You Smell That? It’s the Aroma of Authenticity, and it’s Quite Valuable
Campbell’s Soup, the most popular and trusted soup brand in the US, has always relied on M&A to grow. So, it comes as little to no surprise that the company spent a whopping $2.7 billion for Sovos Brands, the maker of Rao’s pasta sauces, Noosa yogurt and Michael Angelo’s frozen pizza and other Italian foods. Each of the Sovos brands relies on an extraordinary back story, in fact they pack in so much detail and color into them that you can taste the real ingredients.
Campbells, like other CPG giants, are hungry for M&A amidst slowing growth due to higher food costs. Narrowing their focus to buying one-off brands, oftentimes in $1 billion-plus range, they’re looking for a strong complementary fit. Recent deals in this vein include Hershey snapping up Dot’s to broaden the company’s salty snacks portfolio, Coca-Cola purchasing the rest of BodyArmor to boost its stake in better-for- you sports drinks and Mondelēz International gobbling up Clif Bar to increase its presence in the high-growth bar business. Despite the challenges across the food industry, premium products with cult-like followers remain a bright spot.
Another billion-dollar buy-out this week was the global publishing giant Simon & Schuster. The 99-year-old brand founded by two Jewish entrepreneurial booksellers in New York City, sold for the 5th time in its history for a meager $1.62 billion. In recent years, the publishing industry, dominated by a handful of global mega-corporations, has acquired dozens of smaller imprints in a race against their oblivion.
Brand stories, when executed well, cement customer loyalty and advocacy, creating a dedicated cult of ambassadors that promote the brand through word-of-mouth and social media. A good brand marketer carefully chooses the unique elements that make up a brand's identity by creatively focusing on its core values, targeted demographic messaging, strong visual identity, and unique selling points. Balancing various aspects of its personality that often reflect the passion of its founders, marketers are able to establish a strong emotional connection to drive current and (discounted) future cash flows.
Brands like Rao’s understand the power of exclusivity, and how it adds to their charm. By giving their most loyal customers a seat at the table more than 40+ years ago, the unlucky masses who would never get to eat there adopted and advocated for their right to enjoy the recipes in a $9 glass jarred marinara sauce. Ultimately, these grocery store loyalists spread the word, growing sales and distribution nationwide.
When it comes to authenticity in branding, fan support can make all the difference. Great brands are created through consumer passion. The best, are spiced up by marketers.
As for Campbell’s, Prego now has a soul mate. What lies ahead for Simon & Schuster though, remains to be seen.