Client Situation
A leading multi-national packaged foods company pursued a growth strategy of acquiring brands and product lines to plug into its strong sales and distribution infrastructure. The client acquired the #2 brand of canned soup, which held a 10 percent share of domestic canned soup sales, far below the largest competitor’s market leading 80 percent share. Given the relatively weak market share in the canned soup category, the client embarked on a strategy to grow the brand through new frozen products and other Italian food categories. After its first two years, none of the brand’s strategic goals were achieved.
Solution
A new cross-functional business team, including a Divisional CFO position taken on by a E78 partner, was assigned to turn around the failed strategy. Highly detailed financial analyses and extensive consumer research indicated that the brand’s heritage in canned soup, positioned for “adult palates”, was the most leverage-able asset of the brand. Failed new products were discontinued, and the business strategy was refocused on the canned soup product line.
Results
- New television advertising was launched
- Gross margins and promotions efficiency were improved, and the client used its sales and distribution infrastructure to expand distribution to the western U.S.
- Since this strategic refocusing, the client’s canned soup line has steadily grown its market share by a factor of four times, to 40 percent of the $1.9 billion domestic soup category
