Campbell’s Condensed

SoupChicken Noodle Soup

By Kimberly Son and Heng Tien

Table of Contents• Company background• Executive summary• Overall revenue, expenses, & contribution margin• Ratios• Product development issues• Relevant cost of product• Profitable or not?• Reference

Campbell’s Past

Campbell’s began in 1869 with a fruit merchant, Joseph Campbell and a icebox manufacturer, Abraham Anderson. Due to disagreements in their visions, Campbell bought out Anderson’s shares and began Campbell’s. Their first products included salad dressing, ketchup, mustard and their Ready-to-serve Beefsteak Tomato Soup. Campbell’s history was changed drastically when Joseph’s nephew began to work for the company. He invented the formula for soup and was able to slash the prices to 10 cents a can by removing the heaviest ingredient, water. With this drastic change to condensed soups, Campbell’s became a household name in America. The company expanded its products to include different condensed soups such as Mushroom, Chicken Noodle and French Onion.

80 years later under the leadership of William Beverly Murphy, Campbell’s took the corporation public and began to increase their repertoire of products by buying out Pepperidge Farm, V8 , Swanson and Godiva’s Chocolates. Campbell’s success has been affected greatly by the effects of their advertising and the role they play in the American household. Both from a convenient standpoint as well as very family-oriented, Campbell’s has been a staple in American pantries for almost a hundred years.

Campbell’s PresentOne great thing about the Campbell brand is their ability to adapt with the times. As America becomes more health-conscious, Campbell’s continues to reduce the sodium in their entire soup line and offers healthier options. With different soup lines such as 100% Natural and Health Request, Campbell’s changes with the times and continues to grow with a market that thinks of Campbell’s as a brand with the customer in mind. Not only that , market segmentation is a vital part of Campbell’s present success. With more hearty appetites in mind, Campbell created Chunky soups in 1997 to satisfy those who wanted soup as a fulfilling meal. To satisfy those who are on the go and don’t necessarily have the time to sit down and enjoy a bowl of Campbell’s, the research team created Microwavable soups that can be taken to the office and eaten on the go. Most recently in 2012, Campbell’s created a unique like of Go Soups that feature exotic flavors like Thai Coconut and Spicy Chorizo to attract the younger generation. Advertising for these new products have taken the social media approach and includes interactive websites, Twitter and Facebook to sell their products to the new generation. This will keep Campbell’s Soups a stable in homes all over the world well into the future.

Executive Summary• Campbell Soup Company is an American producer of canned soups as

well as other associated products. Their headquarters are based in Camden, New Jersey and their products are sold around the world in 120 countries. In addition, they hold more than 20 brands with almost 7,000 employees, plus 11 manufacture facilities in the United States and Canada. The Campbell Soup Foundation has financially supported local advocates that encourage constructive changes in their communities. Every year, the Foundation contributes exactly $1 million to different organizations that pay attention to their community’s welfare. In addition, they have almost 30 years of experience helping schools obtain free supplies in return for their product labels.

• Campbell’s prime focus for their company is to create nutritious delicious products to serve family all over the world. They also focus a lot of attention on philanthropic events to fight hunger and educate citizens about nutrition.

(Executive Summary)Dividends

1980 – started at $0.030 1981 – increased by $0.0031982-1984 – went up $0.001 each year1985-1986 – increased by $0.0021987 – their dividends were up by $0.0041988 – increased by $0.008 since 1987 1989-1990 – went up $0.005 from 89-90, didn’t gain or lose dividends1991 – increased by $0.010 1992 – increased by $0.015 and then by another $0.010 by the middle of the year1993 – started out at $0.110 and went up $0.015

1994 – went up $0.015 1995 – steadily went up another $0.0151996 – increased $0.0181997 – increased $0.0201998 – increased $0.017, quickly went down $0.110, 2 months later and increased $0.110 another 2 months later1999-2001 – went up $0.015 in 1999 and stayed the same till 2001 2002 – went down 0.067 in 2002 and stayed the same till 20042005 – went up $0.0122006 – increased by $0.0102007 – up by $0.0202008 – up by another $0.0202009 – up by $0.0302010 – up by $0.0252011 – up by $0.0152012 – stayed the same since 2011

(Executive Summary)Stock Price

Overall Company Revenue

Expenses

Contribution Margin• Total Revenue (7/29/12) = 7,707.0 million USD• Variable cost = ~4,715.0• Contribution margin = 2,992.0

Product Development Issues• Campbell’s Chicken Noodle Soup was introduced in 1934 along with Mushroom Soup. One of the major

issues that they dealt with during that time was bringing the cost low enough to entice buyers. Until Joseph Campbell’s nephew came along with a degree in Physics from M.I.T, there were no plans on expanding the soup aspect of Campbell’s. However, as Joseph began working in the lab, he came up with the idea of condensed soup. With only ½ of the water that was previously in the tomato soup, he was able to reduce the shipping cost 3:1 of what it use to be. This brought the cost down from 30 cents a can to 10 cents a can. Not only that, money was saved by introducing a smaller can which cost less material to manufacture.

• In the 21st century, the Chicken Noodle Soup recipe has also needed to be changed drastically. One major problem that the marketing team at headquarter has noticed is the perception of Campbell’s Condensed Chicken Noodle Soup. It became a product that was viable to those with small children but when families do not have small children, they view the product as unheathy. A major way that they tried to change the perception is through lowering the sodium content. By placing a green label that says “Now Healthier with Reduced Sodium!,” Campbell’s is hoping to bring some of the older clientele back to the original condensed soup. Commercials that were made in the 80’s are still running today in order to bring back the memories that will trigger the older customers to purchase Condensed Chicken Noodle Soup.

• Another way they are continuously trying to develop the product is by creating multiple versions of it. Now along with the Condensed Chicken Noodle Soup, there is also Chunky Chicken Noodle Soup which has bigger pieces of chicken and noodles as well as celery and carrots added. There is also a Healthy Request version that comes with organic chicken breast and wheat noodles.

Relevant Costs of Campbell’s Chicken Noodle Soup

Ingredients: Chicken stock, enriched egg noodles (wheat flour, egg solids, niacin ferrous sulfate, thiamine, mononitrate, riboflavin, folic acid), cooked chicken meat, water, contains less than 2% of the following ingredients: salt, chicken fat, cooked mechanically separated chicken, monosodium glutamate, cornstarch, onion powder, modified food starch, yeast extract, spice extract, soy protein isolate, sodium phosphates, beta carotene for color, chicken flavor (contains chicken stock, chicken powder, chicken fat), flavoring, dehydrated garlic.

We can do without monosodium glutamate (MSG) because it is $1.30 per kilogram because the manufactured MSG is harmful to our brain, many organs, and our nervous system initiating certain processes in our body. A major trend in the food industries today is the removal of MSG from certain foods.

Recommendation• More vegetables

– Food trends of 2013 are leaning towards vegetables

– Campbell’s Soups, especially the Campbell’s Chunky brand has always emphasized on the size and quantity of its protein but never about the vegetables

– Adding more vegetables is the No. 4 predicted popular food trend of 2013 and can really bring Campbell’s more sales and different markets Appeal to different store locations

Campbell’s is currently being sold in general grocery stores such as Kroger, Wal-Mart, Target but what about higher end grocery stores such as Whole Foods or Central Market?Whole Foods alone makes 33% of its revenue on non-perishable items such as canned soups and would be a great start for penetration With a revamped package and healthier ingredients, stores like Whole Foods and Central Market can welcome Campbell’s into its lines of gourmet soups.

Referenceshttp://investor.campbellsoupcompany.com/phoenix.zhtml?c=88650&p=irol-stockquotechart

http://investor.campbellsoupcompany.com/phoenix.zhtml?c=88650&p=irol-dividends

http://www.campbellsoupcompany.com/about_us.asp

http://www.wholefoodsmarket.com/company-info/investor-relations/annual-reports