Campbell battling in beverages

by Eric Schroeder
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Campbell hopes the new V8 Veggie Blends line jump-starts the company's beverage business.

CAMDEN, N.J. — Is the glass half-full or half-empty? In the case of Campbell Soup Co.’s U.S. Beverage business, perhaps it’s both.

Those with a pessimistic view of the business may point to the 16% decline in operating earnings within the U.S. Beverages business during the first half of fiscal 2015, or the 3% dip in sales. Results were even weaker during the second quarter of fiscal 2015, when earnings fell 35% and sales dropped 4%.

But despite the declines and the acknowledgement by the company’s top executive that Campbell was not satisfied with the performance of its U.S. Beverage business, there is hope that the company may find a way to shake off the rust.

“The shelf-stable juice category has been really sluggish for a couple years, and I think that one of the big drivers is most of the juice in that category contains sugar and there’s been a movement on the part of consumers to really pay attention to that,” Denise Morrison, president and chief executive officer of Campbell, said during a Feb. 25 conference call with analysts to discuss second-quarter results. “That said, we are pretty well-positioned, having vegetable-based beverages, and we decided a year ago to really rethink that whole offering from V8, which is why we spent a great deal of time developing the V8 Veggie Blends, gaining some expertise from our part of the business at Bolthouse Farms.”

Although Campbell is just getting the vegetable blends into the marketplace, Ms. Morrison said she believes the new beverages will offer consumers great-tasting vegetable juice alternatives that are mainstream-priced while providing a jump-start to the company’s V8 business.

“We only have 10% of our business in single-serve, whereas most beverages have about 50%,” she said. “So we are still very committed to increasing our V8 business in single-serve, immediate consumption. And with the Veggie Blends we will have more of a breadth of line to offer our distribution the marketplace.”

Outside of the Veggie Blends business, Ms. Morrison was asked by an analyst to comment on the core tomato franchise and whether it has weakened. She described the franchise as “polarizing.”

“There are people who either like tomato or who don’t like tomato, and we haven’t been able to offer the people that don’t like tomato-base a different alternative,” she said. “So we believe that tomato will still be an important part of our franchise for those who love it, and we will be able to offer other things as well.”
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