Campbell Soup Co Earnings Call Nuggets: Mexican Transition and Increased V8 Advertising
Jason English – Goldman Sachs: I’d like to get a little bit of understanding of this Mexican transition and specifically, I’ve a few questions. So I apologize in advance, I’m just going to rattle off a few. First, can you give us a rough sense of how big your soup and beverage business is in Mexico right now? Where the current distribution level stands? Where you think distribution could go to over time? Then give us a sense of the time line for this transition and roll out.
B. Craig Owens – SVP, CFO and CAO: So Jason, we don’t disclose the size of the business but it is relatively small and in Mexico, while we’ve been there for quite some time and have developed a reasonable soup business given that the soup business there is not primarily wet soup and lately we’ve had a lot of success with our beverage business there. Our distribution model currently is primarily in the developed trade, and really, I think the primary impact of this change is that it’s going to take us in a much better way down market and into the smaller mom and pops or the smaller outlets that are still important particularly to our beverage business in that country. The timeline is that we will phase out of production really across the next several quarters. But fairly quickly, we will move into distribution through the third parties. And so we’ll start to see some of that impact as early as the latter part of this quarter.
Jason English – Goldman Sachs: Are you expecting any material impact on the overall margin profile of this business?
B. Craig Owens – SVP, CFO and CAO: Well, I don’t want to get all deeply at this point into the accounting for this. The margin will improve. We’ll probably see a decline in our reported sales because of the structure of the agreement, but I think it’d be best for us to tackle that when we report the quarter where that impact begins.
Increased V8 Advertising
Thilo Wrede – Jefferies: I just want to clarify something. So if I understand you right, you’re planning to increase advertising on V8 because you’re not happy with the performance of the brand. You increased advertising on Chunky, and apparently the brand is reacting there, yet you’re still planning to decrease advertising overall. Doesn’t the success of your advertising show you that more advertising would be helpful?
Denise Morrison – President and CEO: Yes. Thilo let me take that question. There’s a number of different dynamics going on in different brands. And what we’ve been talking about is, for each brand, optimizing all of the drivers of demand. In the V8 situation, we believe that as we introduce our new V8 with improved taste and the Hint of Lime and the new energy drinks and the juice boxes on kids, increasing our advertising in the second half is a good way as one of the drivers for that business in addition to merchandising and the innovation and product improvement that I just talked to you about. In terms of Chunky; the biggest change on Chunky was going back to the NFL and having advertising that was a lot more productive than when Chunky got lost in the amazing campaign last year, we think that has been huge. Across the soup business in general, our advertising investment is still indexing significantly higher than peers, but we’ve used media vehicles – for example we shifted to our higher quality GRPs and doubled our network prime GRPs, which were much more effective for us. So we’ve made some changes in not only the advertising campaign in Chunky, but also in the media as well. So I think that – suffice it to say, that we are looking at all those drivers by brand and we’re making the decisions based on the situation the brand finds itself in.
Jennifer Driscoll – VP, IR: Just to fact check it, advertising was down in Soup, not up as you said, Thilo.
Thilo Wrede – Jefferies: But was it up on Chunky?
B. Craig Owens – SVP, CFO and CAO: No. it was down on Chunky. It’s one of the things that makes it a good example of what we’re talking about. We had great response to more effective advertising on Chunky and to some of the other things that we did in the marketing mix, but advertise spend on Chunky was down.
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