Campbell’s turns to suppliers to help ease tariff costs

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Dive Brief:

• The Campbell’s Company is working with Italy-based suppliers to reduce the impact of tariffs on its Rao’s brand of premium pasta sauce and other products, EVP and CFO Carrie Anderson said during a June 2 earnings call.
• Suppliers include La Regina di San Marzano USA Inc., which imports the Rao’s products from Italy, according to Anderson. Campbell’s imports Rao’s finished goods and raw materials. Campbell’s acquired Rao’s parent company, Sovos Brands, for $2.7 billion in 2024. 
• “We are going to look at all of the levers that we have to mitigate tariffs,” the CFO said, including “working in close partnership with our suppliers, and that would include our partnership with La Regina.”

Dive Insight:

Campbell’s tariff mitigation plan also includes strategic inventory management, alternative sourcing, product cost optimization, and “where absolutely necessary, consideration of surgical pricing actions,” Anderson said. The company expects “the net incremental headwind of tariff-related costs to be up to $0.03 to $0.05 per share to fiscal ‘25 adjusted EPS,” she added.

Campbell’s based its estimated costs on the assumption that current tariffs stay in place, according to Anderson. President Donald Trump has imposed a 10% baseline duty on European Union imports during a 90-day pause on country-specific reciprocal tariffs. 

However, Trump has signaled that reciprocal levies will return for some countries, and the EU could impose its own countermeasures if the two sides do not reach an agreement by July 9.

Campbell’s also faces higher costs for exporting soup to Canada due to a reciprocal 25% tariff on U.S. goods not covered by the United States-Mexico-Canada Agreement. Other contributors, Anderson said, were the Trump administration’s tariffs on steel and aluminum imports, which Campbell uses for its soup and beverage cans. 

The uncertainty surrounding tariffs makes it impossible to predict their effects on the company’s bottom line, Anderson said. “I think it’s a bit too early to say what the fiscal ’26 impact may be, mainly because of the rapidly evolving trade landscape.” 

In March, Campbell’s CEO Mick Beekhuizen joined other executives of major food and beverage manufacturers in warning that tariffs were already impacting operations and could lead to price increases. The levies could raise packaging costs and hurt Campbell’s namesake soup brand, Beekhuizen said.