A Period of Revolutionary Change The food industry is being transformed before our eyes by the seismic shifts that Campbell identified early in my tenure. Our industry faces global economic realities with a shrinking American middle class and a growing one in developing markets; major demographic changes, including continued growth of Millennial and Hispanic cohorts in the U.S. and a redefinition of the American family; profound changes in consumer preferences for food with increased focus on health and well-being, fresh and organic; and the game-changing impact of digital technologies. The convergence and acceleration of these seismic shifts are reshaping the consumer and retailer landscape and have disrupted steady growth in the food industry, placing volume pressure on mainstream food, particularly center-store categories. Traditional food companies have felt the impact for several years. In calendar 2014, on the heels of many of these changes, the industry’s average net sales growth rate slowed to only 1-2 percent. In response, companies have initiated a series of strategic actions, from spin-offs and consolidation to acquisitions and aggressive cost-cutting. “The actions we are taking position Campbell for a promising future.” Unmistakable Actions Campbell has taken unmistakable actions in anticipation of these shifts. Strategically, we have accomplished a great deal over the past several years. Most significantly, we embarked on a strategy of realigning our portfolio to focus on higher-growth categories. In doing this we: • Added four new growth engines with the acquisitions of Bolthouse Farms, Plum, Kelsen and, in fiscal 2015, Garden Fresh Gourmet. • Exited our Russia operations and shed our slower-growing European simple meals business. • Implemented an innovation process that has helped increase rolling three-year sales from new products from 8 percent in fiscal 2011 to 10 percent in fiscal 2015. • Restructured our Campbell-Swire joint venture in China to better support our soup and simple meals business. • Entered into strategic commercial arrangements in Mexico with La Costeña and Grupo Jumex. • Increased our investment in Southeast Asia, particularly in Indonesia, to accelerate organic growth. • Drove meaningful improvement in our cost structure, closed five plants and implemented initiatives to improve our supply chain. Clearly, Campbell has changed, and our performance is now competitive with the industry. Although we have made progress, we know it has not been enough.
Denise M. Morrison President and Chief Executive Officer
Fellow Shareholders, Fiscal 2015 was an eventful time for our company and the industry. In my entire career, I have never seen an environment so fraught with both challenges and opportunity as the one in which we are currently operating. Against that backdrop, we continued to take important steps to reinvent Campbell and improve our growth trajectory, using our purpose, Real Food That Matters for Life’s Moments , as a filter to analyze strategic decisions about our business. We aligned our organization with our strategy by redesigning our enterprise structure to create three new divisions with clear portfolio roles. We started to implement a major cost savings effort. We also acquired another growth engine, Garden Fresh Gourmet, to expand our packaged fresh portfolio. As I will discuss in the following pages, this is solid progress, but there is more to come. I am confident that the actions we are taking position Campbell for a promising future.
1 Campbell Soup Company
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