Del Monte Foods can withstand the threat of private label to its consumer foods business with a series of promotional and marketing campaigns in the next year, the US firm’s chief has said.

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The canned veg maker lifted its annual earnings target today (3 September) after price hikes taken in its last fiscal year helped boost sales and profits during the first three months of the company’s fiscal 2010 period.


Nevertheless, speaking to analysts this afternoon, Del Monte chairman and CEO Rick Wolford revealed that moves by US retailers to cut own-label prices had affected the market share of some of the company’s consumer food brands.


“We see private-label pricing being used as a strategic tool by select customers, who are using private-label pricing to achieve their competitive goals of bringing customers in,” Woolford said. “As we look at our holiday season and beyond, with the consumer promotional programme in place, we will see that average price gap narrow and our shares will improve throughout the year.”


Del Monte CFO Dave Meyers said the company will up its spending on marketing by around 55% – or around US$60m – during the rest of its fiscal year.

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The company, which sells a range of canned vegetables and fruit snacks, believes the current trend among US consumers to eschew eating out for eating in will propel sales of its consumer foods brands.


Wolford insisted Del Monte’s marketing plans were designed to support its brands into fiscal 2011. “Our objective is not just to deliver this year but to build equity and deliver relevance to consumers beyond this fiscal,” he said.


The Del Monte chief, meanwhile, played down the prospect of any acquisitions in the months ahead. Wolford said the company would prefer to focus on its existing brands.


“M&A is always very opportunistic and it’s not included in our guidance. Our focus right now is to make sure we build on the pillars of strength that we’ve laid as a foundation for the company and focus hard on that.”