Campbell Soup Co. has indicated it is eyeing expansion into new categories through its US$1.55bn acquisition of carrot-to-beverage firm Bolthouse Farms.

The company announced today (9 July) that it has entered into an agreement to buy Bolthouse Farms from the group’s private-equity owner Madison Dearborn Partners.

While the acquisition will be margin dilutive, Campbell management said it was “comfortable” with the deal because it will not cannibalise its own sales and the acquisition offers the opportunity for long-term growth in complimentary categories.

Bolthouse’s products include fresh private-label carrots as well as premium beverages and refrigerated salad dressing.

Speaking during a conference call with analysts, Campbell CEO Denise MORRISON said the move would allow the group to expand its business in fresh food and beverage sectors. “We were attracted [to Bolthouse] for the potential for growth beyond what we do today,” she revealed.

This direction, Morrison said, was a result of consumer insight undertaken by Campbell.

“For us, it starts with the consumer. As we have studied the millenials and looked at some of the trends we saw the opportunity to acquire this business that is a combination of the beverage, and the produce, and carrots. This gives us the scale to build other products on top of it. For us this was about growing our business in fresh food and beverages where we can add value,” Morrison said.

As soup sales in the US have slowed, the company has focused on augmenting its line-up of health and wellness products and Morrison said the deal would boost Campbell’s good-for-you credentials.

“This brand brings great wellness credentials to us. There will be a nice combination there. What we are about is bringing consumers tastey, affordable, healthy food and beverages and this is another way for us to do that.”

Higher-value consumer packaged goods account for about one-third of Bolthouse’s revenues. However, Campbell indicated the group plans to grow this revenue stream through NPD and innovation.

“The majority of their business is in the baby carrots and we see some CPG potential in that area,” Morrison revealed. “The top three leaders there have done an outstanding job of building the company to where it is today. Their new product pipeline is pretty compelling and we believe that with our emphasis on innovation we can help build that growth.”

Campbell also revealed it is eyeing international growth by pursuing what management termed “external international development opportunities”.

“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,” Morrison revealed.