Marketing Memo: Global Food & Grocery Company-Brand Marketer CEO's Speaking Out Much More During These Bad Economic Times; Have Your Noticed?

The big, global food, grocery and consumer packaged goods companies and brand marketers are fairing better than similar global companies in other business sectors in the current recession and financial-credit crisis. In part this is because people do have to eat. But it's also because such companies have tended to follow business fundamentals much better than say global financial service firms, the auto industry and a few other sectors. Such fundamentals include not building up too much debt and, most importantly, focusing on being consumer-centric marketers, something the U.S. auto industry has failed to do, for example, but something most big consumer food and grocery companies-brand marketers focus on closely and do well at.

And although people have to eat, they don't have to buy (and eat) your brands, even if you are Nestle, Kraft, or Campbell Soup. Of course having the huge brand portfolios these three global consumer packaged goods marketers do have -- in categories ranging from the most basic food and grocery items on up to niche natural, organic and specialty brands, as well as being the global market leaders in most of those food, grocery and beverage categories -- does help.

And in this serious global recession, which finds consumers trading down and looking for the best price they can find for food and grocery products, even these big food marketers are having to adapt -- searching for ways to lower their cost of goods, reducing expenses, and spending more money on things like price promotion.

We've also noticed another way the CEO's of these big, global food and grocery companies have been dealing with the global recession of late is that they are speaking out much more in to the media (especially the financial press) about what they and the companies they lead are doing to maintain and increase sales and profits in these difficult economic times. We been noticing a significant increase in interviews and the like from food and grocery company CEO's in the last couple months. And not just before earnings report time.

And it's no secret that the big consumer packaged goods marketers are communicating more so because the companies they lead are publicly traded ones. In this economic climate (check the stock market this week), communicating what a company is doing to the stock analysts who follow the companies and the investors, both institutional and individual, who invest in them is paramount -- particularly in relation to what initiatives these CEO's and their teams are taking to keep the company growing during the recession, along with the cost-cutting measures that are being made. Wall Street loves cost-cutting almost as much as it does sales and profit growth.

Communicating more frequently in these bad economic times also is important for these global food and grocery companies in terms of speaking to the food and grocery retailing trade. Grocers and other format retailers are increasing their store brand portfolios -- and devoting more shelf space, shelf space often previously devoted to manufacturers' brands -- as a way to offer lower prices overall in their stores to shoppers. And shoppers are buying more private label brands in-turn in order to save on their grocery bills. Every time a consumer buys a store brand that means a lost sale for a manufacturers' brand -- be it canned milk or pet food (Nestle), canned or packaged soup (Campbell Soup), or salad dressing and marshmallows (Kraft).

These big, global consumer packaged goods marketers therefore want the trade to know about the initiatives they are undertaking to create more value for their brands, even though the respective company sales forces or broker reps communicate such messages one-on-one to the retail buyers.

By speaking out more frequently -- as the CEO's of Nestle, Kraft and Campbell have been doing of late -- they can reach the top of the food retailing chain, CEO's, senior executives, ect. -- as well as consumers. It's part of a multi-communications paradigm. But those stock analysts and investors are at the top of the multi-audience pyramid.

Below are three features from today about each of these major global food and grocery companies -- Nestle, Kraft and Campbell Soup.

~Nestle. Forbes.com: Nestle Feels Confident About 2009.
~Campbell Soup. Rueters: Campbell ready to shop.
~Kraft. PBS-Nightly Biz Report: Kraft CEO talks recession strategies.

A few comments. First, notice that basically all three of these leading global consumer packaged goods companies are planning to grow despite (or perhaps because of) the recession. Second, notice the stress on value -- not just price but value. That's major adaptation from just over a year ago, when value wasn't a real hot button in consumer packaged goods marketing -- or for that matter with consumers. As that old saying goes: "What a difference a year makes." Particularly when the bottom falls out of the credit markets and major world economies.

Third, notice the focus on markets other than the U.S. It's a big world out there. Many people, such as the Chinese, have yet to become big buyers and consumers of Campbell's Chicken Noodle Soup or Kraft Salad Dressing. Imagine the sales growth if they do? Lastly, when reading the three pieces, think about the various audiences the food and grocery marketers are trying to reach -- and why. Doing so makes the reading much more interesting, particularly from a marketing perspective.

Supply-Side Memo: Food Industry Giant Campbell's is Making a Big 'Locally-Grown' Push as Part of a Tomato Processing Plant Expansion in California

Natural~Specialty Foods Memo learned at the recently concluded FMI (Food Marketing Institute) annual convention in Las Vegas, Nevada, that food industry giant Campbell Co., marketers of both conventional and organic food brands like Campbell's Soup, Prego pasta sauce (both conventional and organic), V-8 vegetable juice and V-8 juice drinks (conventional and organic), Pace Salsa (also conventional and organic) and numerous other brands, plans to increase its use of locally-grown California produce as part of a $23 million expansion and upgrading to its tomato processing plant in Dixon, California USA, near Sacramento.

The company's Dixon, California tomato processing plant is located in an agricultural and tomato processing-rich valley about 15 miles from Sacramento and about 50 miles from the San Francisco Bay Area.

The plant processes tomatoes and vegetables for Campbell's flagship soups, its sauces, salsa varieties and V-8 vegetable juice, V-8 V-Fusion and V-8 Splash vegetable drinks.

The $23 million expansion and remodeling of the plant will increase its size, add new, state of the art equipment, and boost overall plant production by about 15%.

The Dixon plant in Solano County in California's Sacramento Valley agricultural region is Campbell's largest tomato processing plant in the U.S. The plant was built in 1975, according to the company, and currently employees close to 200 people.

Campbell's has become an increasingly bigger player in the organic foods sector, with introductions of its organic versions of its Campbell's tomato juice, V-8 vegetable juice, Prego pasta sauce and Pace salsa, along with a few other brands and products.

As part of the plant's expansion, Campbell's Anthony Sanzio says the company will be buying more organic vegetables to process at the facility for these organic food and beverage product brands and lines.

Campbell's has plans to line-extend its current organic product offerings and to create new products, according to Sanzio.

The locally-grown angle

Because the Dixon plant is located in a tomato and vegetable-growing region, as well as being very close to the heartland of California agriculture in the San Joaquin Valley, along with near the central coastal region where numerous vegetables also are grown, Campbell's sees an opportunity to add the "local" angle in a big way to both the conventional and organic produce it buys to process at the facility for its soup, juice, beverage, pasta sauce and salsa brands and products.

The food company correctly sees numerous similarities between the organic foods and local foods consumer, and wants to play that fact up at least in California by increasing the capacity of the Dixon plant so that it can process, and thus allow Campbell's to buy, more locally-grown conventional and organic produce. IT also says it wants to further support local farmers.

As part of its plant expansion plan and locally-grown foods procurement emphasis, Campbell's Sazio says the company will increase agricultural production with farmers it contracts with in Solano County, as well as in neighboring Yolo and Sacramento counties, along with those in nearby Colusa, San Joaquin, Contra Costa, Sutter and Monterey counties.

This expansion of vegetable production includes organic as well as conventionally-grown produce.

Local agricultural industry officials and observers say the Campbell's Dixon plant expansion will be good for both local conventional and organic farmers.

For example, even though Solano County has urbanized considerably over the last two decades, agriculture, including tomato growing and processing, remains a significant industry in the area. Last year's tomato crop value in the county for example was about $23 million. Other double digit (in millions) crops in the county include walnuts and almonds and alfalfa, along with a few others. Numerous other fruit and vegetable crops are grown throughout the region as well, including an increasing amount and variety of organic crops.

Michael Amman, who heads up the Solano County Economic Development Corp., a nonprofit entity, says Campbell's Dixon plant expansion will be a big boost for local agricultural, locally-grown foods and local farmers, many of whom are smaller family farmers.

He says a major benefit will be that the local farmers will be able to get longer-term contracts with Campbell's because of the plant's increased capacity and emphasis on organic and locally-produced produce. In other words, Campbell's will put its emphasis on vegetables grown by local farmers even if they can buy produce for less money from farther away. As a result, the food company will need to sign longer contracts with the local farmers so it can ensure enough supply of the local produce to meet its needs. This is particularly true in the case of organic produce.

Campbell's says it may flag (on the labels) some of its conventional and organic food products produced at the Dixon plant with all locally-grown produce as "local" or "Made with California Produce," or something similar. However, the food giant isn't sure of that since what's local in California isn't local in Chicago or New York. In order to flag the products as local on the labels, the plant would have to produce certain runs just for California, after all.

However, Campbell's marketing and sales teams will be able to conduct "local foods" promotions with supermarkets in the region, including the Bay Area, with those products produced at the Dixon plant. (Shelf talkers identifying the "locally-grown" aspect of the products would be a simple and cheap way to promote the local angle of the products in-store.)

The important local foods aspect of Campbell's Dixon, California plant expansion and emphasis on using produce produced by local farmers though is the huge boost it could give to the region specifically and to local foods procurement in general. After all, many food processing plants, even in California, truck-in produce from a long way away rather than use that produced locally because they can obtain it for a cheaper cost.

As we've suggested numerous times on Natural~Specialty Foods Memo, we see the "local foods" movement growing in size and popularity to equal that of the organic foods movement.

Local is a bit harder to define than organic? Is it the strict locavore definition of food from no farther than 100 miles from where a person lives.? If so, why not 200 miles? That's still local to many, and it makes a bit difference in terms of increasing the variety and amount of "local foods." "Local" does have some wiggle room, in other words.

But, when it comes to locally-produced, most of us basically know it when we see it. If you live in Los Angeles, even though the city is about 400 miles from Sacramento, produce or food products bought in LA and produced completely in Sacramento are pretty "local," even though it doesn't meet the 100-mile locavore definition.

In the case of produce used for processing like at the Campbell's plant in Dixon, the important fact is that local farmers, ranging from those just down the street from the facility, to others as far as 150 -to- 200 miles away (Monterey County), are providing the vegetables.

This practice will be using locally-produced crops, which supports local communities, and offers those consumers who live nearby an opportunity to buy packaged food and beverage products at the supermarket which in turn will benefit their local economies if they do so.

Doing so, in a widespread way, is essentially a major aspect of the local foods' movement philosophy, it just pertains to processed food products rather than fresh ones. We think Campbell's is on to something in Dixon.