The world’s largest soup maker, Campbell Soup Company (NYSE:CPB), has decided to close two plants and lay off 727 employees in an attempt to trim costs amid sliding soup consumption. The Sacramento, California plant, the company’s oldest plant in the USA, is likely to be closed by July 2013. The South Plainfield, N.J plant employs 27 workers, and will be closed in March 2013.
Campbell said the Sacramento plant has the highest cost of production per case. Campbell Soup Company (NYSE:CPB) has about 20,000 employees around the world. The company has been struggling due to lack of strong new products and heavy discounting in the industry. The company has notified employees at both the plants that there was going to be a meeting at 6 am local time today.
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“It’s always difficult, even when there’s a business case that is compelling,” said Anthony Sanzio, a Campbell spokesperson. “You’re dealing with people, and this is going to impact 700 employees who’ve worked together closely for many years.” For undisclosed reasons, CEO Denise Morrison was not present at the meeting.
Campbell Soup Company (NYSE:CPB) is trying to reinvent itself by launching a number of new soup flavors to attract the younger generation. Most of the new products now come in pouches, instead of the symbolic steel cans. Though the company has other products as well, soups alone account for more than half of its revenues.
Research firm Euromonitor International said that the consumption of canned soup has declined 13 percent in the last ten years, as fresh soups are increasingly available in grocery stores, supermarkets, and restaurants. Additionally, Campbell’s market share in the soup business is down to 53 percent from 67 percent ten years ago, due to rising competition.
Camden, N.J.-based Campbell expects the two closings to cost it $115 million, plus $27 million in capital spending. The company expects the move to save $30 million annually, starting in 2016. Campbell shares are down 10 cents to $34.76 in New York trading.