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Campbell Soup boosts promotions to help lift sales

September 8, 2014, 2:22 PM UTC
Cans of Campbell Soup Co. Campbell's chicken noodle and tomato soup are arranged for a photograph in Washington, D.C., U.S., on Monday, Nov. 19, 2012. Campbell Soup Co. is scheduled to release earnings data on Nov. 20. Photographer: Andrew Harrer/Bloomberg via Getty Images
Photograph by Andrew Harrer — Bloomberg/Getty Images

Campbell Soup, among the traditional food and beverage companies facing profound challenges as consumer eating behavior rapidly change, reported weaker-than-expected fiscal fourth-quarter sales growth as use of promotions increased.

Denise Morrison, Campbell’s president and CEO, told analysts the industry is in a period of “profound change and challenge”–citing economic challenges, rapidly shifting consumer preferences and demand for greater product transparency. Those trends have created sweeping challenges in the food and beverage space, with traditional names like PepsiCo (PEP) and Coca-Cola (KO) stung by weaker soda sales and burger chain McDonald’s (MCD) and other fast-food and casual-dining changes hurt by a shift toward newer names restaurant brands like Chipotle (CMG).

Many of those food trends have been driven by younger Millennial consumers, who experts often say demand more flavorful items but are also less loyal to brands than prior generations.

Campbell’s latest results indicated challenges remain even as the company recently unveiled a plan to debut more than 200 new products in the new fiscal year to meet those evolving consumer preferences. On Monday, Campbell’s (CPB) reported fiscal fourth-quarter sales rose 7% to $1.85 billion, while analysts surveyed by Bloomberg had projected $1.87 billion. Acquisitions and an extra week boosted sales, offset slightly by increased promotions.

Campbell’s has signed a number of acquisitions recently has it aims to better position itself in the food aisle, angling to tackle hotter product categories beyond the traditional soups and sauces businesses. Recent acquisitions include the $1.55 billion purchase of Bolthouse Farms, as well as the smaller multi-million-dollar acquisitions of organic foods and snacks maker Plum PBC and baked snacks maker Kelsen Group A/S.

The company said it is counting on continued growth from those businesses, bolstered by expanded distribution. Campbell’s sales those three businesses have added more than $1 billion in sales in faster-growing categories.