Campbell Soup Expands Production, Sales in Mexico

Campbell Soup (NYSE: CPB  ) this week announced it will be expanding production and distribution capabilities in Mexico and will take a $9 million restructuring charge related to the move.

The soup and drink maker entered into arrangements with Grupo Jumex, the largest producer of fruit juices and nectars in Mexico, and Conservas La Costena, one of the largest producers of prepared foods in the country, that will give it better access to manufacturing and distribution capabilities in Mexico for its beverages, soups, broths, and sauces. Beverages represent the largest part of the company's portfolio in Mexico. Financial terms of the deals were not disclosed.

Campbell currently employs 330 people in Mexico. As a result of the just-announced deals, it will close its plant in Villagran, Mexico, eliminating 260 jobs. The remaining 70 positions will be retained for R&D, sales, supply chain, marketing, and general management. As a result of the restructuring, Campbell's will take a $9 million charge related to the restructuring -- $6 million after tax -- most of which will show up in the second quarter.

Grupo Jumex will be responsible for manufacturing and distributing Campbell's V8 portfolio throughout the Mexican market, while Conservas La Costena will manufacture and distribute Campbell's soups, broths, and Italian sauces. Campbell will retain responsibility for consumer marketing, product research, and new product development. 

According to Campbell, Mexico has annual sales of non-carbonated beverages of $3.5 billion, and the market is growing at approximately 6% a year.


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