Campbell, with Coca-Cola, to broaden reach of V8 juices

Campbell Soup Co.'s single-serve V8 vegetable and fruit juices will gain broader distribution under an agreement announced yesterday between the Camden food manufacturer and Coca-Cola Co.

"Everywhere there's a cash register and a cooler, we want V8," Denise Morrison, president of Campbell USA, said in an interview.

The distribution agreement is an important step for Campbell, which is heavily anchored in the supermarket and has long sought to improve its access to convenience stores, delis, and other outlets where people buy refrigerated drinks on the go.

Christopher R. Growe, a food-industry analyst at A.G. Edwards Inc., said the deal could double or triple the size of Campbell's single-serve beverage business, which he estimated at $80 million to $90 million in annual sales.

"This transaction has been rumored before, and we believe it is a good one," Growe said. "The growth prospects for this healthy beverage are intriguing and, we believe, are best exploited through the vast Coca-Cola network."

The terms of the deal - which is effective immediately and covers V8, V8 V-Fusion, V8 Splash and Campbell's Tomato Juice in the United States and Canada - were not disclosed, but Morrison described it as an opportunity for "profitable growth."

Campbell, whose other brands include Pepperidge Farm breads, cookies and crackers, said last month that U.S. beverages were its best-performing business so far in fiscal 2007. One fact in the strong performance is V8 V-Fusion, a drink introduced last year that contains a full serving of fruit and a full serving of vegetables in each eight-ounce serving.

"The beverage business is a very attractive growth vehicle for Campbell Soup as the V8 brand is healthy, has strong margins, and is still underpenetrated," Mitchell B. Pinheiro, a food-industry analyst at Janney Montgomery Scott L.L.C., said in a research note.

Pinheiro estimated Campbell's beverage business at $600 million, with only 15 percent coming from single-serve products. Campbell's overall revenue was $7.34 billion in the fiscal year ended July 30.

Coca-Cola Enterprises Inc., which bottles and distributes about 80 percent of Coca-Cola's volume in North America, will begin distributing Campbell's products in September, the companies said.

On a day when major stock indexes tumbled, Campbell shares closed down 22 cents, or 0.6 percent, at $38.59 on the New York Stock Exchange.