Vlasic in a Pickle but Fayetteville’s Fine

Spinoff tailspin prompts sale of Swift-Armour division; local Swanson plant unaffected

Vlasic Foods International, one of the seven companies that was spun off by Campbell Soup in March 1998, has seen its stock drop from about $24 per share in January to about $7.50 per share in July.

The stock drop accompanies a net income loss of $147.8 million for Vlasic last year. The company had sales of $1.3 billion in 1998.

But the financial problems apparently won’t affect Fayetteville’s Vlasic plant.

The former Campbell Soup plant in Fayetteville is the second-largest of Vlasic’s 13 plants with about 950 employees. The Fayetteville plant makes Swanson frozen dinners and pot pies. Swanson is a subsidiary of Vlasic, which is headquartered in Cherry Hill, N.J., and is best known for producing pickles.

Kevin Lowery, vice president for public affairs at Vlasic, says most of the problems can be attributed to the company’s nine U.S. mushroom farms and a tax hike of about $2.3 million per year levied against the company’s Swift-Armour canned meat division in Argentina.

Lowery says the problems at Swift-Armour and the mushroom business amounted to $30 million to $40 million less in earnings for the last fiscal year.

Vlasic responded by selling the Swift-Armour plant for $93 million to the plant’s president and two partners. The plant brought in about $200 million in sales annually. The sale should go through by early August. The money will be used to offset some of the more than $500 million in debt Vlasic inherited from Campbell Soup in the spinoff, Lowery says.

In addition, Vlasic recently completed a $200 million bond offering at a fixed rate.

Since going public immediately after the spinoff, the problems that normally come with setting up a new company “from scratch” have all been in public view for Vlasic, Lowery says.

Some observers think Campbell Soup was spinning off problem companies when it let Vlasic and others go, shedding one-fifth of its total fighting weight. Lowery says that’s not the case. He says Vlasic was neglected under the Campbell Soup umbrella and is only now getting the support it needs and deserves.

Lowery says Vlasic and Swanson had been declining in sales for the past three years, but since January that has turned around and both are now experiencing sales growth.

Vlasic is now focusing on making the mushroom farms more profitable, Lowery says.

But the company’s main focus will be on its core businesses – Vlasic and Swanson – which account for 90 percent of its sales.

Vlasic Foods International will launch 20 new food products in the coming year – including family sized dinners for four, two new pot pies (one with mashed potato tops) and four new breakfast items (including a microwavable omelette and a croissant sandwich with sausage, egg and cheese). Some of those products will be made at the Fayetteville plant, Lowery says.

The problems Vlasic has faced won’t affect the Fayetteville plant, Lowery says.

“The more we as a company focus on Vlasic and Swanson, the better it is for Fayetteville,” he says.