Campbell Soup Co. will cut 400 jobs and launch 29 new products in an effort to boost sales and improve earnings.
The changes are not expected to affect spending for fiscal 2005, which begins Aug. 1, 2004, but could impact marketing budgets for fiscal 2006.
The job cuts are across the board and include marketing, although it’s unclear how many marketing jobs will go. A sales and marketing development group is being dismantled with its handful of staffers reassigned or let go. Campbell will form a multi-disciplined strategic group to leverage consumer research. The company also will reorganize its sales force to better cover convenience-driven distribution channels, especially c-stores as well as Wal-Mart and dollar stores.
In all, Campbell will cut 300 salaried jobs in North America (165 of them at its Camden, NJ, headquarters) and 100 jobs overseas. Campbell won’t fill about 60 empty positions and will cut redundant jobs from its February realignment that merged U.S. soup with sauces and beverages. The cuts are less than 2% of Campbell’s worldwide workforce of 25,000.
With the changes, Campbell expects to boost sales 3% to 4%, improve earnings 5% to 7% and save $40 million a year.
Marketing support and expanded distribution will focus on Campbell’s, V8 and Pepperidge Farm as well as Arnott’s in Australia; the four brands account for two thirds of Campbell’s global sales.
The four brands are also the platform for most new products, including Campbell’s Carb Request ready-to-serve soups (five flavors, 3-to-6 grams of carbs) with promotional support via Depersico Creative Group, Havertown, PA; premium, ready-to-eat soup in resealable asceptic packaging used in France and Canada; V8 vegetarian soups, entrees and chili (for away-from-home consumption); low-sugar V8 Splash juice and Smoothies line extensions; and Campbell’s Chunky Chili (four flavors, first entry into the $300 million U.S. chili category) with ad support via Young & Rubicam, New York City. Launches are slated for fiscal 2005.
Campbell also will spend $65 million to double its production capacity for microwaveable soups by August 2006 and will keep significant marketing support. Separately, Campbell is expanding its gravity-feed shelving system to 8,000 stores by yearend with commitments from another 2,000 stores. The shelves have helped bump condensed soup sales and helped grocers better organize stock.
Campbell has spent $600 million since 2001 on new product and packaging development, quality improvements and increased marketing support. That has improved sales across its portfolio, especially in beverages, snacks—and soup, where convenience products have helped spur sluggish sales. New lines Chunky, Select and Soup at Hand are expected to hit $250 million in annual sales by August, per Campbell.
“We’ve significantly improved the quality of our products and packaging, restored marketing spending to very competitive levels, and rebuilt our innovation pipelines,” said CEO Douglas Conant in a statement. “Our consumer insights are much better and our customer relationships are stronger” since Campbell began its turnaround plan in 2001, “However … we’re not yet where we want to be in some areas. It has taken us longer than expected to moderate the decline in condensed soup and this will continue to be a priority for us.”
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