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Go-go introduction boom over at Campbell as company disciplines core brand strategy.

Go-Go Introduction Boom Over at Campbell As Company Disciplines Core Brand Strategy

Is the great new products explosion of the 1980s over? Perhaps so, at least as far as some of North America's leading frozen food packers are concerned. R. Gordon McGovern, Campbell Soup Co. president and CEO, spelled out the trend in no uncertain terms at the recent National Frozen Food Convention in Chicago.

Indeed, the Camden, N.J.-headquartered outfit weeded out some 115 new products -- including line extensions -- from its range in 1987. Another 100 were scheduled to be phased out last year. This makes for a net gain of just over 100 items during the past five years.

Herb Baum, Campbell USA president, summed up the problem faced by packers during the annual meeting of the Association of National Advertisers in New York: "The food business is flat, particularly in dry grocery and frozen." The bottom line means that companies are being forced to boost sales through promotion "rather than taking the time to do long-term brand building."

Caution appears to be the new guiding light in FF marketing. Such an approach has been taken with Souper Combos, a frozen soup and sandwich line which Campbell's New Ventures Group has been testing for more than a year now. "Two years ago we would have rolled it out nationally," said Baum, "but now we're taking a very slow, disciplined approach."

Campbell USA's pruning of slow movers no doubt played a major role in the overall corporation's turnaround during fiscal 1988 as sales rose 8% to $4.87 billion while net earnings were up 12% at $274 million. The previous year recorded a decline in earnings and volume resulting from sluggish sales of soups, frozen foods, groceries, and the $25 million failure of since discontinued Fresh Chef refrigerated foods.

The U.S. unit last year realized a 12% increase in operating earnings on a 7% sales gain and 4% volume hike. Swanson frozen foods, entrees and breakfasts contributed to the uptick with a 3% gain in volume. A review of Campbell divisions active in marketing frozen and refrigerated foods follows:

. The convenience meals segment made up about one-quarter of net sales, surpassed only by soups which accounted for roughly half. Traditional meals charted solid growth rates, with Swanson Dinners up 4% and Homestyle Entrees skyrocketing 32%. A risky price reduction on 2-pounds frozen Swanson fried chicken was proved strategically sound as sharp unit volume gains and a significant increase in market share resulted.

Premium meals saw volume growth in the category's Le Menu Light Style dinners line. Le Menu dinners, however, showed flat volume while nonetheless grabbing a greater share of the shrinking premium dinner market.

Up 11%, Swanson Great Starts breakfasts reported a solid year led by increases in several established varieties and a strong performance from such new items as scrambled egg, bacon and home fries, budget breakfasts and microwaveable Belgian waffles.

. Pepperidge Farm's unit volume improved 5% and operating earnings rose 6% to $492.5 million and $57.1 million, respectively. Regional introductions of frozen American Collection single serving desserts and Pepperidge Farm Frozen Danish were met with positive consumer acceptance. Other items in the frozen line include layer cakes and croissant pastry pizza, the latter of which was restaged.

. The Vlasic Foods division, which is largely represented by condiment products, reported solid gains on sales of $352.7 million and earnings of $29.9 million. While foodservice (catering) sector volume and profits were reported as moderate, its frozen category scored double digit growth.

The U.S. Hispanic unit restaged its entire line, ditching commodity-type products in favor of new value-added offerings exemplified by a range of frozen Caribbean products unveiled late in the year. Casera Foods, which markets in Puerto Rico, other local islands, and the United States mainland reported increases in volume in its major product line.

. The seafood segment rode out stormy seas as Mrs. Paul's Kitchens was hit hard by strong price and promotional competition. While net sales of $150 million were flat, the unit suffered a sharp loss of $3.5 million. In addition to volume declines, the brand sustained modest market share erosion.

According to Campbell's annual report: "The results for the fiscal year came despite a heavy infusion of marketing dollars supporting Mrs. Paul's products against continuing aggressive competition."

Among the brand's traditional offerings, breaded fish sticks and batter dipped fillets recorded volume gains. Light fillets, a new item, provided a bright spot with solid unit volume.

Domsea Farms, Inc., Campbell's experimental aquaculture unit, reported strong sales and volume increases of its plate-size salmon products.

. Campbell Enterprises, paced by its foodservice business, saw sales rise 4% on earnings of $24.3 million. Strong advances were made by the division's frozen soups and frozen entrees, chiefly due to increased commitments from supermarket delicatessen accounts.

. Campbell International's sales of more than $1 billion climbed 16% over 1987's level, posting volume gains of 6%. The bottom line, however, reflected a 9% decrease in earnings of $57.5 million compared with a 19% gain in 1987. The company's annual report explained why:

"Improved earnings performances in Canada and Continental Foods (Europe) were more than offset by difficulties in the United Kingdom resulting from the start-up of the frozen food operation, and in Latin America resulting from hyper-inflation rates and continuing currency devaluations and dual exchange rates. The increase in 1987 earnings resulted from strong performances in European, Canadian and Latin American operations."

It should be pointed out that frozens accounted for only $93.2 million in volume, or 9% of Campbell International's net sales last year. Shelf-stable and refrigerated products were the big categories, doing more than $637 million or 61.6% of net sales.

Despite disappointing earnings, Campbell International registered what it called important strides toward achieving global competitiveness in prepared convenience foods. Acquisitions of Freshbake Foods (the No. 3 FF, company in the U.K.) and Beeck-Feinkost GmbH of West Germany were achieved. In addition, unit volume growth took place in Hong Kong and Singapore, where Swanson was positioned as a Chinese-style prepared foods brand to complement Campbell as a Western-style label.

There was little positive news from Latin America, however, where subsidiaries in Argentina and Mexico had poor years. Convenience food products packed by the parent company's Mexican unit were perceived by consumers as being too "upscale" and unaffordable at a time when the country's economy is depressed. Hence exports, led by frozen vegetables, are being emphasized.

PHOTO : Regional introduction of Pepperidge Farm American Collection frozen desserts was among the

PHOTO : sweet news at Campbell last year. In addition to San Francisco Chocolate Mousse and

PHOTO : Manhattan Strawberry Cheesecake, the line features Bennington Apple Berry Pie and Monterey

PHOTO : Hot Fudge Chocolate Chunk Brownie. Retail price range from $1.09 to $1.29 per unit.

PHOTO : Campbell's Casera brand -- marketed by its U.S. Hispanic unit -- boasts items ranging

PHOTO : from Pastelillos de Coco (Sweet Coconut Pastries) as seen above to Carne Guisada

PHOTO : (Criollo-style Beef Stew). Bilingual Spanish and English markings are featured to

PHOTO : broaden sales appeal.
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Title Annotation:Campbell Soup Co.
Publication:Quick Frozen Foods International
Date:Jan 1, 1989
Previous Article:Under attack from rival food systems, frozens pushed to wall, McGovern warns.
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