Campbell Soup Company

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Campbell Soup Company

Campbell Place
Camden, New Jersey 08103-1799
U.S.A.
(609) 342-4800
Fax: (609) 342-3878

Public Company
Incorporated: 1922
Employees: 43,256
Sales: $6.26 billion
Stock Exchanges: New York Philadelphia London Swiss
SICs: 2032 Canned Specialties; 2038 Frozen Specialties Nee; 2051 Bread, Cake & Related Products; 2052 Cookies & Crackers; 2034 Dehydrated Fruits, Vegetables & Soups; 0812 Food Crops Grown Under Cover; 5148 Fresh Fruits & Vegetables; 0161 Vegetables & Melons; 2015 Poultry Slaughtering & Processing; 5149 Groceries & Related Products Nee.

Campbell Soup Company is the number-one maker of soups in the United States and is also a leading manufacturer of other products, including frozen entrees, baked goods, fruit juices, pickles, spaghetti sauces, and ready-to-eat salads.

The roots of the Campbell Soup Company can be traced back to 1860, when Abraham Anderson opened a small canning factory in Camden, New Jersey. In 1869 Philadelphia produce merchant Joseph Campbell became Anderson’s partner, forming Anderson and Campbell. The company canned vegetables, mince meat, jams and jellies, and a variety of soups. In 1876 Anderson and Campbell dissolved their partnership and Campbell bought Anderson’s share of the business, changing its name to Joseph Campbell Preserve Company. In 1882 a partnership was formed between Campbell’s son-in-law, Walter S. Spackman; Campbell’s nephew, Joseph S. Campbell; and Arthur Dorranee, Spademan’s personal friend who brought a cash infusion to the partnership. At this time the company was renamed Joseph Campbell Preserving Company. The senior Campbell maintained daily involvement in the company until his death in 1900.

In 1896 the company built a large factory in Camden and expanded its product line to include prepared meats, sauces, canned fruits, ketchup, and plum pudding. The next year Arthur Dorrance hired his nephew John Thompson Dorrance, a chemical engineer and organic chemist. By 1899 John Dorrance had successfully developed a method of canning condensed soup. This innovation helped Campbell outstrip its two soup-canning competitors. While others were still shipping heavy, uncondensed soup, Campbell was able to ship and sell its product at one-third cost. As the company began increasing the variety of soups it offered, it began canning less produce. John Dorrance became director of the company in 1900 and soon after the company was renamed the Joseph Campbell Company.

Campbell’s soup began finding its way into American kitchens at a time when the prepared-food industry was growing rapidly yet was still small. By 1904 the company sold 16 million cans of soup a year. Boasting 21 varieties of soup by 1905, Campbell began to eye a bigger market; in 1911 Campbell began doing business in California market, thus becoming one of the first companies to serve the entire nation.

In 1910 Dorrance was made general manager of the company, and in 1914 he became president. Dorrance focused on soup and discontinued the marginal line of ketchups, preserves, and jams. In 1915 Dorrance became sole owner of Campbell when he bought out his uncle, Arthur Dorrance.

In 1912 Campbell began growing its own produce in an effort to standardize quality. This program was the first of an ongoing series of efforts Campbell has made to grow what it processes. At that time, during the eight summer weeks in which tomatoes were harvested, the Campbell plant devoted its entire effort to the production of tomato soup and tomato juice. During World War I almost half of Campbell’s sales were from these two products.

In 1921 Campbell acquired the Franco-American Food Company, and the next year the company was renamed the Campbell Soup Company. In 1923 Arthur C. Dorrance, John Dorrance’s brother, became Campbell’s general manager. In 1929 Arthur C. Dorrance was made a director and vice-president of the board of directors. When John Dorrance died in 1930, Arthur C. Dorrance was elected president.

Throughout this period Campbell continued to grow. In 1929 the company opened a second major facility in Chicago. In the early-1930s Campbell opened subsidiaries in Canada—Campbell Soup Company Ltd.—and Great Britain—Campbell’s Soups Ltd. In 1936 Campbell began making its own cans and in 1939 its agricultural research department was formed. In 1942 sales topped $100 million for the first time. In 1946 Arthur C. Dorrance died and James McGowen, Jr. became president. The following year Campbell began growing its own mushrooms in Prince Crossing, Illinois.

Despite this growth, Campbell was slow to diversify. In 1948 the company acquired V-8 juice, but its first major purchase was not made until 1955, when it bought the Omaha, Nebraska-based C.A. Swanson & Sons, producers of the first complete meal frozen entrees called TV dinners.

In the midst of this growth, W. B. Murphy was elected president, following McGowan’s retirement in 1953. In 1954 Campbell took its stock public and, in 1957, the company formed an international division to oversee its foreign concerns. In 1958 sales exceeded $500 million for the first time and Campbell established Campbell’s Soups, S.p.A. in Italy. This venture was followed, in 1959, by the opening of subsidiaries in Mexico and Australia.

Throughout the 1960s Campbell was conservatively managed and quite successful. In that decade the company opened two mushroom-growing facilities and 11 new plants on three continents. In the 1960s Campbell’s growth—which underwent a slight shift in emphasis—began to include regular acquisitions in addition to internal expansion. In 1961 Campbell acquired Pepperidge Farm, a maker of quality baked goods, and a similar Belgian company, Biscuits Delacre. In 1965 Campbell created a food-service division and, in 1966, began marketing EfficienC, its own brand of food-service products through that division. Also in 1966 Campbell formed Godiva Chocolatier to distribute the Belgian-made chocolates in the United States. In 1974 the company completed a purchase of the European Godiva company and became its sole owner. Campbell created Champion Valley Farms, a pet food concern, in 1969.

During the 1970s the company’s slow but steady growth continued. Campbell, which had built its fortune on Dorrance’s invention of condensed soup, introduced the first Chunky brand of ready-to-serve soups. This became a highly successful enterprise. In 1971, for the first time, Campbell’s sales topped $1 billion. In 1972 Murphy retired and was replaced by President Harold A. Shaub. Also that year, Swanson introduced Hungry Man meals, a line of frozen dinners with larger-than-average portions. In 1973 Campbell acquired Pietro’s Pizza Parlors, a chain based in the Pacific Northwest. This led, in 1974, to the formation of a restaurant division, and heralded Campbell’s intention to add more restaurants to its growing list of subsidiaries.

In 1978 Campbell purchased Vlasic Foods, a Michigan-based producer of pickles and similar condiments, for approximately $35 million in capital stock. This acquisition gave Campbell the lead over archrival H. J. Heinz in the pickle-packing business. Campbell added seven small European food-producing companies and three domestic operations in 1979. That same year sales topped $2 billion for the first time. In 1978 Campbell made a brief and unsuccessful foray into the Brazilian soup market.

The diversification movement started by Shaub in the early 1970s prepared the company for long-term growth. Campbell’s debt remained low and the company’s new products and acquisitions have provided it with popular brand names in a variety of food-industry sectors. Campbell realized that the key to growth in this mature market is diversification. Shaub changed a longstanding policy on new-product development requiring a profit within the first year. His most notable innovation, however, was his decentralization of marketing for major product lines.

To sustain these growth-oriented policies, Campbell broke its tradition of relying on internally generated funds to finance its efforts. In June of 1980 the company entered the debt market with a $100 million ten-year offering. As a cautious food producer, Campbell’s earning have always been healthy, but Shaub hoped to increase both sales and profits margins. A key reason for Shaub’s determination to allow Campbell to diversify was the recognition that the market for many of these products had matured and growth had slowed.

In 1980 R. Gorden McGovern succeeded Shaub as president and Campbell made two acquisitions—Swift-Armour S.A. Argentina and a small American poultry-processing plant used by Swanson for its frozen chicken dinners. Campbell’s efforts in Argentina were not entirely fruitful; much of the difficulty has been related to currency-transaction adjustments. Also in 1980 Campbell acquired additional bakery, pasta, and pickle operations.

In 1981 McGovern reorganized management structure, dividing the company into two new divisions—Campbell U.S.A. and Campbell International—and about 50 business groups. This new structure was meant to foster entrepreneurship and heighten management’s sensitivity to consumer opinion, long a weakness at Campbell. The company acquired Snow King Frozen Foods, a large producer of uncooked frozen specialty meats, and introduced the wildly successful Prego spaghetti sauce nationally in 1981. In 1982 Campbell acquired Mrs. Paul’s Kitchens, a processor of frozen prepared seafood and vegetables. Several of the company’s subsidiaries also made major purchases. Vlasic Foods acquired Win Schuler Foods, a specialty-foods producer, and Pepperidge Farm completed the purchase of an apple juice processor, Costa Apple Products, with markets primarily on the East Coast. Also in 1982, Juice Bowl Products, a fruit juice processor, was acquired.

A variety of other acquisitions in the early 1980s added Annabelle’s, a restaurant chain; Triangle, a manufacturer of physical-fitness and sports-medicine products; a fresh-produce distributor; a Puerto Rican canning company; and an Italian manufacturer of premium biscuits.

McGovern further increased emphasis on marketing and new-product development in an effort to shift the company away from its production-oriented focus. McGovern also introduced Total Systems, a worker-oriented system designed to increase quality and efficiency that is similar to the successful worker management strategies employed by many Japanese companies.

One of McGovern’s primary concerns was turning Campbell into a “market-sensitive food company.” After McGovern publicly referred to some of the company’s Swanson TV dinner line as “junk food” in 1982, Campbell initiated Project Fix in an effort to upgrade food quality and improve packaging of its older products. As McGovern told Business Week in 1983, one of the most important facets his make over was making the company “somebody who is looking after [consumers’] well-being.” The 1983 Triangle Manufacturing purchase and 1982 formation of a health-and-fitness unit were both designed to meet that goal. Campbell’s involvement in frozen fish, juices, and produce were also part of the new market sensitivity urged by McGovern.

In addition, Campbell has attempted to market products regionally and according to age group. The central marketing was broken into 20 regions to allow tailoring of advertising and marketing to fit each region’s peculiar demographics. For instance, the company sells spicier nacho cheese soup in Texas than the rest of the country. The company also aimed its national brands at regional audience, with spots featuring local celebrities and locally arranged promotions. Campbell, which reached half the nation’s homes just by sponsoring the television show Lassie in the 1950s, spent 15 percent of its advertising budget in regional efforts in 1983. That figure was expected to eventually reach 50 percent.

McGovern increased Campbell’s sales and earnings significantly in his first few years. His encouragement of new-product development and line extensions may have been overzealous. The company introduced frozen entrees to compete with Stouffer’s, dried soups to challenge Lipton, and name-brand produce such as Farm Fresh mushrooms and tomatoes, complemented by exotic varieties of mushrooms, refrigerated salads and pasta sauces, and juices. In all, Campbell introduced 334 new products in the first half of the 1980s. This included several costly mistakes, such as the 1984 failure of Pepperidge Farm’s Star Wars cookies, which did not fit the brand’s high-quality image. Yet spurred on by successes such as Le Menu frozen dinners, McGovern concentrated on marketing and new-product development. In 1985, however, the company decided to cut back on new-product gambles and McGovern reevaluated his goals and returned the company’s focus to product quality and efficiency.

Throughout this period, during which it became increasingly clear that McGovern’s plan was destined to fail, acquisitions and group formations continued, but at a pace reminiscent of the old Campbell. The company purchased a Belgian food producer and 20 percent of Arnotts Ltd., an Australian biscuit manufacturer, in 1985. In 1986 the company bought two more American food companies and established Campbell Enterprises to oversee non-grocery products. Meanwhile new products were gradually but steadily introduced.

In 1984 John T. Dorrance Jr., the son of condensed soup’s inventor, retired as chairman of the board and became director of the board’s executive committee. He was posthumously inducted into Junior Achievement’s National Business Hall of Fame in 1991. He was succeeded by William S. Cashel, Jr. Dorrance and other members of his family, however, still controlled 58 percent of Campbell’s stock and showed no interest in selling, keeping the company safe from takeover.

By 1987 McGovern began selling off some of Campbell’s less-successful ventures. In 1987 the company sold its disappointing pet food, Triangle physical fitness, and Juice Works beverage businesses. In 1988 the Pietro’s pizza and Annabelle’s restaurants were also sold, taking Campbell out of the restaurant business entirely.

However, Campbell also bought several smaller companies in 1987 and 1988 that were more compatible with its traditional lines of business. These included a French cookie maker, the Open Pit barbecue sauce line, an American olive producer, and Campbell’s largest acquisition to date, Freshbake Foods Group PLC, a British producer of frozen foods. Also in 1988, Robert J. Vlasic, whose Vlasic Foods Campbell had purchased in 1978, became chairman of Campbell.

Campbell’s management crisis was exacerbated by the death, in April of 1989, of John Dorrance. Dorrance’s 31 percent of the company’s stock was split between his three children, who have demonstrated an interest in preserving family control of the company. The remaining 27 percent of the family-owned stock is split among other members of the clan, some of whom (representing about 17.4 percent of the company’s stock) have expressed a desire to sell Campbell. But Chairman Vlasic had loaded the board with family members loyal to the company (six of the 15 board members are family members, including John Dorrance’s three children), so a proxy battle seems unlikely.

McGovern left Campbell in late 1989. His final attempt to recoup Campbell’s losses, a $343 million restructuring program, earned him little praise. Although sales had doubled during his term, profits had dropped 90 percent as a result of his aggressive capital commitments. From 1988 to 1990 alone, earnings fell from $274.1 million to $4.4 million.

In January of 1990 David W. Johnson was elected president and CEO. Johnson came to Campbell from Gerber Products Company, where he had been successful in streamlining that company’s operations. Johnson employed a “back-to-basics” strategy that called for drastic restructuring. The new CEO oversaw the divestment of whole businesses, including mushroom farms, a salmon processing plant, the refrigerated salads line, and cookie maker Lazzaroni. By June of 1991, Johnson had closed or sold 20 plants worldwide, reduced the company’s 51,700 person work force by 15.5 percent, and pulled unprofitable lines from store shelves. And while Johnson purported to support marketing, he also cut Campbell’s advertising budget.

The product Johnson was most interested in promoting was soup, the company’s core. Even into the early 1990s, Campbell soups had 66 percent, or $1.6 billion, of the $2.6 billion U.S. soup market, which contributed almost half of the conglomerate’s $570 million operating profits.

In anticipation of the North American Free Trade Agreement, Johnson also supervised the combination of Campbell’s Canadian operations, some Mexican companies, and the U.S. businesses into one division called Campbell North America. Late in 1991, Campbell also focused on the impending European Community’s single market, which promised 344 million consumers (50 percent more than the United States) and had potential for future growth. The cookie subsidiary of Campbell Soup, Campbell Biscuits Europe, got a head start on the market in February of 1990, when it reorganized its European corporate structure, consolidated marketing, and standardized packaging.

By the end of 1991, some indicators showed that Johnson’s efforts had paid off: Campbell’s earnings through the first three quarters of 1991 had risen 33 percent, making the company’s profits the second-fastest growing in the food industry. But some analysts warned that the profits came at the expense of core brand promotion, which was cut in 1991. The earnings were not based on sales, which only rose 1.9 percent during the same period.

Johnson has been given an overall good rating in the quick turnaround at Campbell. In 1992 the company made bolder goals, with a vision expressed as “Campbell Brands Preferred Around the World.” The plan made further preparations for the European Community’s single market and expanded those efforts around the world. The company was reorganized into three multi-national divisions. Campbell North and South America grouped Campbell’s Swift-Armour subsidiary in Argentina with the previously-organized North American group. Campbell Biscuit and Bakery united Pepperidge Farm in North America with Delacre in Europe and Australia’s market-leading biscuit company, Arnotts Limited (of which Campbell owns 58 percent). Campbell Europe/Asia is a growth-oriented division that comprises the company’s “greatest opportunity and challenge,” according to the 1992 annual report.

Campbell’s good performance, maintenance of high stock prices ($80 in mid-1991), and 58 percent Dorrance family ownership has staved off any threat of takeover by such giants as Philip Morris and Unilever. Campbell hopes to maintain those qualities by building brand strength, concentrating on global marketing, and continuing strategic asset divestment.

Principal Subsidiaries

Campbell Finance Corp.; Campbell Investment Co.; Campbell Sales Co.; Casera Foods, Inc.; Godiva Chocolatier, Inc.; Hender Farms, Inc.; Joseph Campbell Co.; Mrs. Paul’s Kitchens, Inc.; Pepperidge Farm, Inc.; Vlasic Foods, Inc.; Swift-Armour Sociedad Anónima Argentina; N.V. Biscuits Delacre S.A. (Belgium); Campbell Foods P.L.C. (England); Societe Francaise des Biscuits Delacre S.A. (France); Campbell’s de Mexico, S.A. de C.V.; Compania Envasadora Loreto, S.A. (Spain); Campbell Soup Co. Ltd. Les Soupes Campbell Ltee (France); Campbell S. Australasia Pty. Ltd. (Australia); Campbell S. Fresh, Inc.; Campbell S. U.K. Ltd. (United Kingdom); NV Campbell Food & Confectionar Coordination Center Continental Europe; ESA; NV Godiva Belgium, SA; Royal American Foods Corp.; Sanwa Foods Inc. (Japan).