Campbell Soup (NYSE:CPB) has announced plans to sell its soup in Russia and China. The rationale is easy to understand. Both countries have large populations, which Campbell's is eager to capitalize on. Still, it's a major undertaking that will take both time and money, as the company itself has acknowledged. There are definitely pitfalls when expanding overseas. I think Campbell's has given this careful consideration and is well aware of them, and the rewards.

It's easy to see why Campbell's is attracted to these markets. The company estimates 32 billion servings of soup are eaten in Russia per year, and 320 billion in China (versus 14 billion in the United States). The problem is that the majority of soup is made from scratch, almost unheard of in the United States. Consumers in these countries have said they just don't like the canny taste of prepared soups. In response, Campbell's will sell broths and soup bases in pouches and boxes. (The company already sells broths successfully in Hong Kong.) Homemade soups will become easier to prepare, which should be very popular as incomes rise and increased industrialization makes lifestyles more hectic. Campbell's products should save time while keeping the flavor that is of utmost importance. 

I think its research shows the company is going in prepared. Those in research and development should get a raise for their efforts. Rather than just blindly sell its products, on the basis of a large market, Campbell's is conforming to local tastes and customs. Companies get in trouble when they blindly enter a new market. AMF Bowling decided to go into China and other Asian countries, and the results were disastrous. Sales were soon disappointing, and, along with overexpansion in other areas, led to its bankruptcy filing. On the flip side, McDonald's (NYSE:MCD) has had tremendous success in foreign markets by carefully researching what the consumers in those countries prefer and catering to their tastes.

Patient investors should be rewarded by Campbell's strategy to go into these markets. It has obviously given it careful consideration and will sell its soup in a form foreign consumers will embrace. Campbell is also going in at an early stage, before there is a lot of competition. The early bird catches the chicken (and beef)!

For related Foolishness:

Need new ideas for your money? Talk stocks with other investors and our analysts when you give our newsletters a try.

Fool contributor Larry Rothman is happy to receive feedback, and promises to read it when not being wrestled by his three children. Feel free to e-mail him at He doesn't have any positions in the companies mentioned.