Campbell Soup’s $2.7B purchase of Rao’s parent creates a “compelling story” in food, top exec says

Campbell Soup has positioned itself as a “very compelling story” in the food space following its $2.7 billion purchase of Rao’s parent company Sovos Brands, a top executive said in an interview.

Mick Beekhuizen, Campbell’s president of its meals and beverages division, said the addition of pasta sauce maker Rao’s and Michael Angelo’s frozen meals gives the 155-year-old company a competitive presence in fast-growing premium sector. It also complements its more established portfolio, including its namesake soups and V8 juices, as well as its burgeoning snacks business of Goldfish crackers, Pepperidge Farm cookies and Late July chips.

The purchase, the largest for Campbell Soup in six years, closed Tuesday. It was first announced last August, but the closing was delayed after the Federal Trade Commission requested more information.

“This is a historic day for us as a meals and beverages division but also Campbell’s as an organization,” Beekhuizen said. “We have these iconic brands in our portfolio, but adding these premium brands to that portfolio … now you’re starting to create a very compelling story.”

Campbell’s CEO Mark Clouse said the meal and beverage portfolio’s premium business would rise to about 25% with the new brands, an increase from around 10% before the deal.

The crown jewel of the purchase is the fast-growing Rao’s brand. Its product list includes sauces, dry pasta, soups and frozen meals. Rao’s sales surged 37% last year, and it was responsible for three-quarters of Sovos’ $1 billion in sales in 2023. 

Campbell’s also adds to the mix Noosa yogurt following the Sovos purchase. The soups and snacks maker reiterated plans Tuesday to evaluate strategic alternatives for the dairy brand. 

With the deal complete, Campbell’s establishes a “distinctive brands” unit within its meals and beverages division. It will focus on the premium segment where growth is outpacing recent increases in its core offerings. Distinctive brands include the recently acquired Sovos portfolio, as well as Campbell’s organic Pacific line that been an area of strength.

“I want to make sure that we maintain the growth trajectory that Sovos has,” Beekhuizen noted. “We’ve got to continue to make sure we stay focused on that in order to continue to bring the excitement to the consumer, which Sovos has done really well.”

Sovos has prioritized purchasing disruptive brands with recognizable ingredients. The company then innovates the core offerings while expanding them into other areas — for example, Rao’s into soups and frozen pizza and Noosa into gelato.

Sovos’ products complement offerings Campbell already has in its portfolio. Rao’s pasta sauce, for example, will complement its mainstream Prego offering, while Rao’s soups will join the Campbell Soup brand and Pacific.

The acquisition will greatly enlarge the scale of Campbell’s, best known for its shelf-stable products, in frozen. Prior to Sovos, its frozen presence was focused on its Pepperidge Farm brand.

“We’re going to continue to build upon that and continue to use that as one of the areas of growth,” he said. “How can we continue to build upon those innovations that are working?”