Campbell’s runs with new idea
MOUNT LAUREL, N.J. — Campbell’s Soup, a long-time fixture in American homes, is taking on a new role: the food for people on the run.
So at Nasser Nasser’s 7-Eleven in Hackensack, N.J., the spots next to the microwave and the sandwich case are now the domain of Campbell’s ready-to-serve soups.
Campbell Soup Co. is increasingly turning to outlets such as 7-Eleven and Subway to get soup on the minds of the hurrying public. The shift in strategy, a move away from the company’s dependence on supermarkets, is one of the innovations Campbell has made in hopes of reviving stagnant sales.
At Nasser’s store, a marketing company set up displays for Campbell and the owner said they are helping sales.
“It’s a known brand,” Nasser said. “People know Campbell’s. It’s advertised on TV.”
Campbell, which has struggled for years with a shrinking market share, has gone through a three-year restructuring, and is still working to remake itself. In June, the food conglomerate and world’s largest soup maker announced a lower earnings forecast and a reduction of 400 employees from its worldwide payroll of 25,000. Most of the job cuts came through layoffs, and 40 percent were at the company’s headquarters.
“Clearly we were a very challenged company,” CEO and president Douglas Conant told analysts in a conference call at the end of June. “We were in disarray on multiple fronts … Three years are almost up and we have indeed revitalized our company.”
Evan Morris, who follows the company for Bank of America Securities, agreed in part.
“The organization is in better shape than it was three years ago,” Morris said. “But I’m surprised to see how much heavy lifting they still have to do.”
The company’s familiar condensed soups — its biggest and most profitable business — had long seen sales declining. New marketing efforts and reconstituted soups have slowed the losses, but did not reverse them.
The company did well with its ready-to-serve varieties, including the drinkable Soup at Hand line introduced during the restructuring. Storeowner Nasser said the soups were a big seller, especially in the winter.
The Chunky Soup ready-to-serve line is also growing.
Christine McCracken, an analyst with FTN Midwest Research, said Campbell has done better than most food companies in the last few years of coming up with new products. It has also been expanding other product lines.
For example, Pepperidge Farm crackers — a favorite among toddlers — are now available in multiple colors and Pepperidge Farm cookies come in more varieties. And in the next year, Campbell expects to launch 29 new products, including low-carbohydrate and vegetarian soups and low-sugar V8 Splash juices.
It’s also working to get its products into convenience stores and cafeterias of hospitals and other institutions — and is also taking steps to improve its performance in supermarkets.
Campell is installing what are known as gravity-feed can dispensers, devices that give some order to usually chaotic store shelves, in about 8,000 supermarkets nationwide.
John McMillin, an analyst with Prudential Equity Group, wrote in a report on Campbell recently that the company’s plans sound like they’ll make money in the future. But in a world where food and packaging costs are rising, he lowered his target price for Campbell’s stock to $28 to $27 after Campbell announced its new plans.
The company’s stock is currently trading in the $25 range.
CEO Conant said the company’s turnaround in the past three years has come despite some setbacks that the company could not have foreseen.
Sales at the company’s Godiva chocolates division were hurt when the 9/11 attack on the World Trade Center in New York leveled a top-performing store. Conant said that the post-9/11 slowdown in air-travel and the SARS outbreak in Asia last year also hurt Godiva, which gets much of its sales in duty-free shops and in Asia.