Campbell plans to sell its fresh foods and international businesses to refocus on core products in North America. The fresh foods business includes brands such as Bolthouse Farms and Garden Fresh Gourmet, which were acquired in 2012 and 2015, respectively. In a time when many food and beverage companies are seeking to increase their hold on the fresh and natural foods market, this is an interesting move.
On the one hand, it is understandable to divest of poor performing brands, but on the other hand, it’s debatable whether Campbell can rely on existing “core” brands for long-term growth. While Campbell plans to “leverage consumer insights and trends – including health and wellness, snacking and convenience,” the company will need to make major changes to combat slumping sales. Earlier this year Campbell’s sales of organic soup dropped. No matter how healthy it is, canned soup, once a staple, is no longer a popular product.
As a result of the divestment and operational efficiencies, Campbell is expecting an additional $150 million in cost savings; however, as we have noted on this blog, cost savings are never a plan for long-term growth. On a positive note, the sale will let Campbell recalibrate its business and strategic growth plan and once the company has had a chance to refocus on core competencies, hopefully it will make more exciting strategic moves to drive long-term growth.