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Campbell Soup (NYSE:CPB), General Mills (NYSE:GIS), and Mondelez (NASDAQ:MDLZ) operate in the highly-competitive packaged food market, continuously trying to outperform each other. In this article, we are going to see which of the three could be the best investment for the long run.

Campbell's first-quarter results were not satisfactory as net sales of $2.16 billion were down 2% from the previous year, and far below analysts' estimate of $2.3 billion. Earnings were also behind the estimates of 87 cents per share, and declined 21% year over year to 66 cents per share.

The tepid results were due to a late Thanksgiving holiday, weakness in the core business categories, higher marketing expenses, and the recall of Plum Organics pouch products. The sluggish start to the year led Campbell to lower its fiscal 2014 guidance.

In the near future, Campbell expects acceleration in growth by launching 8 new soups in the second and third quarter, which includes Chunky and Healthy Request soups, Hispanic-inspired cooking soups, Goldfish Mac and Cheese. Further, the diversified brand portfolio and its efforts to reduce cost to enhance productivity might help drive the operating performance.

For fiscal 2014, Campbell plans to enhance its portfolio with around 200 new products. This is to further strengthen its business for higher growth rates. The new products will also be targeted at the $200 billion dinner segment by introducing Campbell's slow cooker sauces.

Campbell has been working upon improving its supply chain management by streamlining its business in North America, and also acquired four plants in the past two years. This resulted in a massive annual saving of $40 million.

But, for Campbell, the mere agglomeration of brands is not sufficient to maintain its dominant position in the market, but it needs extension and diversification in its products for catering to health-conscious people.

The increasing demand for healthy food in most of the developing countries requires Campbell to bring in nutritious products to catch the attention of consumers to this market. However, it needs to acclimatize itself to the ever changing and developing trends in consumer behavior towards health products and spending shift towards economic products.

Watching General Mills and Mondelez

General Mills also uses a multi-channel like Campbell for the sale of its products. Though its second quarter results were depressing and below analyst estimates, management has maintained its fiscal 2014 guidance and has continued to experiment with its products to boost sales.

Focusing on the nutritional value, General Mills has always concentrated on the expansion of its health-conscious customer base by adding nutrition like fruits, vegetables, fiber (with reduction in fat content) to its core brands. Its well- known brand "Muir Glen" produces a rare variety of organic tomatoes called Halley and recently, General Mills has started making original Cheerios made from oats excluding biotech seeds making it a healthy breakfast.

General Mill sees a strong prospect for grain snacks. Consumers are partial toward grain products as compared to refined products, mainly due to the nutritious value of the grain products and snacks.

It's not only Campbell and General Mills, but Mondelez, previously known as Kraft Foods Group, also wants to have a bite of the market share in this segment. Its product line includes beverages and food. The company is redefining its supply chain management by enhancing management skills, manufacturing processes, and synergistic tie-ups with its suppliers. Various measures in cutting down operating costs are a prime focus of the company. To attain this, it's installing Oreo manufacturing lines that may require 30% less capital.

India and China are big markets for the food & chocolate industry. The Indian chocolate industry is worth $30 billion. As a part of its international expansion plans, Mondelez with Cadbury India plans to launch a chocolate "5 Star chomp" in India. Cadbury India has a retail network of 100,000 stores and Cadbury anticipates that post launch, the "5 star chomp" will be sold in all its stores within a month of launch.

Furthermore, Mondelez is seriously restructuring its supply chain network for streamlining its operations and save on operation costs. It plans to invest in 14 Greenfield plants by 2020 to support the anticipated demand growth.

Conclusion

All three companies have different growth strategies and investors can pick any of them depending on their preferences. The cheapest of the three is General Mills with a P/E of 17.5, but Campbell and Mondelez are growing faster and so they trade at expensive valuations. So, the conservative investor should look at General Mills while the aggressive ones should look at the other two.

Source: 3 Food Companies That Could Enrich Your Portfolio