Campbell Soup Co. is undergoing some significant changes in response to a new economic reality and shifting consumer preferences. These changes are both structural and cultural. On the one hand, the group wants to leverage its scale, on the other, it recognises the need to be "agile" and adopt a "challenger mindset". At the company's investor day yesterday (22 July), its management detailed how Campbell intends to move into faster growth areas of the stagnating food sector. Here are just-food's key takeaways from the event.

1. Accelerated cost savings

Campbell is raising its cost savings target form annualised savings of US$200m to $250m. These will be achieved through headcount reductions (which will account for one-third of the lower cost base), the introduction of zero-based budgeting and the establishment of integrated global services, which will cover various corporate functions such as HR and finance. Shared global services will increase efficiency, effectiveness and "elevate operational excellence", CEO Denise Morrison said. Providing further detail on the cost-cutting measures, CFO Anthony DiSilvestro added Campbell anticipates savings of $75m in 2015 and $135m in 2016 before hitting annualised savings of $250m.

2. Sales, earnings outlook adjusted

The early realisation of cost-cutting efforts prompted Campbell to raise its forecast for earnings per share for the fiscal year ending on 2 August. The company increased its guidance to $2.43-2.46 a share, compared with its previous forecast for $2.32-2.38 a share. The company said the improved outlook this year also reflects a strong gross margin performance.

However, Campbell was less upbeat on the mid-term outlook. Excluding currency exchange, the soup maker kept its mid-term EBIT and EPS outlook "unchanged" at 4-6% 5-7% respectively. Meanwhile, Campbell cut its sales outlook to 1-3%, down from its previous target of 3-4%, to reflect the "new reality" in the food industry. Management stressed the majority of its sales are in low-growth, centre-store categories while it is also facing increasing competition from challenger brands as it grapples with changes in consumer demand.

3. New divisional structure providing focus

Campbell has implemented a new divisional structure, with its business now split into Americas simple meals and beverages; global biscuits and snacks; and Campbell fresh. According to Morrison, each division has a clearer purpose within the portfolio. "Americas simple meals and beverages... we will manage it for moderate growth and margin expansion... In global biscuits and snacks our focus is to expand in developed and developing markets... [Meanwhile] the fresh opportunity is so compelling that we have formed an entire division around it... we will make focused investments to accelerate sales growth and expand into new areas of packaged fresh."

4. Removing artificial ingredients

Campbell recognised the need to reformulate its core portfolio to deepen its appeal to existing consumers and re-connect with ones that have switched loyalties. Morrison said the group has "transformed" the way it thinks about food "from farm to spoon". Responding to growing consumer demand for products made from simpler ingredients, which are perceived as healthier, Campbell said it will remove artificial colours and flavours from its North American portfolio by the end of 2018. It is also cutting high fructose corn syrup from a number of items in fiscal 2017. High fructose corn syrup will not be used in the majority of product launches in 2016, the group added. "These are critically important steps," Morrison stressed.

5. Increasing transparency

While Campbell is working on reformulating core products, the group also recognises the need to increase transparency and communicate these changes to consumers.

The company is launching a whatsinmyfood website. "Through this platform we hope to engage in meaningful discussion with the stakeholders who care," Morrison said. "This is a serious commitment. We will be open and honest about what goes into our food, how we make our food and the ingredients we choose."

While not all consumers will agree with Campbell's ingredient's choices, the company expects a positive response to its honesty. "Through this engagement we can better explain the reasons for our choices... In some of our early engagement, consumers have indicated they would be more likely to buy our food as a result of our transparency," Morrison revealed.

The whatsinmyfood website will be rolled out to "several" of its largest brands in North America this year and will be expanded next year to include "all major brands" in the US and Canada. The concept will be expanded globally over the next three years, management revealed.

6. Focus on growth: health and wellness

Campbell is concentrating on expanding its business into higher growth areas of the grocery sector, where the group is investing a higher proportion of its resources. In the US, this means a focus on health and wellness, particularly through its fresh division. Morrison said: "Today people from all walks of life want to lead healthier lives... 90% of consumers indicate that freshness is a contributor to health... the gravitational pull of fresh foods on the consumer is strong."

The chief executive insisted Campbell's "scale" and "diverse portfolio" in fresh – which spans deli, produce and fresh soups – would also make the group a more "strategic" partner for retail customers, who are giving more shelf space to fresh items.

7. Focus on growth: organic

Campbell's organic sales have reached the $8bn mark, increasing by around 12% over the past three years. The group believes increased consumer interest makes the organic sector a valuable growth area and Campbell is increasing its organic offering accordingly.

The group is expanding the Plum line of organic food for babies, toddlers and kids. In 2016, Plum GrowWell – a range of purees – will be launched, while Plum's Mighty range of snacks, and MashUps fruit sauce lines will be expanded. Campbell’s organic soups were launched in January and the company will roll out a kids range, which includes a tie-up with Disney's Frozen, in August.

"We know that many parents are seeking products made with simpler ingredients for their children. As a result, we are extending our line of kids soups with organic varieties and simplifying recipes to make them an easy choice for parents and fun for kids," America simple meals and beverages president Mark Alexander said.

8. Focus on growth: developing markets

Campbell highlighted the profound demographic changes that are taking place globally and stressed the opportunity presented by developing markets.

Morrison said the decline of the American middle class represents a significant challenge for FMCG companies operating in the market. "There's a new global economic reality... The middle class in America is shrinking. Its income has continued to decline since 2000... The [US] middle class has been largely left out of the economic recovery... The chasm between the haves and the have-nots continues to widen," she observed.

As a result, Campbell is looking for growth in developing markets where the middle class is expanding. "Despite a slowdown in growth, the middle class continues to expand [in emerging markets]. By 2030 two-thirds of the global middle class will live in Asia," Morrison said.

Luca Mignini, president of global biscuits and snacks, said Campbell will build brands like Goldfish, Tim Tam and Kjeldsens beyond their home markets and across new geographic boundaries. The company will leverage its organisational structure to feed products into its distribution structure in markets like China and Indonesia.

9. Focus on growth: digital

Campbell is increasing its focus on digital channels, including e-commerce and online marketing.

Morrison said e-commerce currently represents a small proportion of its revenue stream but insisted Campbell expects this channel to evolve in the coming years. "We believe it will be increasingly important to our consumers and customers in years to come," she noted.

Changes in the way people consume media have also prompted Campbell to shift its marketing budget to digital platforms. In fiscal 2016, Campbell will raise its digital budget to 40% of its media spend, while cutting its expenditure on TV advertising to 50%. "We are moving away from brand marketing to brand experiences... brand building is a relationship based on shared values and mutual respect," Morrison said.

10. Robust M&A pipeline

As Campbell works to move its portfolio towards the high-growth areas identified by management, the group plans to use M&A to support expansion. Morrison identified external development as a key tool to reshape the Campbell portfolio. "We have identified a pipeline of targets that meet our criteria... We are taking a very disciplined approach. Any deal has to make both strategic and financial sense or we walk away," she insisted.