all picked up share, the company said, citing IRI data.
