Campbell Soup Co. announced it will be selling its European chip brands, including UK-based Kettle Foods Limited and Netherlands-based Yellow Chips B.V., to Valeo Foods, a portfolio company of Capvest partners LLP. The deal is worth approximately $80 million.
The latest transaction with the Dublin-based food and beverage producer is subject to customary closing conditions, and Campbell’s plans to use the money from the divestiture to help reduce its debt.
Last year, Campbell’s — one of America’s oldest soup companies — experienced a loss in sales and its share value was also hit. With health-conscious consumerism on the rise, many packaged goods companies such as Campbell’s have been challenged by customers trading processed foods for healthier alternatives.
The new business agreement will still allow Campbell’s to sell Kettle Brand products in the US and other regions, with the exception of Europe and the Middle East.
The company hopes its remaining shares in Kettle Foods Limited will fuel growth in Campbell’s snack unit portfolio, which includes brands like Cape Cod, Emerald, Goldfish, Lance, Late July, Milano, Pepperidge Farm, Snack Factory Pretzel Crisps and Snyder’s of Hanover brands.
This is one of many divestitures the company has announced as it works to narrow its core business to North America and focus its growth on two segments: meal & beverages and snacks.
As a result, the company has been working towards discontinuing its Campbell’s International business portfolio which includes its global biscuits and snack segment. It also discontinued its Campbell Fresh brand earlier in June due to a loss in sales. It had initially launched the brand to expand the packaged goods company into other areas of the supermarket to reach new consumers.
Earlier this summer, the company also announced it would sell its Danish biscuit company, The Kelson Group, to CTH Invest, a Belgian holding company affiliated with Nutella producer Ferrero, for $300 million. It also announced it would be selling Arnotts, the Australian biscuits business known for their Tim Tams for $2.2 billion.
So far the company’s new business strategy is showing positive results. According to Campbell’s fourth quarter earnings, its meal & beverage and snack segments fueled a 2 percent year-over-year increase in sales, generating $1.78 billion dollars in revenue.
Furthermore, its full-year results generated $8.11 billion in sales, indicating a 23 percent year-over-year increase thanks to its product lines Snyder’s, Lance and Pacific Foods.
US soup sales increased by 3 percent in the last quarter, with ready-to-serve and condensed products experiencing the highest revenue, which could be due to younger consumers heightened attraction for convenience. Between 2020 and 2021 the company also plans to invest more into their core soup segment by focusing on enhancing quality, merchandising and marketing.
The transaction between Campbell’s and Valeo is expected to close in the first quarter of 2020 along with most of its other business divestitures. As for the future, Campbell’s looks to be relying on its roots to increase revenue and help minimize overextending itself in other food markets.