Campbell Soup clings to growth engines in proposed European sale

By Oliver Nieburg contact

- Last updated on GMT

The UK, Africa and the Middle East have high growth potential for soup sales and have been excluded from the deal
The UK, Africa and the Middle East have high growth potential for soup sales and have been excluded from the deal

Related tags: United arab emirates

Campbell Soup is in talks to sell its European operations to CVC Capital Partners, but is keeping hold of the largest and fastest growing elements.

The proposed deal excludes exports of Pepperidge Farm products to Europe and Campbell’s goods in the UK as well as the Middle East and Africa. Included in the deal are Campbell’s national brands of soups, sauces and simple meals, including Erasco in Germany, Blå Band in Sweden, Liebig and Royco in France and Devos Lemmens and Royco in Belgium.

Fastest growing soup market excluded from deal

Canadean report analyst Ronan Stafford told FoodNavigator: “There’s actually a big difference between the UK and Belgium, France and Germany ​[in terms of soup sales].”

Volume sales of soup in the UK amounted to 235 million kg in 2012, twice that of France and Germany combined.

The UK is also set to register greater volume sales growth for soup than the other nations included in the deal, according to Canadean data.It is forecast for a 4.2% compound annual growth rate (CAGR) in soup sales over the next five years, while Germany is set for 3%, France, 2.9%, Belgium 2.7% and Sweden just 1.8%.

Middle East & Africa: Another growth engine

As well as the fast-growing UK market, Campbell Soup intends to hold onto the Middle East and Africa.

“Africa and Middle East soup volumes are nowhere near the scale of Europe, but you have some markets with very high growth rates,” ​said Stafford.

For example, Canadean is forecasting that the United Arab Emirates (UAE) will grow its soup volume sales at a 6.3% CAGR between 2012 and 2017. It expects Turkey to grow even faster at 8.2%.

“This gives you a flavour of the opportunities in these emerging markets,” ​said Stafford.

What’s included in the deal?

Campbell expects the proposed sale of its European operations will be completed in first quarter of its fiscal 2014.

The deal includes four factories: Puurs, Belgium; Le Pontet, France; Lubeck, Germany; and Karpalund, Sweden.

The businesses within the transaction recorded net sales of $530m (€398m) in 2012.

Danish-based snacks business Kelsen, which Campbell only acquired yesterday, is left out of the proposed deal.

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