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Campbell Soup Co. plans to invest $20 million in the Garden Fresh Gourmet Ferndale facilities as part of its commitment to keep the company’s operations in Michigan, said Garden Fresh Founder and CEO Jack Aronson.
Camden, N.J.-based Campbell (NYSE: CPB) plans to add production space through expansions of the current Garden Fresh manufacturing facilities in Ferndale, which include a 25,000-square-foot salsa plant and a 28,000-square-foot site that produces hummus under the Garden Fresh and other brands.
Also on tap for the plants: new product lines and other modernization of the facilities, Aronson said.
Campbell confirmed it plans to invest in the business but declined to discuss specifics, saying it is still developing plans.
Though companies including T. Marzetti Co., PepsiCo Inc. and Nestle USAhad approached Garden Fresh about acquiring the company previously, none of them felt right, Aronson said. “We weren’t for sale.”
But the Bolthouse plant in Bakersfield, Calif., was “the first culture we ever found that mirrored ours.”
“You know if you go through a plant if people are happy (by) the way they talk to management,” he said. “If we were going to sell, it was going to be to these guys.”
What sealed the deal, Aronson said, was the fact that Campbell said it was going to keep the company’s operations in Michigan, retain the current workforce of over 450 people and make investments.
“It was a great opportunity for our team, the city of Ferndale and our state,” he said.
It also helped lay to rest the couple’s biggest fear: that they would have to lay off employees. Given the debt the company had taken on to accommodate its growth, “if there would have been a catastrophe of any kind, we would have had to lay people off because we didn’t have a pot of cash,” Aronson said.
Aronson will remain an adviser to Bolthouse/Garden Fresh, helping to work on new recipes for existing product lines which include salsa, chips, hummus and dips and developing them for new products.
As for the recipes he developed to this point: Campbell’s President and CEO Denise Morrison, “said they’d never change a (Garden Fresh) recipe without our approval,” Aronson said.
Though Garden Fresh has the leading U.S. market share among fresh salsas, it’s only sold in about 25 percent of the grocery and big box (like Costco) stores across the country, Aronson said.
Overall, the industry of making salsa is considered a mature market worth more than $900 million in the U.S., according to a February report by Australian research firm IBISWorld Inc.
But revenue growth potential has driven the large players to expansion, including manufacturing efficiencies, increased domestic production and acquisitions. Discretional spending is also increasing abroad, improving export conditions for U.S. salsa makers.
As for the Garden Fresh brand under new ownership, it will have access to a much larger distribution network as a part of the Campbell Fresh division, Bolthouse Farms and a team of 26 or more national sales people selling it vs. three, Aronson said.
“With the clout that Campbell’s and its international partners bring, Garden Fresh will get the attention of markets and new consumers never imagined in the past, said Ken Nisch, chairman of the Southfield-based retail consulting firm JGA Inc., in an email.
With Michigan’s agricultural capacity, hopefully, there will be opportunities to not only keep but also expand food manufacturing and processing in Michigan as Campbell’s increases distribution and develops other products under the Garden Fresh brand, he said.
The Garden Fresh brand is about fresh and from the garden, said Darren Tristano, executive vice president of Chicago-based food research and consulting firm Technomic Inc. “It has a health halo around it (and) is a really strong place to start if you’re Campbell,” trying to break further into the fresh market.
“If they want to leverage this brand…they really need to build the story behind it, communicate to the customer what it is, what it’s representing,” he said.