Sip. Slurp. Repeat. That sums up the business plan at Campbell Soup cpbbefore Douglas Conant took over as CEO eight years ago this month. It was the same old company doing much of the same old stuff it had been doing since it was founded in 1869. It had no clear direction. No red-hot brands. Its innovation cupboard was bare.
Pretty thin for a company whose basic product — soup — is held in such high esteem that the typical American home has six cans of Campbell's in the pantry.
Conant went to work. His self-described mission: to take a "bad" company and lift its performance to "extraordinary" by the end of one decade — that's by 2011.
How to accomplish that? By developing or keeping only products that rank No. 1 or No. 2 in the categories of simple meals, baked snacks and veggie-based drinks. By staying laser-focused on only creating products that scream value, nutrition and convenience.
And by action. "You can't talk your way out of something you behaved your way into," Conant says.
In his first three years, 300 of the company's top 350 leaders were replaced — 150 from within and 150 from outside. Conant stressed convenience, with microwaveable soups and cans that open with a pull. The recipes got healthier for its soups, V8 drinks and Pepperidge Farm snacks. He unloaded non-core brands, such as fancy Godiva chocolates.
Now he's steering the $8 billion company toward a promising but risk-filled future in two of the world's biggest soup-eating nations: China and Russia.
But turning Campbell around has not been simple, and is not a done deal. Last year, Campbell far outperformed the stock market. While the Standard & Poor's 500 finished down 38% for 2008, Campbell stock was down 16%.
But Campbell struggled to hold its own against rival food companies. The S&P packaged foods index finished down 15.1% for the year — a slightly better showing than Campbell.
Still, investors have done quite well in the eight years Conant's been CEO. The total return on Campbell stock, assuming reinvested dividends, is 31.5% vs. a loss of 14.4% for the S&P 500 in that time.
More dramatic, on Sept. 29, when the S&P 500 fell 8.8% in one day, Campbell was the only stock to post a gain, up 12 cents to close at $37.75.
Conant was in Singapore that day, but his phone never stopped ringing. He got calls from reporters, executives and family.
He refused to celebrate. "It was just another day-in-the-life," he says, matter-of-factly.
That's Conant being Conant. A bold act for the 56-year-old is strapping on the flashy, Campbell's Soup can tie that he wore to meet a reporter. At first blush, he seems as old-fashioned as the 139-year-old Campbell's brand.
Conant is a self-described introvert who reads and rereads management advice tomes with the kind of gusto with which millions of Americans read the gossip sheets. He reads at least four hours a day. He also sets aside time to write thank-you notes to employees, suppliers and customers, up to 20 every day. "It carries a personal message that gets lost in e-mail," he says.
One smart cookie
Underneath the old-school values, however, is a new-school thinker who is M'm! M'm! savvy. Before joining Campbell, he spent a combined 25 years at General Mills, Kraft Foods and Nabisco.
As a realist he knows Campbell's challenges are many. The company is coping with commodity costs up double-digits last year.