Campbell Soup Co., the US-based food group, is a business that has, in recent years, attempted to reshape its portfolio more towards faster-growing categories.

And, with growth from its core operations still below its targets, the signs are the company is ready to take more action.

Denise Morrison, Campbell’s president and CEO, took the helm in July 2011. The company’s results for the 12 months to 31 July that year showed Campbell’s US simple meals business accounted for 36% of the group’s sales and for 45% of its operating earnings. That year, sales and profits from that side of the business fell amid declining soup sales in the US. As Morrison took the hot seat at Campbell, it was clear the company needed to find new ways to grow the business.

Since then, Campbell has made three significant acquisitions to try to boost its growth prospects: US chilled foods firm Bolthouse Farms, still its largest acquisition, US baby food business Plum Organics and Denmark-based baked snacks company Kelsen Group.

Campbell has not just added to its business. Last autumn, it agreed to sell a clutch of European soups, sauces and simple meals assets to private-equity firm CVC Capital Partners.

During Morrison’s tenure, Campbell has made moves to refocus its business outside the US. The Kelsen deal gave it the opportunity to build on its presence in China. It has invested in Indonesia, where it has seen growth in its Pepperidge Farm snacks business. The company revamped its operations in Mexico, closing its plant and passing the manufacturing of its products for that market to partners. The company quit Russia in 2011, just four years after entering the market, preferring instead to focus on markets like China.

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Campbell has also made moves to try to improve the performance of its core US soup business, with changes to promotional investment and innovation tried out. Spells of extremely cold weather in the US have helped at times but, among some industry watchers, there remains some concern over the long-term growth of that part of Campbell’s business. Soup is the largest part of Campbell’s US simple meals division. According to Campbell’s most recently-published accounts, for the nine months to 27 April, US simple meals generated 37.9% of the group’s net sales and 55% of its operating earnings – larger shares than when Morrison took charge three years ago.

This week, Campbell hosted analysts at its annual investor day at its HQ in New Jersey.

The company announced plans for 200 new products to be rolled out in its new financial year, which starts on 4 August, with organic Campbell soups and the V8 beverage brand’s move into protein shakes and bars among the more eye-catching developments.

However, Campbell also revealed it expects its organic sales, adjusted EBIT and adjusted earnings per share would all be below its long-term targets in 2014/15, a further indication of the stagnant nature of the core of its business. The group said it “may need to continue reshaping its portfolio to achieve these long-term goals”.

Despite Campbell’s recent M&A, more is needed and, at the investor day meeting, Campbell’s management recognised that was the case. Morrison said the company has set a target of becoming “a US$10bn company in the next five years”. The group’s net sales for the fiscal year about to end are forecast to hit around $8.3bn. M&A is key to fulfilling that ambition.

DiSilvestro added: “We’ve made a lot of progress with the three acquisitions helping our overall growth momentum. As we look externally, we think more acquisitions can help do the same type of thing.”

Unsurprisingly, Campbell’s management would not specify where it was looking for more deals. Morrison returned to her stock phrase of Campbell pursuing “smart external development”.

Fresh food is one area Campbell is likely to be looking at. However, deals in that part of the industry are likely to be pricey, even in the wider context of expensive transactions in the US food industry at present.

“The company wants to play in a very hot, very high multiple area – fresh and packaged fresh,” Jonathan Feeney, principal at Athlos Research, tells just-food.

Jeff Dunn, president of Campbell’s Bolthouse Farms business, said the perimeter of the store was “fragmented”, meaning there was unlikely to be a major deal out there Campbell could make to really boost its already-growing fresh business. Dunn insisted Campbell saw “tremendous organic growth opportunity” with its existing fresh operations but nevertheless revealed the company was looking at bolt-on deals.

“Having Bolthouse and the fresh soup business gives us a platform and it will be much easier now to bolt on smaller acquisition. Can we do it organically and how fast can we get there versus going out and buy something that accelerates? We’ve got a pipeline of both ideas. If we’re going to be the leader in this space, we’re going to have to keep moving quickly,” Dunn said.

However, with the fresh aisle is growing faster than the moribund centre-of-store and there is likely to be competition for assets.

To aid the organic growth of its faster-growing assets, perhaps Campbell could look at managing the more stagnant parts of its portfolio (like soup) for cash and divert resources towards more buoyant parts of its business?

Campbell is committed to soup – Morrison referred to the business more than once as a “core economic engine” – but a shake-up of resources could be a solution in the company’s bid to achieve faster growth.

“I suspect that they may have recognised that some parts of the portfolio should be managed for cash, but that’s a hard topic to broach with investors,” Sanford Bernstein analyst Alexia Howard tells just-food. 

“It really depends upon whether and how fast the underlying sales in condensed – and possibly ready-to-serve soup – are in decline. We haven’t really seen good data on this over the past two years due to the disruption caused by cold weather and also a reduction in net pricing in RTS soup. If the underlying declines are faster than expected, then the shift in resource allocation may be faster.”

It must be recognised Campbell has done a lot of work reshaping its business since Morrison became CEO in the summer of 2011. She and the company must receive some credit for that repositioning.

And Morrison’s opening presentation, in which she outlined the pressures facing the US food sector, including the rise of dollar stores and e-commerce, the growing demand for healthier products and for greater transparency from companies, showed Campbell has a chief executive fully tuned in to the changing industry landscape. It had a sense of urgency, a drive for change that should benefit Campbell.

However, Campbell faces some critical questions, both in the long-term outlook for its core simple meals business and how to quickly expand in competitive categories like fresh.