Why Campbell Soup Company Needs to Make Even More Acquisitions

NEW YORK (TheStreet) -- What do you do when you're an iconic brand but you have sluggish sales in your core market and massive mergers are happening within your industry?

This is the situation that Campbell Soup (CPB) finds itself in. The company saw domestic sales of its soup decline by 10% in its latest quarter.

One solution is acquiring businesses in high-growth parts of your industry, and Camden, N.J.-based Campbell is already doing that. This month it agreed to buy Garden Fresh Gourmet, a manufacturer of refrigerated salsa, hummus, dips and tortilla chips. The acquisition will become a part of the Campbell Packaged Fresh division, which already includes Bolthouse Farms.

Here are three reasons why more strategic acquisitions will be good for Campbell: 

  1. They give Campbell Soup instant access to faster-growing segments. Consumers are making a massive shift toward healthier food. Gluten-free, organic and natural food products are dominating growth in the industry. This former fad is here to stay.

    The Organic Trade Association reported that a record number of consumers are reading labels. They want to know the ingredients in the products they purchase at the grocery store. Sales of organic foods experienced double-digit gains last year, and the market is now worth $35 billion, according to a report from the OTA.

    A recent CNBC article said that even baby boomers, who grew up on products including Campbell's soups, are becoming extremely health conscious in their food-purchasing decisions. When people buy less soup, retailers keep less in inventory. This can turn into a downward spiral, as shelf space starts to grow for the products that are resonating with American consumers.

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