Campbell Outlines Plans for U.S. Soup Business, Expansion Efforts in Emerging Markets
Campbell Soup Company (NYSE: CPB) today outlined the evolution of several key strategies and detailed innovations planned for the upcoming fiscal year at a meeting with investors. Campbell’s management described plans for its U.S. soup business and its expansion in Russia and China. A replay of the presentation can be accessed via a Web cast at www.campbellsoupcompany.com.
Douglas R. Conant, Campbell’s President and Chief Executive Officer, said, “We continue to be on track with major wellness initiatives across our portfolio, most notably in our U.S. soup business. We remain very bullish about our U.S. soup innovation initiatives for this upcoming fiscal year and beyond. Additionally, I am pleased with our progress in both Russia and China. We continue to be very optimistic about our prospects in both markets and envision further expansion in the coming fiscal year.”
U.S. Soup Business
Denise Morrison, President, North America Soup, Sauces and Beverages, outlined plans for the company’s U.S. Soup business for the upcoming fiscal year, with a focus on the introduction of innovative new products:
* New “Swanson” stock - Campbell is expanding its successful line of “Swanson” broths with the launch of a flavorful line of all-natural cooking stocks in both beef and chicken varieties, packaged in distinctive re-sealable 28-ounce aseptic cartons.
* “Swanson” broth - The undisputed leader in the broth segment, Campbell plans to accelerate its growth with product improvements across its broth line and increased advertising support and distribution.
* “Campbell’s Select Harvest” soups - The new line of “Campbell’s Select Harvest” ready-to-serve soups will be available in both cans and microwavable bowls. All Light varieties will be at 80 calories or less and will provide popular weight management guidelines on the label. The entire line of “Campbell’s Select Harvest” soups will deliver great taste at healthy sodium levels of 480 mg. per serving.
* “Campbell’s V8” soups - These pureed soups will be available in five flavors, with each bowl providing a full serving of vegetables. These soups are low in fat, saturated fat and cholesterol and contain no artificial flavors or preservatives.
Morrison said, “Our U.S. soup portfolio enjoys unprecedented scale in the food category and consumers recognize soup as the superior simple meal based on its strong attributes of wellness, convenience, quality and value. Nearly 11,000 servings of ’Campbell’s’ soup are consumed each minute and we are in approximately 85 percent of U.S. households.”
Campbell focused a portion of its presentation on the value area of the soup category, highlighting the benefits of its condensed soup franchise. Campbell compared the cost of its iconic condensed soups to other consumer staples over a five-year period from 2003 to 2008. According to the Bureau of Labor Statistics, the cost of many staples has risen sharply during this time:
* A dozen eggs has increased $.0.92 from $1.01 to $1.93;
* A pound of cheese has increased $0.59 from $3.81 to $4.40;
* A gallon of milk has increased $1.07 from $2.69 to $3.76;
* Comparatively, “Campbell’s” condensed soup has increased only $0.09 per serving.
“’Campbell’s’ condensed soup continues to provide excellent taste, nutritional value, warmth and convenience. It remains an extraordinary value for people today and still costs about 52 cents per serving,” said Morrison.
Larry McWilliams, President-Campbell International, reviewed the company’s progress in the emerging markets of China and Russia, where Campbell launched new products in September 2007.
Campbell plans to expand the availability of “Campbell’s Domashnaya Klassika” beyond Moscow to other areas of Russia, including the South, Central, North West, Urals, Siberia and Far East regions.
McWilliams said, “Customer reaction to the initiative has been strong, and several of our Russian customers are actively extending the distribution of ’Campbell’s Domashnaya Klassika’ ahead of our expansion plans, based on their very positive experience in the Moscow lead market.”
More than 60 percent of consumers in the Moscow region are aware of “Campbell’s Domashnaya Klassika” and trial has grown steadily since the launch.
Campbell will also introduce a new variety, Beef and Nameko Mushroom, and new larger sizes of its concentrated broth products to better match the way Russian families prepare soup. McWilliams also outlined the company’s plans to establish local manufacturing in Russia via a contract manufacturer, Joosten Foods.
In China, Campbell has achieved solid brand awareness of the “Swanson” line of broths, with awareness exceeding 75 percent in Guandong Province where the product is available.
Campbell plans to expand its new “Swanson” broths to Shanghai in early fiscal year 2009. Shanghai is the leading soup market in China with the highest per capita soup consumption in China. Shanghai residents eat more than 395 servings per year-or approximately 8 billion serving opportunities annually.
McWilliams said, “We have successfully launched Campbell products in the two largest soup consuming countries in the world. Consumer and customer acceptance has been positive in both markets. We have learned a considerable amount from each lead market and we are incorporating this knowledge into our expansion. Everything we have seen to date reaffirms our belief that both Russia and China will be significant growth opportunities. When we successfully expand our brands throughout these two countries, Campbell will increase its access to the global soup market from markets representing 6 percent to 56 percent of global consumption.”
Earlier today, Campbell announced the acquisition of the Wolfgang Puck soup business from Country Gourmet Foods and a master licensing agreement with Wolfgang Puck Worldwide, Inc. for the use of the “Wolfgang Puck” brand on soup, stock and broth products in North American retail locations.
Yesterday, Campbell updated its expected adjusted net earnings per share growth for fiscal year 2008 and announced that its Board of Directors has authorized a new $1.2 billion share repurchase program.
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