CHICAGO (Reuters) - U.S. food groups are looking to emerging markets like China, Russia and Brazil to boost growth of products such as soup, processed meats and coffee while their domestic operations struggle to cope with recession.
The world’s largest soup maker, Campbell Soup Co (CPB.N), is focused on China and Russia; processed meat group Hormel Foods Corp (HRL.N) is looking to China, and Sara Lee Corp SLE.N is eyeing Russia, Brazil and Asian markets to boost overall growth.
Campbell, which still has three-quarters of its sales in its home U.S. market, is investing $50 million a year in the world’s two biggest soup markets -- Russia and China -- and hopes to turn that investment into a profit within five years.
“Russia and China account for around 50 percent of world consumption of soup, all home-made. So we see a huge opportunity there as there is no real commercial competition,” said Campbell CEO Douglas Conant.
The group, which makes its namesake soup, as well as Liebig in France and Erasco in Germany, is focusing on selling concentrated broths in both Russia and China.
Campbell hopes it will soon sell soups in those markets as consumers acquire a taste for ready-made products.
The New Jersey-based soup maker is focused on market needs, with the Chinese looking for healthy soups and Russians desiring soup that is filling, Conant told the Reuters Food and Agriculture Summit in Chicago this week.
Although Campbell’s sales in Russia and China are currently insignificant compared with the group’s annual turnover of more than $7 billion, Conant expects to turn a profit in the two countries by 2014 as sales pick up and annual investment needs decline.
Meanwhile, Hormel is focused on China where it has operated for 11 years. Its two plants in Beijing and Shanghai produce premium canned meat products.
“We are very much sub-scale in China and exploring all options for expanding. We’d like to get into other areas such as a mid-tier brand,” CEO Jeffrey Ettinger told the Summit.
The group, which makes Spam processed meat and Dinty Moore stew, has less than 5 percent of its sales outside its domestic U.S. market, and hopes that a push in China will drive international profit which Ettinger admits has been generally flat in recent years.
Food and consumer goods group Sara Lee highlighted its push into emerging markets, which is largely driven by its Senseo coffee and also its household and personal care goods division which makes insecticides for use in the home.
“Emerging market growth is profitable and good. This is a growth priority for us,” said CEO Brenda Barnes at the Summit.
Key markets for the group’s coffee are Brazil and Russia and for its insecticides Russia and also its Asian markets such as India, Vietnam, the Philippines and Indonesia.
Nearly 70 percent of the group’s profit comes from outside the United States, with half from Western Europe and a big proportion of the rest from emerging markets.
Media reports have suggested Sara Lee is sounding out possible buyers for its Europe-based household and personal care division which could fetch more than $2 billion and allow the group to concentrate on its bakery, beverage and meats businesses.
Barnes declined to comment on the sale talk, but added that although this business was core, future growth will not come from expanding into new geographies and outside established product categories.
(For summit blog: blogs.reuters.com/summits/)
Reporting by David Jones; editing by Matthew Lewis