In M&A circles, Campbell Soup Co., the US food giant, has been seen as one of the more cautious multinational companies in recent years.

Campbell has added the odd business to its portfolio - in 2008, it snapped up the Wolfgang Puck organic soup business; a year later, it bought artisan bread firm Ecce Panis - but it has shied away from major acquisitions in the last decade or so.

That changed last week when Campbell announced the largest acquisition in its history, a US$1.55bn deal for Bolthouse Farms, a business that sells carrots, salad dressings and juices in the US. It is a bold move from Campbell, not just because of its recent record of caution on M&A but also because it gives the company a serious presence in the chilled aisle of US stores.

Bolthouse's margins are lower than Campbell's soup business but the deal gives the company the opportunity to tap into demand for fresh food. What's more, Campbell hinted it could look to use Bolthouse to expand into other chilled categories, including soups, sauces and dips.

And, notably, Campbell chief Denise Morrison said the company had other targets for expansion. "It could be acquisitions, partnerships, joint ventures. We have done extensive work identifying faster growing markets and categories and we have targets that we will work to achieve," she said.

In some ways, a deal of this nature was needed at Campbell. The company's domestic soup division has had its challenges and, although Campbell is working hard to rejuvenate sales, analysts remain concerned over the outlook for that side of its business. Some on Wall Street last week expressed concern Campbell could be side-tracked from revitalising its soup business by the Bolthouse buy. Of course, right now, there is no way of knowing if Campbell will become distracted but, after years of largely keeping its powder dry on M&A, last week's announcement was a welcome one.

Another US company upping its presence in chiller cabinets is PepsiCo. Of course, PepsiCo is the owner of Tropicana orange juice but its US yoghurt venture with Muller is a sign of the US group's ambition to expand its portfolio further into healthier categories - despite recent investor criticism.

PepsiCo is right to do so. Cola and crisps remain the bedrock of the business but chairman and CEO Indra Nooyi's strategy to expand PepsiCo's presence into healthier categories is sound. Sure, it has been a challenge for the business. In the UK, healthier baked snacks under its Walkers brand have not taken off to the extent the company hoped. However, in the round, consumer demand for healthier products is a long-term trend that has withstood the downturn and shows little sign of abating.

That said, PepsiCo and German yoghurt giant Muller have a battle on their hands in the US. PepsiCo's marketing nous and Muller's pedigree in yoghurt suggest the companies could find success in the US yoghurt sector. Wisely, the companies are using the Muller brand and have included in their portfolio products that have had success in Europe. What's more, per capita of consumption of yoghurt in the US remains low and the category is forecast to continue to grow.

However, the recent growth in the industry and its potential have attracted investment and companies including Danone and privately-held Chobani have carved out strong positions in the market, particularly in the Greek category, which by some estimates accounts for a quarter of yoghurt sales in the US.

Analysts believe PepsiCo and Muller can succeed but winning over consumers, even in a market where demand for yoghurt is booming, will not be easy. Even the might of Kraft Foods had to throw in the towel.

Until next time...

Dean Best
Managing Editor
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Email: editor@just-food.com
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