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Campbells' puts UK and Irish businesses up for sale

By staff reporter , 27-Mar-2006

As part of efforts to consolidate its production and business portfolio in Europe, US food giant Campbells' says it is considering the sale of certain of its UK and Irish businesses.

The sale, which may include names such as Oxo and Frany Bentos, would see the company concentrating production around its more successful and traditional soup lines.

The company said that the decision follows a review of its international portfolio as part of the company's ongoing strategic planning process, a strategy that aims to maintain sales growth at between three to four per cent.

The U.K. and Irish businesses have annual sales of approximately $490m (€407m) and also includes Homepride sauces as well as Batchelors dry soup and meals.

Douglas Conant, Campbell's CEO, said, "Our portfolio in the U.K. and Ireland includes some strong brands, but it is highly fragmented and has not met our company's growth expectations. It is time to explore strategic alternatives as we strive to optimize the value of these businesses to our shareowners."

The company says that it will retain the Goldman Sachs Group as its advisor for the intended sales.

Until recently Campbells' has been in decline, but in 2005 condensed soup sales grew eight per cent on a global basis, due to a renewed focus and direction over the past four years.

This entailed strengthening the US management team, enhancing quality and taste for the soup range, and converting all US lines to easy-open packaging. But the biggest boost has been seen from a concerted marketing and advertising campaign that has helped boost sales and brand recognition considerably.

As a result the company reported net sales of $7.5 billion, exceeding a targeted increase in sales of 3 to 4 percent for 2005.

Currently the international businesses represent $2.0 billion in sales with leading brands in Europe, including a variety of soup and sauce brands such as Erasco products in Germany, Liebig soups in France, and Homepride sauces in the U.K, as well as dry soup and sauce businesses throughout Europe.

In 2005, European sales grew slightly, primarily due to favorable currency and sales gains in France and Belgium, but were held back as a result of sluggish sales from the businesses it is considering selling in the UK and Ireland.

The company says that currently it is capitalising on consumers' preferences for convenience with the introduction of instant dry soups in multi-serving jars in the UK and France, and is also expanding in the wellness category with its V8 brand in the UK, which has now been launched in five different flavours.

The proposed sale of the business could do much to shake up the company's product portfolio and will also see the company's manufacturing base become more focused.

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