Campbell’s in $700m deal for organic soup rival Pacific Foods

Campbell Soup has agreed to acquire organic soup maker Pacific Foods for $700 million in cash.

Oregon-based Pacific Foods makes organic broths and soup, and also produces shelf-stable plant-based beverages and other meals and sides. It generated net sales of approximately $218 million in the year to the end of May.

Campbell said that the business ‘has strong health and wellbeing and organic credentials, particularly with younger consumers’. It claimed that the Pacific brand would complement Campbell’s own range of soups.

The company will invest in Pacific Foods’ distribution and R&D, and boost marketing support for the brand in order to engage consumers.

Campbell president and chief executive officer Denise Morrison said: “This acquisition is consistent with our purpose, ‘real food that matters for life’s moments’. Pacific is an authentic brand with a loyal consumer following.

“The acquisition allows us to expand into faster-growing spaces such as organic and functional food. Moreover, Pacific Foods is an excellent fit with Campbell — strategically, culturally and philosophically. It advances our strategic imperatives around real food, transparency, sustainability and health and wellbeing.

“Culturally, Campbell and Pacific Foods share similar values and a commitment to a purpose-driven approach. Philosophically, both companies believe in making food that we are proud to serve at our own tables using simple, recognisable ingredients.”

Pacific Foods will become part of Campbell’s Americas Simple Meals and Beverages division, which includes Campbell’s soup, simple meals and shelf-stable beverage units in the US, Canada and Latin America. The division is led by Mark Alexander, and also includes Campbell’s soups.

Pacific Foods will maintain its farm-to-table approach with CEO and co-founder Chuck Eggert staying on as a supplier of key ingredients through his family farms.

Eggert said: “We’ve spent the past 30 years focused on making nourishing foods with an emphasis on simple, organic ingredients and authentic, rich flavours. Looking ahead, a future with Campbell means we can maintain what we value while accelerating growth of the brand in a way that we couldn’t do alone, reaching more people while increasing our impact on sustainable agriculture.”

The deal will allow Campbell’s greater access to the $11-billion organic food category in the US, which has grown at a compound rate of over 15% in the past four years. “The acquisition will also further Campbell’s efforts to drive innovation in health and wellbeing,” Campbell’s said, as it looks to reinvent the centre of the store by investing in natural and organic claims.

Besides soups, Pacific Foods also manufactures a line of oat, hemp and almond milks.

Food companies are increasingly investing in the perimeter of retail stores, where the fresh produce is traditionally found, as increasing health awareness among shoppers leads to a shift in consumer spending habits.

Packaging supplier Sonoco has twice acquired companies that increase its presence in the retail perimeter – first with Peninsula Packaging and then with Clear Lam Packaging last month.

The official word is that Campbell’s is ‘diversifying its portfolio in response to increased consumer interest in health and wellbeing’.

It is the fifth acquisition in as many years for the New Jersey-based company: it follows deals for Bolthouse Farms in 2012, organic baby food producer Plum in 2013, and fresh salsa and hummus maker Garden Fresh Gourmet in 2015.