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Campbell reinvents soup, one cup, pouch or K-cup at a time

Wed Oct 30, 2013 1:57pm EDT

NEW YORK (Reuters) – When Campbell Soup Co (CPB.N) was losing market share to private label brands and smaller competitors in recent years, it could have used another pop superstar like Andy Warhol to try to make its brand hip again, especially with 20-somethings.

Instead, it got a new CEO, Denise Morrison, who spent hundreds of millions of dollars to reinvent its marketing and packaging, including to-go soup cups that could be made in a Keurig coffeemaker. She also acquired or developed hundreds of new products such as puffed Goldfish snacks and soon-to-be-launched seasoned baby carrots.

Investors have embraced the initiatives, pushing Campbell stock up more than 30 percent in the last two years.

“The market message has changed toward flavor, how good soup tastes, how much of a full meal it is,” said Jefferies analyst Thilo Wrede. “I think if she can keep it up, it can make a difference. The challenge is last year she introduced a lot of changes.”

Under Morrison, Campbell has focused on marketing to families, teens, and young adults and developing products that will build loyalty as these consumers age.

These efforts helped boost soup sales by 5 percent last year, according to Campbell. Soup is expected to make up about a third of the company’s sales in 2014, down from 40 percent in 2012, said Morrison, who was named CEO after working at Campbell as executive vice president and chief operating officer. The decline is largely due to the sale of its European soup business this summer to a private equity firm.

Despite the rise in the share price, it may be too early to declare Morrison’s initiatives a success. The company tried in the past to lower its sodium, a move most consumers rejected. This time, it’s trying to build the loyalty of the often fickle younger consumers, who tend to be more price-conscious and less brand-loyal than older cohorts.

Morningstar analyst Erin Lash, who rates the company’s shares as slightly undervalued, said other rivals including General Mills Inc’s Progresso are trying new innovations and have increased market share of its ready-to-serve soups.

“Competitive pressures remain intense not just for soup, but for simple meals in general,” she said, referring to other food items such as macaroni and cheese or frozen pizza.


Attracting millennial consumers – those born between 1982 and 2002 and beginning to flex some of its economic muscle – is key to fostering brand loyalty in the long run, Morrison said at a meeting with analysts in June.

Millennials typically value healthfulness, convenience and portability, and have a more adventurous palate than previous generations, but they’re also more driven by good deals. And soup is still considered a “conservative” or “old-fashioned” food, according to the market research firm Euromonitor.

Campbell has tried to overcome some of these perceptions by offering more exotic flavors, supplementing the classic tomato and chicken noodle varieties with such flavors as Moroccan chicken and curry lentil. It is supplementing the company’s cans – made famous by Andy Warhol 1960s art – with portable bowls and pouches.

Campbell said the percentage of list sales from new products grew from 8 percent in fiscal 2011 to 9 percent in 2012 and 10 percent in 2013. The company expects this number to jump to 12 percent in fiscal 2014.

One weak spot, said Wrede, is Campbell’s V8 products, which while popular with baby boomers hasn’t won over younger consumers who like fresh squeezed, refrigerated juices.

Morrison’s latest initiative was to take soup to the Keurig coffee machine, which makes cups of hot beverages from small single-serve containers.

“I am a Keurig user myself and a couple of years ago I was using my machine and thinking, I wonder if we can do soup in this,” said Morrison, the oldest of four sisters who themselves have served in executive roles at ATT Wireless, Frontier Communications and Expedia Corporate Travel.

Campbell is positioning the K-cup soups, a collaboration with Green Mountain Coffee Roasters (GMCR.O), as convenient afternoon snacks that provide “a whole different experience of soup,” Morrison told Reuters in an interview, adding that company studies found more than 80 percent of Keurig users eat Campbell soup.

“Single-serve really seems to be working, and we think there’s an opportunity to broaden the occasions where soup is eaten,” said Mark Alexander, president of Campbell North America.

The K-cups announcement came about a year after the launch of Campbell’s Go Soups, sold in microwaveable pouches designed to be heated and sipped on the go.

“In food in general and our company, packaging is a key component to how we innovate. It’s part of our broader research and development strategy. Every innovation team has a packaging engineer on it,” Alexander added.

Bill Bishop, a supermarket consultant, said that changing packaging could give Campbell a leg up over private label brands, which often deliver similar products at lower prices.

“Private label is less of a threat when there’s innovation… and moving away from cans is good innovation,” Bishop said.

(Reporting By Atossa Araxia Abrahamian; Editing by Jilian Mincer and Andrew Hay)

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Judge rejects Monte Paschi prosecutor’s seizure request against JP Morgan

Wed Oct 30, 2013 1:45pm EDT

SIENA (Reuters) – An Italian judge has rejected a prosecutors’ request to seize just under 200 million euros ($275 million) of funds from JP Morgan (JPM.N) as part of an investigation into Banca Monte dei Paschi di Siena’s acquisition of a smaller rival, a source with direct knowledge of the matter said.

Prosecutors allege that JP Morgan withheld information from Italian regulators about a 1 billion-euro ($1.4 billion) financing the New York-based bank arranged for Monte Paschi’s takeover of regional lender Antonveneta in 2008.

The source did not say why the prosecutors had requested the asset seizure.

A spokewoman for JP Morgan in Italy said the bank, which has denied any wrongdoing, had no immediate comment to make on Wednesday.

A judge will decide on March 6 whether to indict JP Morgan together with seven individuals, including Monte dei Paschi’s former chairman and director general, for allegedly obstructing regulators.

($1=0.7262 euros)

(Reporting by Silvia Ognibene; Writing by Silvia Aloisi; Editing by Greg Mahlich)

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Exclusive: Merck works toward bringing Zilmax back to U.S., Canada

Wed Oct 30, 2013 1:45pm EDT

CHICAGO (Reuters) – U.S. drugmaker Merck Co plans to resume sales of the controversial Zilmax animal feed additive in the United States and Canada after it completes an audit of how the product is used, a spokeswoman said on Tuesday.

Merck halted sales of the muscle-building drug in August after Tyson Foods Inc. said it would stop accepting Zilmax-fed beef given some cattle were observed arriving for slaughter with signs they were having difficulty walking or moving. Merck has said it stands behind the safety of its product, but the pause added to global concerns over its use.

On Tuesday, a spokeswoman for Merck’s Animal Health unit said that while “it is too early to speculate on when we will resume sales for Zilmax in the U.S. and Canada,” Merck was pushing forward with its quality control program to ensure the drug was being properly used.

It is the first time that the company has said it intends to bring the highly successful product back to the market. It is unclear how big beef buyers may respond, given worries that lame or distressed animals could stir further criticism of their methods from animal welfare groups.

The email from company spokeswoman Pamela Eisele said Merck was “committed to completing this as quickly as possible, while also ensuring it is conducted appropriately and with rigorous scientific measures.”

In a separate statement, Merck said it has formed an advisory board that includes representatives from meat processors, cattle feeder operations, producers, veterinarians, academics and industry consultants. The company declined to say who had been appointed to the board, which convened for the first time in October.

In August, Tyson Foods, the largest U.S. meat processor, said its decision to stop using Zilmax was not made over food-safety concerns. It said it did not know exactly what was causing the animals’ behavior, but Tyson officials said animal health experts suggested that the use of Zilmax may be one possible cause.

Cattle carcass weights have dipped in recent weeks as feedlots rush animals to market to cash in on record-high prices but are no longer feeding them the growth promotant, analysts and economists said.

Feed lot operators have been peppering Merck with questions over if or when Zilmax sales will resume, according to nutritionists and feed lot owners who have spoken to Merck.

Lighter cattle weights have meant less beef at a time when there are fewer cattle going to slaughter. The combination of less beef and fewer cattle should mean record cattle and beef prices at least through the coming year, analysts have said.

(Additional reporting by Theopolis Waters; Editing by David Gregorio and Alden Bentley)

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Pimco taps Maisonneuve as global head of equities

Wed Oct 30, 2013 1:40pm EDT

LONDON/NEW YORK (Reuters) – Pimco, which runs the world’s largest bond fund under Bill Gross, has tapped Virginie Maisonneuve as global head of equities, succeeding Neel Kashkari, who left the firm earlier this year for a possible run for public office in California.

She joins Pimco from Schroders Plc where she most recently served as head of global and international equities and will be based in Pimco’s London office, Pimco said in a news release on Wednesday. Her official start date is expected to be in January 2014.

Mohamed El-Erian, Pimco’s chief executive officer and co-chief investment officer, said in a statement: “Virginie is a proven equity investor and leader who has delivered a track record of success for clients throughout her 25-year career as a portfolio manager and a business builder. We are delighted to have Virginie on board as part of our multi-year effort to deepen and expand the set of global investment solutions we provide to clients around the world.”

Schroders said in a statement that Simon Webber, Maisonneuve’s deputy, would become the lead portfolio manager for global and international equities while Peter Harrison, global head of equities, will take on management responsibility for the team.

A onetime investment banker at Goldman Sachs, Kashkari became an instant celebrity in October 2008 when he was tapped by Treasury Secretary Henry Paulson to run the $700 billion Troubled Asset Relief Program for banks.

Kashkari joined PIMCO in 2009 to lead the firm’s new investment initiatives and left Pimco this past February. One of the initiatives was Pimco’s expansion into equities.

Pacific Investment Management Co., based in Newport Beach, California, launched its first actively managed stock mutual fund in 2010.

Pimco oversees $1.97 trillion in assets, most of which is in fixed income. Pimco’s equity offerings span a range of strategies and styles, including the StocksPLUS suite of strategies, and its active long-short, dividend, emerging market and deep value equity strategies, totaling more than $50 billion in assets under management.

The firm, a unit of European insurer Allianz (ALVG.DE), is run by Gross, founder and co-chief investment officer, and El-Erian.

(Additional reporting by Chris Vellacott; Editing by Chris Reese and Kenneth Barry)

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African Barrick gold production rises

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Fortescue looks to amend US$5bn credit facility

Australian iron-ore producer Fortescue Metals Group Ltd (FMG) said it was looking to amend terms if its US$5 billion senior secured credit facility following an improvement in production, finances and more competitive credit market conditions.

It said it was seeking a reduction of the interest rate payable and extension the maturity date of the loan, FMG said.

The current facility is due to mature in October 2017 and has an annual interest rate of 5.25%.

“The release of the company’s quarterly results and strong financial position, together with strong market conditions, has enabled the company to pursue an amendment,” it said.

Earlier in October FMG announced a 61% year-on-year increase in iron-ore shipments for the September quarter as it neared the close of its US$9 billion expansion in Western Australia. It also started making capital repayments on its US$9.3 billion of net debt.

The process to amend the facility was expected to take two weeks to finalise, FMG added.

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Barclays says helping with FX probe, profits fall

Wed Oct 30, 2013 5:01am EDT

LONDON (Reuters) – Barclays (BARC.L) said it was cooperating with regulators investigating the possible manipulation of currency trading by major banks, deepening scrutiny of the bank’s practices as it grapples with a slump in investment bank income.

Barclays, Britain’s third-biggest bank by market value, said on Wednesday it was reviewing its foreign exchange trading “covering a several year period” and was cooperating with authorities investigating possible attempts to manipulate certain benchmark currency exchange rates.

Several banks are under the spotlight over alleged rigging in the $5.3 trillion-a-day foreign exchange market, and UBS (UBSN.VX) and Deutsche Bank (DBKGn.DE) said on Tuesday they were cooperating with regulators.

The investigation adds to a string of probes faced by Barclays boss Antony Jenkins, who took over as chief executive 14 months ago and is trying to rebuild his bank’s reputation after a series of scandals while trying to withstand a trading slowdown in its core bond market.

Barclays reported underlying pretax profit of 1.4 billion pounds ($2.3 billion) for the three months to the end of September, down from 1.9 billion a year ago but above an average forecast of 1.25 billion from analysts polled by the company.

Profits at its investment bank fell to 463 million pounds from 988 million a year ago and below expectations.

It was the unit’s lowest profit since the end of 2011 and was largely due to a 44 percent slump in revenue from fixed income, currency and commodities in the latest quarter.

Activity across banks has been hit by uncertainty over U.S. monetary policy, but Barclays’ performance was worse than most of its biggest rivals.

Barclays shares were up 2.5 percent at 272.8 pence by 12.12 p.m. EDT, as analysts said bad bond trading had been expected and the absence of any new provisions for mis-selling was positive.

“Barclays is at a stage where management attention in the medium term will largely be focused on fixing the deleveraging process and boosting capital levels,” said Bernstein analyst Chirantan Barua. “Meanwhile (the) fixed income outlook globally remains muted in the medium term.”

Barclays raised 5.8 billion pound in a rights issue last month to meet a capital shortfall identified by its regulator. The bank said that, including the fundraising, its common equity Tier 1 capital ratio improved to 9.6 percent, based on full Basel capital rules that are being phased in.

The UK regulator said banks must meet a leverage ratio – a measure of its capital to assets – of 3 percent. Barclays said the rights issue would lift its leverage ratio to 2.9 percent, or 2.6 percent based on the same criteria used by the regulator.

It plans to retain earnings and sell more assets to help reach the target.

Jenkins said he was pleased with progress in turning the bank around, but remained cautious about the operating environment. ($1 = 0.6228 British pounds)

(Editing by Tom Pfeiffer)

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Fed to maintain aggressive policy stimulus amid soft data

Wed Oct 30, 2013 4:41am EDT

WASHINGTON (Reuters) – The Federal Reserve is expected to maintain its massive bond-buying campaign when it concludes a two-day meeting on Wednesday and may point to softer readings on the U.S. economy to signal that the policy will be extended into 2014.

The central bank, which will announce its policy decision at 2 p.m., has held interest rates near zero since late 2008 and has quadrupled the size of its balance sheet to more than $3.7 trillion through three rounds of bond buying. The purchases are aimed at holding down longer-term borrowing costs.

It shocked markets in September by opting to keep buying bonds at an unchanged pace, after allowing a perception to harden over the summer that it was ready to start scaling back the purchases. The central bank’s caution has since been vindicated.

Consumer and business confidence has been dented by a bitter budget battle in Washington that triggered a 16-day government shutdown earlier this month and pushed the nation to the brink of a potentially devastating debt default.

“I think you will certainly see a change in tone in the statement,” said Scott Anderson, chief economist at Bank of the West in San Francisco.

Like many economists, Anderson now thinks the Fed will keep buying bonds at an $85 billion monthly pace until March.

Data on hiring, factory output and home sales in September that have tumbled in over the last couple of weeks suggest the economy lost a step even before the government shut down. Readings on consumer confidence this month have shown the fiscal standoff rattled households.

Tepid demand is also keeping inflation under wraps, which is yet another factor that could help convince the Fed’s policy-setting Federal Open Market Committee to maintain its asset purchase course. Over the past 12 months, producer prices rose just 0.3 percent, the smallest gain since 2009.

“The October government shutdown has undoubtedly slowed down the economy in the fourth quarter,” economists at Rabobank wrote in a note to clients. “It will be 2014 before we are able to see a number of months of economic data that may convince the FOMC that the recovery is continuing at a solid pace.”


The soft tone in the data has led financial markets to recalibrate forecasts for a tapering in the Fed’s bond purchases. It has also pushed rate hike expectations back into mid-2015 at the earliest.

“It is looking like most of the hikes would happen in 2016,” said Anderson, adding that the shift in expectations has helped pull bond yields lower.

Futures markets indicate a 52 percent chance of the first quarter-point rate hike by April 2015; that rises to 96 percent by September 2015. Yields on the 10-year U.S. Treasury note have fallen back to 2.50 percent, compared with almost 3 percent in early September.


A further wrinkle in the Fed’s deliberations is the upcoming leadership transition at the central bank. Earlier this month, President Barack Obama nominated Fed Vice Chair Janet Yellen to replace Ben Bernanke at the institution’s helm when his term expires on January 31.

Some economists think Bernanke would like to begin reducing the bond purchases on his watch, provided the economic data was sufficiently encouraging.

But if policymakers wait until March, it would presumably give Yellen an opportunity to lean against criticism that she is too dovish in how she weighs unemployment versus inflation.

That question will be a central theme of her confirmation hearing before the U.S. Senate Banking Committee. The hearing likely be held on November 14.

Yellen is expected to win confirmation from the Senate but will likely face tough questions from Republicans critical of the Fed’s ultra-easy monetary policy, which they say risks financial instability and future inflation.

The banking panel needs to vet her nomination before it goes before the full Senate for final approval.

(Editing by Tim Ahmann and Dan Grebler)

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China official PMI seen hitting 18-month high in October

Wed Oct 30, 2013 3:42am EDT

BEIJING (Reuters) – China’s manufacturing activity in October likely grew at its fastest rate since April 2012, a Reuters poll showed, adding to signs of a stabilization in the world’s No.2 economy as the government readies a series of key economic reforms.

The official manufacturing purchasing managers’ index (PMI) is forecast to reach 51.2 from September’s 51.1, according to the median estimate of 11 economists, remaining well above the 50 point line separating expansion from contraction.

A preliminary PMI survey last week by HSBC and Markit Economics showed that the factory sector grew at its fastest pace in seven months in October.

A firm reading in the official PMI could help put to rest worries that the economy may slow down significantly in the fourth quarter.

“We expect a continued moderate growth improvement in the fourth quarter,” said Wei Li, an economist with Standard Chartered in Shanghai.

Concerns had surfaced after disappointing export figures in September and a one-point drop in the final HSBC/Markit PMI figures for the month from its preliminary estimate.

“I’m expecting both the final HSBC PMI and the official number to be close what the flash was signaling in September, and what the flash signaled again in October,” said Tim Condon, Asia economist at ING in Singapore.

Condon said that bad weather had played a role in the divergence between the initial and final HSBC PMI figures for September.

The official PMI is weighted more towards bigger and state owned enterprises and tends to paint a rosier picture than the private survey, which focuses more on smaller and private sector firms.

Economists in a recent Reuters poll saw China’s economy growing at 7.5 percent in the fourth quarter from 7.8 percent in the third.

The government has said it would accept a slowdown while it pushes forward with its reform agenda.

That agenda will be the focus of the Communist Party’s third plenary session starting on November 9. The government wants to shift the economy away from a reliance on exports and investment and more towards consumption.

“Market confidence will be on the rise ahead of the third plenum, as people are hoping that we will see some more comprehensive economic reforms, so October should be a good month.”

Earlier this week, media said the Development Research Centre, an influential think tank linked to China’s state council, or cabinet, had recommended eight key areas for reform: finance, taxation, land, state assets, social welfare, innovation, foreign investment and governance.

Those recommendations are likely to form some of the basic agenda for the plenary session.

The official PMI figures will be released on Nov 1 at 9 am (0100 GMT). The final HSBC/Markit PMI will also be released on November 1, at 9:45 am.

(This story was refiled to clarify median in table is 51.2)

(Editing by Kim Coghill)

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