On June 28, Campbell Soup Co. claimed the company is exiting Russia just four years after setting on the local market.

Photo:AFP

Campbell Chief Operating Officer and CEO-elect Denise Morrison said results in Russia fell below the company’s expectations.

“The steps we are announcing today [regarding exiting the Russian market] will help us continue to lower our costs and help fund our plans to drive the growth of the business. The supply chain initiatives will enable us to improve manufacturing efficiency and further adjust the utilization of our assets to evolving consumer demand. While a workforce reduction is always a very difficult decision, these actions will streamline our organization and improve the level of coverage and the effectiveness of our sales merchandising activities,” Morrison commented.

“As part of the development of our strategic plan, our leadership team, in consultation with the board of directors, has been examining all aspects of our business, including our current emerging market operations,” she continues. “Though Russia remains an attractive potential growth market, the results of the business we launched in that market in September 2007 have fallen short of original expectations. We believe that opportunities currently under exploration in other emerging markets, notably China, offer stronger prospects for driving profitable growth within an acceptable time frame,” she added.

The Wall Street Journal says that Chinese and Russians eat soup more than five times a week, on average, compared with Americans’ once-a-week habit, which Campbell learned when it first studied the overseas markets. However, the ready-made soups company decided to meet the challenge.

Campbell employed cultural anthropologists to study the soup-making habits of customers in both Russia and China. The anthropologists spent two years watching consumers prepare and eat soup and found out that the rising middle class in both countries starts to prefer ‘quick’ soups as they’re getting busier to cook.

But time showed that sales in Russia didn’t fare as the company hoped. So, it said it would close its Moscow office, eliminating about 50 positions. In total, the company plans to cut 770 jobs world-wide, because it’s going to cut costs via automating some packing operations and switching production plants. Campbell didn’t say how much it invested in the Russian market but all the above-mentioned initiatives will result in pretax costs of approximately $75 million.

In January 2011 Campbell’s Soup relaunched in the UK after 5 years of absence.