Campbell expanding in Mexico

by Staff
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CAMDEN, N.J. — Campbell Soup Co. is expanding its manufacturing and distribution capabilities in Mexico through agreements with Grupo Jumex and Conservas La Costena.

Grupo Jumex, which is the largest producer of fruit juices and nectars in Mexico, will manufacture and distribute Campbell’s V8 products in Mexico. Conservas La Costena, which is a large producer of prepared foods in Mexico, will distribute Campbell’s soups, broths and Italian sauces.

“We are delighted to be working with Grupo Jumex and Conservas La Costena — outstanding companies with long and distinguished histories — in a market that offers Campbell exciting avenues for growth,” said Denise Morrison, president and chief executive officer. “Our arrangements with these new partners will increase our access to customers and enable us to reach new consumers for our products. We believe that they will redefine the scope of our business opportunities in Mexico.”

Campbell also is closing its plant in Villagran, Mexico, as the result of the agreements. Production from the facility will be transitioned to Grupo Jumex and Conservas La Costena facilities. Campbell will face a restructuring charge of $9 million as a result.

In a Feb. 15 conference call with financial analysts to discuss second-quarter results, Craig Owens, senior vice-president, chief financial officer and chief administrative officer of Campbell, said the company’s soup and beverage business in Mexico right now “is relatively small.”

“While we’ve been there for quite some time and have developed a reasonable soup business, given that the soup business there is not primarily wet soup, and lately we’ve had a lot of success with our beverage business there,” Mr. Owens said. “Our distribution model currently is primarily in the developed trade, and really I think the primary impact of this change is that it’s going to take us in a much better way down market and into the smaller mom-and-pops and the smaller outlets that are so important, particularly to our beverage business, in that country.”

Mr. Owens said Campbell will phase out production at its facility in Villagran over the next several quarters, but plans to move into distribution through third parties “fairly quickly.”
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