CAMDEN, N.J. — A focus on innovation has been the “most critical ingredient” in a long track record of financial success at Pepperidge Farm, said Patrick J. Callaghan, president of the Campbell Soup Co. division.
Mr. Callaghan participated in a July 12 meeting with investment analysts. The meeting was led by Denise Morrison, who is set to become president and chief executive officer Aug. 1.
After beginning his remarks with a brief history of Pepperidge Farm, which will mark its 75th anniversary next year, Mr. Callaghan then described the division’s “enviable” performance in categories that are staples.
“Over the last six years we have added $500 million of retail sales, more than a 25% increase,” he said. “We continually outpace our categories across each of our businesses.”
Pepperidge will achieve a seventh consecutive year of record sales and profits this year, he said.
Key to the company’s success has been the strength of its Pepperidge Farm and Goldfish brands, Mr. Callaghan said. He cited brand valuation data indicating the brands were in the top 10% of consumer brands, based on differentiation, relevance and stature.
Pepperidge is in the top 3% of brands as measured by the willingness of consumers to pay a premium for the product, Mr. Callaghan said.
Another strength cited by Mr. Callaghan is an efficient supply chain, including nine manufacturing plants and 44 product lines. He said the company’s direct-store delivery capability includes 4,000 trucks reaching 25,000 stores each day.
“Our distributors are focused on increasing points of distribution and building powerful, impactful displays, particularly around customer focused events,” he said.
Still, Mr. Callaghan’s greatest emphasis was on innovation. He said this focus has been crucial in keeping the Goldfish brand “young” even though it is nearly 50 years old.
Line extensions, including flavor blasted Goldfish and Goldfish Grahams, were examples he offered. Additionally, the company has made significant investments in print and television advertising to “convey the wholesome real ingredients baked into each Goldfish cracker,” he said.
Because of the innovation and support, the brand has achieved 8% compound annual sales growth over the last five years, he said.
As specific examples of innovation for fiscal 2012, Mr. Callaghan discussed Milano Melts and Milano Slices, Pepperidge cracker chips and Goldfish sandwich bread.
The decisions to introduce the Milano products were grounded in specific consumer research findings, Mr. Callaghan said.
“One insight we’ve gained is that creamy fillings provide a highly appealing alternative to both traditional and new Milano consumers,” he said. “Another simple insight is that if you keep your Milano wafers separate and use them for an open faced treat, there is almost an endless potential for delicious topping combinations.”
The Melts line has been shipping since February, and the Slices line will be shipped beginning in October, Mr. Callaghan said.
In the adult savory line, the decision to offer cracker chips was driven by what Pepperidge saw as a desire among many adults for healthier snack alternatives to chips.
“Traditional wholesome crackers lack the taste and the crunch they desired,” he said.
He said the Pepperidge product uses a unique formula and processing technology that has chip-like qualities but with 50% to 65% less fat than chips.
Mr. Callaghan concluded with Goldfish sandwich bread, “my favorite innovation of all, one every mom of young children is destined to love.”
“Based on the insight that kids love the shape and smile of Goldfish, that they prefer sandwiches that don’t have any crust, and that moms want to serve lunches that are both wholesome and fun enough for kids to love, Goldfish sandwich bread was born,” he said. “We’re very pleased with our regional success to date, and are launching our national rollout as we speak. Advertising will begin this month in time for the all-important shopping window of back-to-school.”