Campbell Soup Company, seeking to reverse a 12th straight quarterly sales drop, this week closed a $700 million purchase of Oregon-based Pacific Foods, a maker of organic broths and soups. This continues a growing trend of Big Food giants buying what are considered “authentic” brands to help stoke their own stale growth.
Pacific Foods will be part of the Camden, New Jersey, company’s Americas Simple Meals and Beverages division, Campbell said late Tuesday. That’s its largest division, also housing brands such as Campbell’s own namesake label, V8 juice and Plum Organics baby food, also an acquired brand.
“Pacific is an authentic brand with a real food philosophy that closely mirrors our own,” said Mark Alexander, president of the Americas division, in a statement.
Campbell plans to accelerate the growth of Pacific Foods, which also makes almond milk, other plant-based beverages, meals and sides—another growth area Campbell is pursuing.
Capitalizing on the authenticity of brands like Pacific Foods is crucial for Big Food companies like Campbell at a time when consumers’ demands for what they perceive as fresher and healthier foods have often translated to distrust in major brands. It also has led to startups and other smaller brands eating into the market share of traditional consumer packaged goods (CPG) giants like Campbell.
Pacific Foods marks Campbell’s fifth acquisition in five years. Other acquisitions include Bolthouse Farms and Garden Fresh Gourmet.
“[Campbell] has attempted numerous times to crack into the organic soup category and gain entry into its related channels (i.e., natural/organic customers), with little success,” said Barclays analyst Andrew Lazar. “In some categories, mainstream brands have a harder time also being the disruptors.”
In November, Campbell reported that its total sales dropped 2% year over year in the first quarter of fiscal year 2018. But Americas Simple Meals and Beverages—which represents 56% of the company’s total sales—saw an even worse decline of 5%, including a 9% slide in US sales of soup. Campbell has said demand also was hurt by a dispute with a key customer—reportedly Walmart—over issues such as promotions and shelf space.