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A tough task awaits Campbell Soup’s new CEO Mark Clouse

There is a pressing need for the food industry to innovate and adapt to the changing customer tastes. The current state of affairs at Campbell Soup Company (CPB) shows that aversion to change can prove costly in a highly competitive market.

The packaged-food company has been reeling under uncertainties for so long that at one point the management was on the verge of selling it. A month after a potential solution emerged, when investor group Third Point pressed ahead with the plan to have its nominees included in the company’s board, Campbell Soup got a new CEO. Industry veteran Mark Clouse, who took charge this week, is touted as a panacea for all the problems facing the company.

The appointment of Clouse followed a search process that spanned several months. The strength of the former Pinnacle Foods chief is his extensive experience and in-depth knowledge about the industry. However, resolving the present problems successfully will depend largely on his ability to deal with the activist investors who have been calling for a thorough overhaul of the operations, worried about the soup maker’s unimpressive financial performance in recent quarters and mounting debt.

The strength of Mark Clouse, former CEO of Pinnacle Foods, is his extensive experience and in-depth knowledge about the industry

Considering the below-average return being delivered currently, the market will be looking for initiatives from the now-reinforced leadership team to bring long-term benefits to shareholders. Clouse will have to work hard to revive the company that once survived a sale bid – after the prospects of finding the right buyer diminished.

Recovery hopes brighten as Campbell Soup nears deal with Third Point

Most recently, Clouse served as the chief executive of Pinnacle Foods and is credited with successfully managing its acquisition by Conagra Brands (CAG) a couple of months ago. Prior to that, he had served packaged food firms Kraft Foods and Mondelez International. It is expected that Clouse’s impressive track record will help him devise strategies to steer Campbell Soup out of the current mess.

Earlier this year, former CEO Denise Morrison made an abrupt exit after a seven-year stint, at a time when the company was facing criticism from the investment community for its pricey acquisition of snack maker Snyder’s-Lance.  Campbell Soup’s shares lost around 20% this year and underperformed the sector quite often. The stock, which witnessed significant volatility in recent years, closed the last trading session down 2.5%.

 

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