Bolthouse Farms For Sale, Campbell Soup Company Interested

Bolthouse Lineup

Bloomberg – a business news source – recently cited that baby carrot and juice manufacturer Bolthouse Farms is on the market (link here).  Private-equity firm Madison Dearborn Partners LLC (Bolthouse Farms’ parent company), has received an initial offer from Campbell Soup Company among other bids.  While Madison Dearborn analyzes the different offers, I will assess the Campbell Soup bid to see if it makes any sense.

For a company that is famous for  canned soups, this may seem like a strange portfolio diversification to get into carrots and juices.  However, is it really that strange for a soup company to acquire Bolthouse Farms?   Aside from canned soup, the Campbell Soup Company manufacturers a variety of sauces, crackers and beverages (see their worldwide produce portfolio here).  Campbell Soup Company already has expertise in beverage manufacturing and marketing from its V8 line of juice products.  And Bloomberg’s article hints that V8 will be afforded more resources and receive a stronger focus, given their rising sales while the soup business’s performance is softening.  And it appears that if the deal was approved/concluded, Bolthouse Farms’ juice products would fall under the beverage division while the carrot farms and food processing would be integrated into a vertical supply chain for Campbell Soup Company.

V8 Brand - courtesy of http://www.campbellsoupcompany.com/our_brands.asp

Adding Bolthouse Farms beverages to the company’s beverage portfolio will improve scalability and distribution for both.   There will definitely be opportunities to optimize the two distribution networks since Bolthouse Farms products may be listed in retailers where canned soups may not be available (ie convenience/petroleum stores, organic/natural food grocery stores, etc).  Even if both Bolthouse Farms and Campbell Soup products are listed at the same grocery story, Campbell Soup still gains an incremental area of influence within the store.  Bolthouse Farms refreshments anchors the fresh produce aisle in grocery stores while Campbell Soup products typically resides within the non-perishable shelf stable aisles; and penetrating the fresh produce aisle will pay dividends based on the grocery consumer’s shopping habits.  Fresh produce are located near the entrance so there is an opportunity to influence the consumer immediately when she comes in.  And Campbell Soup can leverage Bolthouse Farms juices to scale up promotions by attaching a coupon to offer a different Campbell Soup product (ie V8 juices, Campbell’s Soup, Pepperidge Farm Goldfish crackers, etc), which are located in an alternate section.  When the shopper wheels the shopping cart down the various aisles, they may be more likely to purchase the Campbell Soup product since there’s a coupon offer.

Campbell Soup Company will further solidify the company’s positioning as a manufacturer of healthy and family-friendly products.  The company’s current portfolio of products are already healthy, while adding Bolthouse Farms juices and smoothies further cements their reputation as a company that provides nutritious products.

Campbell Soup Company has been seeking to broaden its consumer appeal beyond canned soup.  While the company is called Campbell Soup Company, the company portfolio extends well beyond soups.  Their soup portfolio alone has come up with some new innovations, such as the microwaveable soup cups and soup pouches.    This is an indication of a company that recognizes where it needs to innovate and where it needs to acquire; internal growth can only add so much value before the organization must look for outside options.  Given its strong positioning on healthy and family-friendly products, bringing Bolthouse Farms into the mix makes great sense.

All that matters now is to how Bolthouse Farms’ parent company assesses the bids from interested companies.  While combining the two companies’ businesses makes sense from my analytic perspective, there are obviously other business and financial considerations.  However, if Campbell Soup does end up acquiring Bolthouse Farms, I can see many positives from this acquisition.

V8 Launches Energy Shots

V8 Energy ShotIn the increasingly popular energy shots category, V8 has launched their own energy shots.  Using green tea extract as their natural caffeine ingredient, this 2.5oz (74ml) energy shot also includes nine fruits and vegetables such as blackberries, raspberries, apples, and tomatoes.  While the green tea extract serves as the energy component, the nine fruits and vegetables provide the user with antioxidants and vitamins.  The V8 energy shot are currently in a pilot rollout, as its only available in certain American markets, including Minneapolis, Jacksonville, and Colorado Springs.  The retail price for the energy shot is $2.99, and will be found in convenience stores, drug stores and grocery supermarkets.

My main questions for V8’s energy shot would be: in light of Red Bull recently discontinuing their energy shots, does V8 stand a chance in this category?  What makes them different from other energy shot products on the market?

Both questions can be answered by V8’s positioning.  The very thing that differentiates V8 different from their competitors is also what might give them a fighting chance in this category.  Not only is V8 a brand that the public trusts and recognizes, the ingredients themselves also source from healthy and easily recognizable ingredients.  Other energy shots still use healthy ingredients (such as taurine, tyrosine, and guarana), but their naming may easily confuse the shopper.  If you had a choice to pick up a product that contained green tea extract compared to tyrosine, which one would you pick?  Or one that contains strawberries and raspberries compared to guarana and phenylalanine?  The easily recognizable names are common natural ingredients that a shopper sees on store shelves anyway.  As such, it makes it less curious as to what the product is made of.  And from the V8 energy shot nutritional information (link here), they do a good job of providing a common name for the vitamins aside from the chemical name – again helping the shopper make the connection of what’s actually inside the bottle.  All in all, this will help differentiate themselves for other manufacturers.  A trusted name with easily recognizable ingredients certainly helps in this aspect.

In terms of their execution strategy,  V8 may have paid some attention to Red Bull’s energy shot and made the conscious decision to launch regionally.  Red Bull’s energy shot was a national launch in Canada after their introduction in the United States, and their product just wasn’t moving leading to their decision to re-focus solely on their core offering.  By introducing the product in specific regions and channels first, this may help the energy shot in gaining traction (and increase demand) from other regions if it is successful.  And if it is not gaining momentum, the regional rollout will minimize market impact on their losses.  The implication for Canadian consumers is that if this product is only in pilot rollout down south, it is likely to take some more time before it will appear in Canada.

It appears that V8’s marketing strategy to introduce their energy shot is well thought out.  On the sales side, a $2.99 market price point and available in the convenience, drug and grocery supermarkets also help.  All that remains is to see (and taste) the product.  Will it have competitive shelf space at the cash register?  Will the taste itself be too strong or too sweet?  For curious readers in the Minneapolis, Jacksonville, and Colorado Springs area, please try this product and leave me a comment on your thoughts!

V8 Fusion in a Can

Courtesy of BevNet.comCampbell Soup Company’s V8 Fusion product line will soon be available in 8oz (237ml) and 11.5oz(340ml) cans in the US.  The company’s news release said that the can will be available in Pomegranate Blueberry and Strawberry Banana varieties, and are ideal for packing in a purse or in a child’s lunchbox. Each 8-ounce can provides a full serving of vegetables (1/2 cup) and a full serving of fruit (1/2 cup), as well as essential antioxidant vitamins A, C and E and no added sugar.

Currently, seven out of ten Americans don’t get their government-recommended vegetable servings each day, but research suggests the key to bridging this “vegetable gap” may be to focus on the factors that are often behind it: convenience and enjoyment.(1,2) The makers of V8(R) juice continue to address these barriers through innovation.

“Most people know that they don’t get enough vegetables — but it can be challenging to find great-tasting options throughout the day,” said Dale Clemiss, Vice President, Beverage Marketing, V8 Beverages. “That’s why we are constantly striving to offer more and more ways to help people get their vegetables any time, anywhere through new products like V8 V-Fusion cans.”

BevWire thinks that innovation is good, especially looking for more instances to serve healthy beverages.  However,  can alternatives may not be the best option.  Who really wants to place a 8oz can into their purse?  A lunchbox maybe, but definitely think that these cans would not go into a purse.  And as more and more companies look to implement regulated servings or calorie-control packages for their products, an aluminum can just doesn’t seem like the best alternative.  Most companies are moving to offer resealable options (Monster Nitrous, Coke 414ml, etc) and having a can that isn’t resealable doesn’t seem to be moving in that direction.

Furthermore, the NCB (non-carbonated beverage) market has shrunk slightly in the last year, so some innovations are necessary to re-capture migrating sales.  Beverage consumers have traded in their soft drinks and ice teas for flavored waters and energy drinks.  Maybe offering the V8 juices in a resealable can would be an option, where the user can drink some juice now, seal it back up and finish it later.  Or make the V8 juices available  in tetra paks.  This will make it easier for moms to pack it with the kids’ meals or even have them consume it in a car ride from home to school.  Or maybe even have the juice in plastic squeeze cap bottles, these would be perfect for active kids that cannot finish their drinks in one sitting.

Maybe Campbell’s V8 Beverages division has already thought of these solutions and have yet to implement them.  Time will tell if the slim 8oz can will be a hit, but if this package succeeds with the Americans, it will likely be released here in Canada soon.