Souping Up Campbell's
Dale F. Morrison has never lacked self-confidence. When he was growing up in Milton, N.D., pop. 200, there were so few kids around for sports and music programs that Morrison happily jumped into every after-school activity around: He played basketball, ran on the track team, even sang in the boys' quartet, despite what he describes as a less-than-exceptional singing voice. "I left [Milton] thinking I could do everything and that anything was possible," Morrison says today.
That attitude has kept the 48-year-old Morrison on the corporate fast track, where he has distinguished himself as a marketing whiz for such all-American products as Doritos and Pepperidge Farm cookies. Now, as chief executive of Campbell Soup Co., Morrison needs to draw on every bit of that self-assurance as he tackles his toughest job yet.
Simply put, Morrison needs to stir up new ways to sell more soup--lots more. It sounds easy, but it isn't. Last July, Morrison took over the top spot at Campbell from the charismatic and financially astute David W. Johnson. Johnson did a great job boosting profits by raising prices and slashing costs. Wall Street rewarded Johnson with soaring share prices, up about 270% since January, 1990. But persuading consumers to slurp up more chicken noodle and tomato soup was another matter. From 1990 through 1996, virtually all of Campbell's 4% annual gain in sales came from aggressive price increases.
Despite the strong performance--and Campbell's nearly 80% share of the U.S. canned soup market--the price hikes put the company at a critical juncture. Similar pricing strategies have come back to haunt leaders in such sectors as tobacco, diapers, and cereal; all have ended up with eroding market share, warns Steven M. Galbraith, an analyst with Sanford C. Bernstein & Co.
That's why Galbraith believes Campbell's earnings growth will likely slow from its recent torrid pace; from 1990 to 1996, profits grew at a 17% compounded annual rate. Morrison has already announced plans to spin off some slow-growing businesses. William Leach, a vice-president with Donaldson, Lufkin & Jenrette, figures net income for the remaining businesses, excluding an earlier charge, will be up about 12%, to $924 million, for the fiscal year ending July, 1998. Sales of the newly slimmed-down company should grow about 4.6%, to $6.8 billion.
"HEALTHY PARANOIA." That kind of middling sales growth, however, doesn't satisfy Morrison. Indeed, he wants nothing less than for Campbell to enjoy the same global clout in soup that Coca-Cola Co. enjoys in the cola wars. And with Campbell holding just 10% of the soup market outside the U.S., Morrison sees a huge opportunity. To kick off his campaign, he has been rallying the troops. At a recent meeting for 1,200 employees, he revved up the crowd with his signature exhortation to set "big, hairy, audacious goals."
It's a role that comes naturally for the intensely likable and exuberant executive, who has been known to go out for beers with factory workers to win them over to his plans. Morrison wants to get Campbell's annual sales growth rate up around 8% to 10%, largely through increased marketing and acquisitions. "I have a healthy paranoia about pricing," he says.
The challenge seems tailor-made for Morrison. Through a series of posts at General Foods, PepsiCo, and most recently at Campbell's Pepperidge Farm unit, he has revealed a knack for clever marketing. When Morrison took over the snack and bakery unit in June, 1995, Pepperidge Farm was in sorry shape. Sales and earnings over the previous three years had been growing at an anemic annual rate of just 3% and 2%, respectively. And though management had been pushing prices upward, it failed to support its products with solid advertising. As a result, market share and volumes were slipping.
Morrison improved manufacturing efficiency by reducing waste and focusing some plants on fewer products. The money saved was pumped into aggressive marketing targeted toward a few promising lines such as Goldfish crackers and Milano cookies. Morrison also met with hundreds of Pepperidge Farm's 2,500 independent distributors, even taking time out from his ski vacation in Colorado to meet with a Steamboat Springs distributor. "I don't want them to think of themselves as truck drivers but as business development people," he explains. And to appeal to the lucrative kid market, Morrison also introduced new kid-friendly packaging.
By getting input from distributors as well as big retailers, Morrison was also able to build support within Pepperidge Farm for the changes he wanted to pull off. The result: In each of the past two years, Pepperidge Farm sales growth has averaged 10%, and earnings are up more than 25%. "He's demonstrated the ability to drive the top line without sacrificing the bottom line," says Campbell director Philip E. Lippincott.
Morrison attributes much of his success to a childhood in which life dealt him some hard blows. When he was an infant, his father, Delbert, was stricken with a debilitating, and ultimately fatal, muscular disease. Although his dad lived to see Morrison gratuate high school, he was forced to sell the family wheat farm. His father's illness reinforced for Morrison the importance of self-reliance and discipline. Before he was even old enough to help on the farm, he earned extra money cutting lawns and delivering newspapers. "He always had a strong inner drive," says childhood pal Thomas R. Waind, who still speaks often to Morrison. "And he knew nothing came easy."
BUCKLING DOWN. While in high school, Morrison showed some of the persistence that has since served him so well. He was a ferocious competitor who excelled under pressure and didn't shy away from a challenge. As a freshman, he took first place in a cross-county meet even though he was competing against juniors and seniors. "Dale may not have been the premier athlete, but he had great determination," recalls Waind.
Early on, though, Morrison realized it would take more than fast legs to find his way beyond Milton. School chums recall more than anything Morrison's ambition. "I remember him saying to make it in this world he'd have to buckle down," says classmate Linda Sperling. "Most kids were just thinking about making it through high school."
Morrison headed off for the University of North Dakota in 1967. While a student, he met his wife, Barbara, on a skiing trip. The couple married during Morrison's senior year and have since raised two children. Putting off his plan to attend law school, Morrison decided to try a sales job with General Foods. Soon his legal ambitions faded as he became fascinated with the power of big brands. He spent nine years there developing sales and marketing strategies for a host of products including Kool-Aid, Country Time Lemonade, and Gaines pet food.
His success at General Foods caught the eye of Roger A. Enrico, then a vice-president for marketing at PepsiCo Inc.'s Frito-Lay unit and now chairman and CEO at PepsiCo. There, Morrison really hit his stride. After stints marketing Pepsi-Cola and Mountain Dew, he made his mark in Britain when, in 1992, he played a key role merging two snack-food companies, Walkers Crisps and Smiths Crisps, that Pepsi then owned. Morrison also brought U.S. marketing smarts to the combined company, updating packaging and displays in stores.
Now, at Campbell, Morrison has much bigger battles on his agenda. In September, he announced plans to spin off slower-growth businesses accounting for $1.4 billion in sales, including Vlasic pickles and the Swanson frozen-food line. "We are driving the incredibly shrinking company," he recently warned employees.
To run the U.S. food unit, Morrison has brought in Mark M. Leckie, a veteran of the brutal price wars in the cereal business. And Morrison is taking a page out of the recipe book that worked so well for him at Pepperidge Farm. He plans to squeeze costs by more than $100 million annually over the next several years while launching an aggressive marketing blitz. To whet consumer appetites for Campbell's soups, Morrison ultimately wants to double advertising outlays from 4% of sales to 8%, including a homey, all-American image campaign planned early next year.
Overseas markets are also attracting Morrison's energies. He has just struck a $170 million deal to buy Danone's Liebig soup business, one of the leading brands in France, and he is scouting more deals. Within two weeks of taking over at Campbell, Morrison sent one executive to Europe and another to Asia to head up the international push. Until then, senior managers in charge of international operations had been based in New Jersey.
Will the French and Japanese really run out and buy Campbell's products? Morrison hardly seems daunted by the challenge. "I feel great about the team we have and what we need to do," he says. Revitalizing a vintage brand like Campbell Soup may be tough, but Dale Morrison is just an older, wiser version of that North Dakota kid who knew he could do anything and everything.