Godiva and incompatible product lines
News that Campbell Soup, the US specialist in canned groceries and midmarket cookies, intends to sell off its Godiva chocolate division comes as not surprise. In fact, the wonder was that Campbell has held on to the luxury Belgian-derived chocolatier for so long - 40 years in fact.
It's a perfect example of discontinuous product lines. The closest parallel is Sara Lee, which once sold bras, bologna, and cheesecake. That combination made no sense, and Sara Lee sold off some of its products.
First there is the target customer: Godiva is aimed at the lower levels of the luxury chocolate market. Not quite as exclusive as the highest-end artisinal chocolates, but better than more mundane gift brands like Fanny Framer or Russell Stover. Other Campbell products including canned soup and Pepperidge Farms snack foods are aimed at a more everyday segment of the consumer market. (According to Bloomberg News, Campbell controls 70 percent of the $5 billion-a-year US soup market.) Therefore, the products are priced and marketed in widely varying locations, with no chance at synergy.
Second, chocolate is perishable, especially the filled chocolate truffles that make up a big part of the Godiva lien. They have definite sell-by dates. Canned soups are indestructible, suitable for storage in a bomb shelter or at the back of a cupboard. Sell-by date is almost irrelevant.
Third, the products are sold at different locations - I've seen Godiva in dedicated shops, department stores, and in Barnes & Noble bookstores, while soup gets delivered to supermarkets and convenience stores. No chance for shared logistics.
In other words, the products have little in common and almost no synergy. It would make more sense for Godiva to be sold by a chocolate company or perhaps a luxury goods company. Campbell plans to concentrate on selling its soups, canned beans, canned pasta, broths, and V8 juice.
Already likely buyers are being mentioned: Swiss-based Lindt & Sprüngli, maker of Ghirardelli chocolates in the US; Hershey Foods, which has been introducing higher-end chocolate to supplement its candy bar lines; US-gum company Wrigley, which tried to buy Hershey; Mars; and Cadbury-Schweppes, which is divesting itself of its beverage divisions to concentrate on confectionery.
Campbell Soup, which painstakingly gone into a wide variety of food businesses worldwide, has also withdrawn from a number of them, as it tries to find the right combination of products. Godiva, while profitable, is probably more valuable to a company that can build from its specialty than as a basically unrelated side-business.
9:26:33 PM 
|
|
