(Bloomberg News) Denise Morrison, the incoming chief executive officer of Campbell Soup Co., outlined a strategic plan last week after the world's largest soup maker failed to attract as many consumers as estimated during the recession. A key component: Sell more food overseas.
"We must and we will implement a new strategy to expand our position and drive our growth in international markets," Morrison said at a July 12 meeting with investors. "The rise of the middle class in large developing markets like China and India" represents a "growth opportunity of staggering proportions."
A surge in global demand for U.S. products hasn't been lost on Federal Reserve officials, including Chairman Ben S. Bernanke and Federal Reserve Bank of New York President William C. Dudley. They've cited the increase as a justification for their forecast of an economic rebound in the second half of the year.
While job growth flags and consumer confidence declines, exports have climbed in the past two years and accounted for a record 13.4 percent of gross domestic product in the first quarter compared with a decade low of 9.2 percent in the second quarter of 2003, according to Bureau of Economic Analysis data.
"It's been a huge bright spot since the recession ended," said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. "I don't think the export piece is enough to be a cure-all, but it could certainly be a help at the margin."
Farmers In Brazil
U.S. shipments overseas reached a record $175.8 billion in April and were $174.9 billion in May, benefiting companies from Midland, Michigan-based Dow Chemical Co. to Deere & Co. in Moline, Illinois, according to data released by the Commerce Department in Washington last week. Deere, the world's largest maker of agricultural equipment, said June 30 that sales of tractors and machinery to farmers in Brazil are rising, buoyed by high commodity prices.
Stanley forecasts that exports will continue to grow at a rate of 5 percent to 7 percent during the next year, outpacing economic expansion of about 4 percent. Consumer spending accounted for 71.1 percent of GDP in the first quarter.
"When you look at the growth rates in developing markets over the next decade, we must and we will participate in that growth," said Morrison, who is chief operating officer and becomes CEO of Camden, New Jersey-based Campbell Soup on Aug. 1. She said the company has "developed a short list of priority markets, principally in Asia and Latin America, in which we will focus our efforts."
The Fed's easy monetary policy has helped spur foreign demand for U.S. products by weakening the dollar. Since Bernanke hinted on Aug. 27 that the Fed might embark on another round of asset purchases, it has declined about 9 percent against a basket of currencies for six major U.S. trading partners, according to IntercontinentalExchange Inc.'s Dollar Index. It has depreciated against all 16 of the major currencies Bloomberg tracks, including the Brazilian real, Singapore dollar and Japanese yen.