Campbell's pushes in-store strategy
The Campbell Soup Company is suffering the same margin pressures and limp sales momentum that has stung other suppliers in Australia.
It has unveiled plans to revamp its local biscuit unit Arnott's as well as a make a bigger pitch for the health and wellness market.
The US conglomerate, which makes brands such as Campbell's soup, and owns biscuit brands Salada, Jatz and the celebrated Tim Tam is particularly struggling in supermarkets.
The company is not looking for a fight with the big supermarkets, Woolworths and Coles, but rather is promising to work with the retailers to develop better in-store promotions with home cooking helping to lift sales of its Real Stock brand 10 per cent last year.
Campbell, well known for its soups range and the iconic soup can art made by Andy Warhol, mopped up the one-third of Arnotts it did not already own for $420 million in 1997 to make it the leader in the $1.3 billion biscuits market. Campbell's international business generates about 30 per cent of overall net sales, led by Australia, Canada and Europe.
But the local offshoot of Campbell has underperformed recently and US bosses will now push through a strategic plan to counter slimming margins and falling sales stemming from intense competition from rival brands and private label groceries. President of Campbell International Luca Mignini said the first priority was to repair its core biscuit business.
"The second is driving expansion in faster-growing spaces with light lunch, healthy beverages and home cooking trend. The third is improving our cost structure through manufacturing automation and supply chain efficiency."
Biscuits represented the biggest part of Australian business, Mr Mignini said, with Campbell Arnott's brand holding 51 per cent share of the $1.3 billion category.
"Within biscuits, our iconic Tim Tam brand has exceptional awareness, but the brand is challenged by margin pressure and aggressive branding competition," he told analysts.
Campbell will also invest in brands that are relevant to the booming health and wellness sector.
"It is a behaviour of replacing traditional ingredients for lunches like sandwiches and bread with a lighter or lower-carb option like crispbread.
"This trend offers a great opportunity for our Cruskits and Vita-Weat. These brands have strong health and wellness credentials and are clearly resonating with consumer because we have seen a high level of response to our advertising."