Campbell sees R.&D. synergies between Pepperidge, Arnott's and Kelsen

by Eric Schroeder
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While the Pepperidge Farm, Arnott's and Kelsen brands and packaging are different, the company is seeing synergies in research and development.

CAMDEN, N.J. — Now that Pepperidge Farm, Arnott’s and Kelsen have been grouped into one unit, Campbell Soup Co. is exploring the many ways of capturing synergies between the businesses.

“On Arnott’s and Pepperidge Farm, they definitely are different,” Denise Morrison, president and chief executive officer of Campbell Soup Co., said during a May 22 conference call with analysts to discuss third-quarter results. “We have been expanding the Arnott’s brand beyond Australia into Southeast Asia, and particularly Indonesia, and also in Hong Kong. Pepperidge Farm has been expanding more into Canada.”

While the brands and packaging are different, Ms. Morrison said the company is seeing synergies in research and development.

“There is a lot of sharing going on in that area,” she said. “But by putting the Pepperidge Farm, Arnott’s and Kelsen brands together in one division, we expect that part of that will be a global brands team that we will start to look at. Now that we have platforms in these countries, how can we expand with the brands that we have to take advantage of that scale?”

Operating earnings in the Global Baking and Snacking division of Campbell Soup Co. increased 18% to $80 million in the third quarter ended May 3, reflecting a higher gross margin percentage, volume gains and lower administrative expenses, partly offset by higher marketing expenses and the negative impact of currency translation.

Sales in the quarter decreased 2% to $555 million. Excluding the negative impact of currency translation, Arnott’s sales increased driven by gains in Australia and Indonesia.

“In the U.S., our Pepperidge Farm business delivered sales gains in fresh bakery, cookies and crackers,” Ms. Morrison said. “Goldfish sales increased 5% in the quarter, and marketing increased across our biscuit and snacks business. I am particularly pleased that this segment’s operating earnings increased 18%.”

For the nine months ended May 3, operating earnings in the Global Baking and Snacking division totaled $277 million, up 18% from $234 million in the same period a year ago. Net sales were $1,822 million, up 1% from $1,812 million a year ago.
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