NEW YORK — Five factors have played an important role in driving growth within the Arnott’s baking and snack unit of the Campbell Soup Co. over the past five years, ranging from a refocused portfolio to investment in research and development, said Doug Conant, president and chief executive officer of Campbell, during the Sanford C. Bernstein Strategic Decisions Conference held June 4 in New York.
Mr. Conant’s remarks were some of the most candid since Campbell last discussed its baking and snack unit’s performance in detail nearly five years ago at the Consumer Analyst Group of New York conference.
The first factor in Arnott’s growth has been a refocus on the company’s core biscuit portfolio in Australia, specifically the divestment of snack foods and salty snacks in 2008, Mr. Conant said. The company also has benefited from the exit of unprofitable private label business and the restructuring of smaller peripheral operations outside of Australia.
Second, Arnott’s restructured its management to eliminate the stranded overheads that resulted from the divesting of snack foods. The company also consolidated its sales forces and streamlined its administration, Mr. Conant said.
A third factor Mr. Conant identified was the complete restructuring of Arnott’s route to market system. The move included converting to a warehouse system from a direct-store delivery system.
“In the highly concentrated retail trade in Australia, where just two retailers have a combined market share approaching 80%, Arnott’s new warehouse delivery system has proved to be more effective and efficient, driving higher retail sales at lower cost,” he said.
Fourth, Arnott’s has grown its core brand through “effective marketing, astute trade promotion and exceptional merchandising,” Mr. Conant said.
Finally, Arnott’s has benefited from investment in a pilot plant and innovation center, as well as stepped-up investments in research and development, Mr. Conant said.
“Arnott’s attracted new consumers through the introduction of numerous value-added and high-quality new products with health and wellness an important growth opportunity,” Mr. Conant said. “This is particularly true of Arnott’s largest category, savory. We added almost 1 million new households to Arnott’s Vita Wheat base with the launch of Vita Wheat grain snacks and Vita Wheat grain cracker. Both of these launches strongly appealed to the many consumers with health and wellness concerns.
“Shapes Sensations, another savory cracker with adult appeal for social munching, also continues to live up to the promise in its name.”
Looking ahead, Mr. Conant said growth potential exists for Arnott’s, with the main opportunity lying in adjacent categories and extensions in savory, sweet and chocolate.
In savory, he said the company recently launched Vita Wheat rice crackers, an introduction made possible by the company’s investment in a new pilot plant. He said the rice crackers are competitively advantaged and are the “first and only 100% natural range of rice” crackers on the market in Australia.
Meanwhile, cooking, through the company’s Bake and Create initiative, stands as an incremental opportunity for Arnott’s sweet biscuits business, Mr. Conant said.
“Our research showed that over 60% of consumers are baking regularly and this gives us a large pool of bakers we can inspire with our cookie-based recipes,” he said. “We started along this path, too, with a very successful initiative around the holidays last year. We drove double-digit growth in the cookie products most popular for inclusion in home baking recipes.”
Lastly, Mr. Conant said the chocolate biscuit category should continue to benefit from Arnott’s sourcing from adjacent chocolate confectionery categories. Specifically, he pointed to the launch of new flavors of Tim Tams and new, lighter forms of products as offering potential growth avenues.