Brand power - new product development at the Campbell Soup Co - includes related articles - New Products Company of the Year - Company Profile

Prepared Foods, April 15, 1993 by Mike Pehanich

After two years of realignment and a fresh focus on core strengths, Red & White is back in the fight and once again at the head of the new product pack ... thanks to

Ask David Johnson why he elected to leave Gerber Products to come to Campbell Soup Co., and he'll tell you in two words: BRAND POWER.

Indeed, the fiery, Australian-born Campbell president and CEO left one of the most trusted trademarks in America when he vacated the chairman's chair at Gerber. But Gerber had a solitary brand with limited application. That's not the case at Campbell which controls a powerful arsenal of brands beginning with flagship Campbell red and white, the second most recognizable brand in America behind Coca-Cola, along with Pepperidge Farm, Swanson's, Prego, Godiva, Vlasic, Mrs. Paul's, and V8.

Through much of the 1980s, Campbell, under the leadership of president and CEO Gordon McGovern, was the most innovative and prolific marketer of new products in the food industry. The company pioneered new categories such as branded chilled foods and branded produce. It searched for alternative markets and created new brands like Prego and LeMenu. But earnings were disappointing, and new product failures were partly to blame.

Johnson came to Camden in 1990 with a reputation as a turnaround artist and a simple order from the Campbell board: Make more money. He did, quickly.

Net earnings leaped from $274 million in 1989 to $491 million in 1992. Gross margins rose from 31.4% to 38.7%. And return on equity climbed from 16.2% to 25.7%.

Many assumed that the torrent of new products that had flowed from Campbell through the '80s would be turned to a trickle. But such was not the case. New product introductions did fall from 156 in 1989 to 130 in 1990, Johnson's first year, then 114 in 1991. In 1992, the number rose modestly to 121. Today, the strategy has changed from bombarding the marketplace with creative concepts to understanding and leveraging the company's strengths and capabilities from research and production to powerhouse brands. And it is working, well enough to make Campbell Prepared Foods' 1993 New Products Company of the Year.

"We've improved our productivity and efficiencies. Now we're counting on new product activity to generate profitable volume," sums up Johnson.

"What David Johnson is looking for is disciplined business management," explains Herb Baum, president of the Campbell North and South America division. "(Former president) Gordon McGovern crawled into the head of consumers and gave us a fresh new product mentality. But today we are looking at new products in terms of what we are good at doing, our core competencies."

CREATIVE BRANDING

"The real stars at Campbell are our products," says CEO Johnson. "The brands provide the funds for driving our vision to fulfillment."

Besides having a stable of awesome brands, Campbell has proven it can ride them, too. No one in the industry has been more successful at creating "cluster brands" under big-name umbrellas: Chunky and Home Cookin' under the flagship Campbell's banner; Healthy Request on its soup, pasta sauce and tomato juice products; Healthy Treasures under the Mrs. Paul's banner; and Wholesome Choice on healthful muffins, sandwich pockets, breads and cookies under the Pepperidge Farm label.

Today the company is testing the tensile strength of some of its top names. The Godiva brand has jumped from premium chocolates to coffee--Cafe Godiva--and liqueurs--Godiva Liqueur. Prego has moved into the pizza component business.

Clever cross-branding has made strangely compatible bedfellows of key Campbell brands and product lines: for example, last year's introduction of Campbell Soup Crackers, which are Pepperidge Farm products sold under the No. 1 soup brand; and Pepperidge Farm Gravies, which took Campbell's market share of Franco-American gravies from 45% to 61% in only four months while growing the category 20% at the same time.

Other cross-branding efforts include spaghetti sauce under the Campbell red and white label and Pepperidge Farm American Collection Chocolates, a promising marriage between the bakery brand and Godiva.

FRESH THOUGHTS ON FROZEN

In the early '80s, LeMenu emerged as the leader and standard bearer for the new wave of upscale frozen dinners. Its strength eroded gradually, however, as consumers tired of selections and complained of high price tags which approached $5.

"Consumers are telling us they have changed the way they treat frozen foods in the market basket," says Kathleen MacDonnell, vice president and general manager frozen foods group and formerly sector vice president prepared foods. "Today they are alternatives--more emergency foods than indulgence foods, as they were in the '80s."

The new reality has meant lower priced dinners--below $3--and repositioning LeMenu. A year ago, LeMenu New American Cuisine hit the market. The products made the line more contemporary and positioned LeMenu further from the Swanson brand.

The line has also gone healthy with five new LeMenu Healthy Entree items.