Campbell Soup Company

Company Overview

Business Model: The Campbell's Company is a manufacturer and marketer of high-quality, branded food and beverage products. Its primary revenue generation mechanisms involve the sale of these products to consumers through various retail channels, including retail food chains, mass discounters, mass merchandisers, club stores, convenience stores, dollar stores, and e-commerce platforms. The Snacks segment also utilizes a direct-store-delivery distribution model with independent contractor distributors. Sales and merchandising activities are conducted through the company's own sales force and/or third-party brokers and distribution partners.

Market Position: The company operates in a highly competitive food and beverage industry, primarily within the North American market, facing competition from numerous branded manufacturers and private label producers. Key competitive factors include brand recognition, taste, nutritional value, price, promotion, innovation, shelf space, and customer service. The company's portfolio includes "leadership brands" such as Campbell's condensed and ready-to-serve soups, Goldfish crackers, Snyder's of Hanover pretzels, and Rao's pasta sauces. Customer concentration is notable, with the five largest customers accounting for approximately 47% of consolidated net sales in 2025, 2024, and 2023. Wal-Mart Stores, Inc. and its affiliates alone represented approximately 21% of consolidated net sales in 2025 and 22% in 2024 and 2023, with both reportable segments selling products to this customer.

Recent Strategic Developments:

• Acquisition: On March 12, 2024, The Campbell's Company completed the acquisition of Sovos Brands, Inc. for a total purchase consideration of $2.899 billion, adding brands like Rao’s, Michael Angelo’s, and noosa to its portfolio.
• Divestitures: The company divested its Emerald nuts business on May 30, 2023, its Pop Secret popcorn business on August 26, 2024, and its noosa yoghurt business on February 24, 2025.
• Strategic Framework: The company's strategy is built on four pillars: "Top Team" (talent cultivation, leadership development, consolidation of Snacks offices to Camden, New Jersey headquarters), "Best Portfolio" (consumer-focused marketing, leadership brand support, Growth Office for innovation), "Winning Execution" (strategic retailer relationships, manufacturing/distribution network optimization, digitization, new cost savings initiatives), and "Lasting Impact" (sustainability and community goals).
• Cost Savings Initiatives: In September 2024, the company announced plans for cost savings initiatives beginning in 2025, targeting approximately $250 million in annual ongoing savings by the end of 2028. This estimate was increased to approximately $375 million by the end of 2028 on September 3, 2025.
• Snacks Direct-Store-Delivery Optimization: An initiative began in the second quarter of 2024 to improve the Snacks direct-store-delivery route-to-market network, involving the purchase, combination, and resale of certain routes to independent contractor distributors.

Geographic Footprint: The Campbell's Company is primarily focused on North America, with 95% of its net sales derived from U.S. operations in 2025, 2024, and 2023. Less than 1% of its long-lived assets were related to non-U.S. operations in 2025 and 2024. Its principal executive offices are located in Camden, New Jersey. Manufacturing facilities are spread across various U.S. states, including Arizona, California, Connecticut, Florida, Illinois, Indiana, Massachusetts, North Carolina, Ohio, Oregon, Pennsylvania, Texas, Utah, and Wisconsin, with some facilities being leased. The company also maintains principal business unit offices in Doral, Florida; Hanover, Pennsylvania; and Mississauga, Canada.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 30.4%
• Operating Margin: 10.96%
• Net Margin: 5.87%

Investment in Growth:

• R&D Expenditure: $0.100 billion (0.98% of revenue)
• Capital Expenditures: $0.426 billion
• Strategic Investments:
  • Acquisition of Sovos Brands, Inc. for $2.899 billion (March 12, 2024).
  • Capital expenditures in 2025 included network optimization for the Meals & Beverages business, chip and cracker capacity expansion for the Snacks business, and enhancements to the headquarters in Camden, New Jersey.
  • Expected capital expenditures for 2026 are approximately $420 million, allocated to network optimization for both Meals & Beverages and Snacks, information technology projects, and wastewater initiatives (including approximately $35 million for upgrades to the Napoleon, Ohio wastewater treatment facility and $20 million for other network wastewater initiatives).

Business Segment Analysis

Meals & Beverages

Financial Performance:

• Revenue: $6.050 billion (+15% YoY)
• Operating Margin: 17.78%
• Key Growth Drivers: The increase was primarily driven by a 15-point benefit from the acquisition of Sovos Brands, Inc. and a 2-point benefit from the 53rd week. Excluding these factors and the divestiture of the noosa yoghurt business, sales were comparable due to gains in foodservice, Canada, and Rao's pasta sauces, partially offset by declines in U.S. soup and SpaghettiOs. Gross profit margin decreased due to higher cost inflation, other supply chain costs, unfavorable net price realization, and the dilutive impact of the acquisition, partially offset by supply chain productivity improvements, benefits from cost savings initiatives, and favorable volume/mix.

Product Portfolio:

• Major product lines include Campbell’s condensed and ready-to-serve soups; Swanson broth and stocks; Pacific Foods broth, soups and non-dairy beverages; Prego pasta sauces; Pace Mexican sauces; SpaghettiOs pasta; Campbell’s gravies, beans and dinner sauces; Swanson canned poultry; V8 juices and beverages; and Campbell's tomato juice.
• Acquired products (as of March 12, 2024) include Rao's pasta sauces, dry pasta, frozen entrées, frozen pizza and soups; and Michael Angelo’s frozen entrées and pasta sauces. The noosa yogurts business was sold on February 24, 2025.
• The segment also includes snacking products in foodservice and Canada.

Market Dynamics:

• Sales of U.S. soup were comparable with the prior year, with increases in broth and condensed soups offset by decreases in ready-to-serve soups.

Snacks

Financial Performance:

• Revenue: $4.203 billion (-4% YoY)
• Operating Margin: 13.32%
• Key Growth Drivers: The decrease was primarily due to lower gross profit and higher marketing and selling expenses. Gross profit decreased due to the impact of cost inflation, other supply chain costs, and unfavorable volume/mix, partially offset by supply chain productivity improvements, the benefit of the additional week, and benefits from cost savings initiatives.

Product Portfolio:

• Major product lines include Pepperidge Farm cookies, crackers, fresh bakery and frozen products (including Goldfish crackers); Snyder’s of Hanover pretzels; Lance sandwich crackers; Cape Cod potato chips; Kettle Brand potato chips; Late July snacks; and Snack Factory pretzel crisps.
• The segment also includes the snacking and meals and beverages retail business in Latin America, which will be managed under the Meals & Beverages segment beginning in 2026.
• The Pop Secret popcorn business was sold on August 26, 2024, and the Emerald nuts business was sold on May 30, 2023.

Market Dynamics:

• Sales decreased, excluding the impact from the divestiture of the Pop Secret popcorn business and the benefit of the additional week, due to declines in third-party partner brands and contract manufacturing, Goldfish crackers, Snyder's of Hanover pretzels, Lance sandwich crackers, fresh bakery, and Pepperidge Farm cookies. Sales were impacted by volume/mix declines with neutral net price realization.
• Impairment charges were recognized in 2025 on the Snyder's of Hanover trademark ($150 million), certain salty snacks and cookie trademarks (Allied brands) ($15 million), and the Late July trademark ($11 million) due to sales and operating performance below expectations and lowered long-term outlooks.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $62 million (1.303 million shares) were repurchased in 2025 under the anti-dilutive share repurchase program. As of August 3, 2025, $301 million remained available under the September 2021 strategic share repurchase program (up to $500 million) and $198 million remained under the September 2024 anti-dilutive share repurchase program (up to $250 million). Both programs have no expiration date.
• Dividend Payments: $459 million in 2025. Annual dividends declared were $1.54 per share in 2025.
• Future Capital Return Commitments: The company has authorized share repurchase programs with remaining amounts as noted above.

Balance Sheet Position:

• Cash and Equivalents: $0.132 billion (as of August 3, 2025)
• Total Debt: $6.857 billion (as of August 3, 2025)
• Net Cash Position: -$6.725 billion
• Credit Rating: Not explicitly disclosed in the provided text, but the company identifies a risk of a downgrade in its credit rating due to its level of indebtedness.
• Debt Maturity Profile: The company has $400 million aggregate principal amount of senior notes maturing in March 2026, which it expects to repay and/or refinance. Principal payments for long-term debt (including finance lease obligations) are $432 million in 2026, $514 million in 2027, $1,008 million in 2028, $606 million in 2029, $503 million in 2030, and $3,520 million thereafter.

Cash Flow Generation:

• Operating Cash Flow: $1.131 billion in 2025.
• Free Cash Flow: $0.705 billion (Operating Cash Flow less Capital Expenditures).
• Cash Conversion Metrics: The company reported negative working capital of $674 million as of August 3, 2025, driven by a focus on lowering core working capital requirements, including optimizing supplier payment terms (generally 0 to 120 days).

Operational Excellence

Production & Service Model: The Campbell's Company manufactures food and beverage products, sourcing ingredients and packaging materials primarily from North American suppliers. It also purchases finished products from domestic and international suppliers. The company employs various strategies, including purchase orders, short- and long-term contracts, inventory management, alternative sourcing, supplier collaboration, and commodity risk management tools, to mitigate price volatility. The Snacks segment operates a direct-store-delivery distribution model utilizing independent contractor distributors.

Supply Chain Architecture: Key Suppliers & Partners:

• Ingredients & Packaging: Sourced from various suppliers, predominantly in North America. These items are subject to price fluctuations due to geopolitical conflicts, trade policies, scarcity, demand, energy costs, currency fluctuations, supplier capacities, government policies, climate change, and agricultural factors.
• Contract Manufacturers: Utilizes third-party contract manufacturers; for example, the substantial majority of Rao’s tomato-based sauce products are produced by a third-party contract manufacturer at a single facility in Italy, with the remainder produced at a single U.S. facility.
• Distribution Partners: Engages third-party brokers and distribution partners for sales and merchandising activities.

Facility Network:

• Manufacturing: The company owns principal manufacturing facilities across the U.S. in states such as Arizona, California, Connecticut, Florida, Illinois, Indiana, Massachusetts, North Carolina, Ohio, Oregon, Pennsylvania, Texas, Utah, and Wisconsin. Leased facilities include Tualatin, Oregon and Austin, Texas.
• Research & Development: R&D expenditures are incurred for new product and manufacturing process innovation, and improvements to existing products and processes.
• Distribution: The company owns and leases distribution centers throughout the U.S.

Operational Metrics: The company has achieved supply chain productivity improvements and benefits from cost savings initiatives, which positively impacted gross profit margin in 2025 and 2024. Capital expenditures in 2025 included network optimization for the Meals & Beverages business and chip and cracker capacity expansion for the Snacks business. Planned capital expenditures for 2026 include further network optimization for both segments, information technology projects, and wastewater initiatives.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Achieved through the company's own sales force.
• Channel Partners: Leverages third-party brokers and distribution partners.
• Direct-Store-Delivery: The Snacks segment employs an independent contractor distribution model.
• Retailers: Products are resold to consumers through a diverse range of retail channels, including retail food chains, mass discounters, mass merchandisers, club stores, convenience stores, dollar stores, and e-commerce.
• Foodservice: The Meals & Beverages segment also serves the foodservice channel.

Customer Portfolio: Enterprise Customers:

• Customer Concentration: The five largest customers collectively accounted for approximately 47% of the company's consolidated net sales in 2025, 2024, and 2023.
• Tier 1 Clients: Wal-Mart Stores, Inc. and its affiliates represent the largest customer, contributing approximately 21% of consolidated net sales in 2025 and 22% in 2024 and 2023. Both the Meals & Beverages and Snacks segments sold products to Wal-Mart Stores, Inc. or its affiliates. No other single customer accounted for 10% or more of consolidated net sales.

Geographic Revenue Distribution:

• United States: Accounted for 95% of total net sales in 2025, 2024, and 2023.
• Canada: The Meals & Beverages segment includes products sold in Canada.
• Latin America: The Snacks segment includes the snacking and meals and beverages retail business in Latin America, which will be managed under the Meals & Beverages segment starting in 2026.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The Campbell's Company operates in a highly competitive food and beverage industry, primarily in North America. The market is characterized by numerous competitors of varying sizes, including private label product producers and other branded food and beverage manufacturers. Competition extends across traditional retail and e-commerce channels. The industry is navigating a dynamic environment marked by commodity cost volatility, supply chain pressures, tariffs, shifting global trade policies, economic uncertainties, and evolving consumer purchasing and spending patterns. Consumers are increasingly seeking value, convenience, at-home cooking solutions, stretchable meals, and making intentional snacking decisions related to health, wellness, and indulgences. Retailers are leveraging their buying power to demand more favorable terms, increased promotional programs, and customized products, while also expanding their private label offerings.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: The company faces competition from numerous branded food and beverage manufacturers and producers of private label products. Some primary competitors are larger and possess substantial financial, marketing, and other resources, potentially allowing for more aggressive advertising and promotional activities.

Emerging Competitive Threats: Reduced barriers to entry and easier access to funding are fostering new competition. The rapid evolution of technologies, including artificial intelligence and machine learning, could become critical in interpreting consumer preferences, posing a technological competitive threat. A continued shift towards private label offerings, particularly during periods of economic uncertainty or significant inflation, also represents a competitive threat.

Competitive Response Strategy: The company's strategy emphasizes brand recognition, taste, nutritional value, price, promotion, innovation, shelf space, and customer service. It focuses on predicting and responding to consumer tastes and dietary habits, offering a diverse array of products, and developing innovative solutions across multiple categories. The company also aims to respond successfully to technological advances and intellectual property rights of competitors, and to rapidly develop products in faster-growing and more profitable categories. Leveraging its scale, marketing, product innovation, and category leadership positions is key to responding to evolving customer dynamics.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Global Macroeconomic Conditions: Deterioration, including recession, slow growth, or high inflation, can adversely affect consumer spending and demand. Geopolitical conflicts, supply chain challenges, rising interest rates, energy costs, labor shortages, and pandemics contribute to volatility.
• Global Trade Policies: Changes, including imposed and threatened tariffs by the U.S. and reciprocal tariffs by trading partners (e.g., Canada, Mexico, EU, UK), can increase costs for ingredients, packaging, and finished products.
• Pricing Power: Inability to increase or sustain price increases to fully offset inflationary pressures on costs (raw materials, packaging, labor, distribution) may lead to reduced sales volume or a shift to lower-priced private label products.
• Brand Perception: Consumer perception is critical; negative publicity or failure to maintain product quality, anticipate preferences, or invest in brand image can diminish brand value. Social and digital media amplify such risks.
• Customer Landscape Changes: Shift from traditional retail to alternative channels (dollar stores, club stores, e-commerce) can create price deflation and increase retailer demands for promotional programs and customized products.
• Customer Concentration: Reliance on a few large customers (top five account for 47% of sales, Wal-Mart Stores, Inc. for 21%) creates risk if sales to these customers are disrupted.
• Intellectual Property: Inability to obtain or adequately protect intellectual property (trademarks, patents, copyrights, trade secrets) or competing claims can reduce product and brand value, leading to costly litigation.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Disruption to Supply Chain: Damage or disruption to manufacturing, warehousing, or distribution capabilities (internal or third-party) from execution issues or external factors like changing trade policies, geopolitical conflicts, material scarcity, logistics disruptions, supplier capacity constraints, climate change impacts (extreme weather, water scarcity), natural disasters, labor shortages, or cybersecurity breaches.
• Supplier Dependency: Production of agricultural commodities is vulnerable to weather, disease, and resource scarcity. Reliance on single suppliers or locations (e.g., Rao’s tomato-based sauce products from a single third-party contract manufacturer in Italy and a single U.S. facility) poses significant risk.

Financial & Regulatory Risks

Market & Financial Risks:

• Asset Impairment: Risk of impairment to goodwill ($4.991 billion) and other indefinite-lived intangible assets ($3.678 billion) if growth rates, operating margins, cost of capital, or market conditions change. Impairment charges of $176 million in 2025 and $129 million in 2024 were recognized.
• Pension Liabilities: Increased liabilities and costs related to defined benefit pension plans due to changes in regulatory requirements, asset values, investment returns, interest rates, and mortality rates.
• Indebtedness: Substantial indebtedness of approximately $6.857 billion as of August 3, 2025, increases exposure to interest rate fluctuations, potential credit rating downgrades, and limits financial flexibility.
• Financial Market Access: Disruptions in financial markets may impair access to liquidity, increase borrowing costs, or negatively affect relationships with customers, suppliers, and creditors.

Regulatory & Compliance Risks:

• Legal and Regulatory Proceedings: Exposure to various legal and regulatory proceedings, including class actions and claims related to false or deceptive marketing. The food industry faces increased scrutiny and evolving regulations.
• Industry-Specific Regulations: Extensive regulation by federal (FDA, USDA, FTC, EPA) and state agencies in the U.S., and similar international bodies, covering product processing, ingredients, labeling, packaging, waste management, and safety. Anticipates continued legislative and regulatory developments (e.g., FDA call to phase out synthetic dyes, MAHA Commission recommendations).
• Independent Contractor Model: The Snacks segment's independent contractor distribution model is subject to increased regulatory scrutiny and lawsuits.
• Data Privacy: Subject to evolving and potentially inconsistent privacy, data protection, and data security laws across jurisdictions.

Geopolitical & External Risks

Geopolitical Exposure:

• Ongoing Geopolitical Conflicts: Global economic disruptions from conflicts (e.g., Russia-Ukraine, Middle East, China-Taiwan tensions) have led to material shortages and increased costs for transportation, energy, and raw materials. Further escalation could result in cyberattacks, supply disruptions, and adverse impacts on financial markets.
• Trade Relations: Changes in global trade policies, including tariffs and retaliatory measures, create uncertainty and can impact financial performance.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas: The company's R&D efforts, with expenditures of $100 million in 2025, are focused on new product and manufacturing process innovation, as well as improvements to existing products and processes. There is also a strategic emphasis on optimizing information technology infrastructure and increasing data digitalization across operations. Innovation Pipeline: The company has established a Growth Office to support its two divisions and expand consumer-led innovations, aiming to develop products in faster-growing and more profitable categories.

Intellectual Property Portfolio:

• Patent Strategy: The company owns a number of valuable patents, though no single patent or group of related patents is considered critical to any specific business segment.
• Trademark Strategy: The Campbell's Company holds over 3,000 trademark registrations and applications in more than 150 countries. Its principal brands, including Campbell's, Cape Cod, Chunky, Goldfish, Kettle Brand, Lance, Late July, Milano, Pace, Pacific Foods, Pepperidge Farm, Prego, Rao's, Snack Factory, Snyder's of Hanover, SpaghettiOs, Swanson, and V8, are protected by trademark law in their major markets and are considered a significant and valuable aspect of the business.
• Other IP: The company also owns registered and unregistered copyrights, proprietary trade secrets, technology, know-how, and processes.

Technology Partnerships: The company leverages consultants and third-party service providers to enhance its information security program and collaborates with suppliers to mitigate supply chain impacts.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: Building a "Top Team" is a core strategic pillar, focusing on cultivating an engaged culture to attract, grow, and retain top talent, including investments in leadership and development programs. The consolidation of Snacks offices into the Camden, New Jersey headquarters aims to foster closer collaboration and enhance decision-making.

Board Composition: The Board of Directors, in coordination with the Audit Committee, oversees the company’s Enterprise Risk Management (ERM) process, including the management of cybersecurity risks. The Board annually reviews assessments of the information security program under the National Institute of Standards and Technology cybersecurity framework (NIST CSF) and receives reports from the Chief Digital & Technology Officer (CDTO) and Chief Information Security Officer (CISO). The Audit Committee has primary responsibility for overseeing cybersecurity matters.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 13,700 full-time and part-time employees as of August 3, 2025.
• Geographic Distribution: Employees are located in the U.S. and non-U.S. locations, as indicated by pension plan sponsorship.
• Skill Mix: The company relies on highly skilled individuals and all levels of skilled labor in its manufacturing facilities.

Talent Management: Acquisition & Retention:

• Hiring Strategy: The company is committed to attracting, developing, and retaining world-class talent.
• Retention Metrics: Not explicitly disclosed, but the company acknowledges the risk of a sustained labor shortage or increased turnover rates.
• Employee Value Proposition: The "Make history with Campbell’s" Employee Value Proposition is central to building a winning team and culture.
• Compensation Philosophy: Provides market-based competitive compensation through salary, annual incentive, and long-term incentive programs. Compensation structures are benchmarked against competitive market data, with individual pay based on role, experience, job location, and contributions.
• Benefits: Offers a robust benefits package, including a 401(k) plan with immediate vesting and resources for retirement planning.

Diversity & Development:

• Development Programs: Investments are made in training and development programs focusing on leadership excellence, change management, and functional capabilities to support a culture of continuous learning.
• Culture & Engagement: The company fosters a culture of belonging through frequent and transparent communication (company-wide and business unit check-ins) and employee engagement surveys. Modernized workspaces and a hybrid work policy are also in place.
• Wellness & Safety: Prioritizes employee health, safety, and well-being through comprehensive health, safety, and environment management policies and standards. The "Ways to Well-being Strategy" provides resources for physical, financial, professional, social, and emotional well-being.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: The company has established science-based targets for Scope 1, 2, and 3 greenhouse gas emissions.
• Renewable Energy: Not explicitly detailed in the filing.

Supply Chain Sustainability:

• Supplier Engagement: The company monitors existing and pending environmental laws and regulations related to climate change, greenhouse gas emissions, energy, and sustainability.
• Responsible Sourcing: The scarcity of organic ingredients is noted as a factor that can influence commodity prices.

Social Impact Initiatives:

• Community Investment: The company is committed to delivering for its communities through continued progress on sustainability and community goals.
• Product Impact: The company is monitoring legislative and regulatory developments related to food ingredients, labeling, and packaging, including the FDA's call to phase out "petroleum-based synthetic dyes" and the MAHA Commission's recommendations regarding chronic childhood disease, indicating an awareness of product health and social impact.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Demand for soup products is seasonal, with the highest sales volume typically occurring during the fall and winter months.
• Economic Sensitivity: Demand for other products is generally evenly distributed throughout the year. However, overall consumer preferences and demand can be affected by weak economic conditions, recessions, significant inflation, government regulation, and pandemics.
• Industry Cycles: The company operates within a dynamic operating and regulatory environment influenced by various economic uncertainties.

Planning & Forecasting: Ingredient inventories generally peak in late fall and decline during winter and spring, reflecting the seasonal nature of certain raw material availability, for which the company makes purchase commitments in their respective seasons. The company's strategic initiatives, including supply chain optimization and cost savings, imply ongoing demand forecasting and capacity planning efforts.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations: The manufacture and marketing of the company's food products are extensively regulated. In the U.S., activities are subject to various federal agencies, including the Food and Drug Administration (FDA), Department of Agriculture, Federal Trade Commission, Department of Labor, Occupational Safety and Health Administration, and Environmental Protection Agency, as well as state and local agencies. Similar agencies regulate the business outside the U.S. Regulations cover processing, ingredients (e.g., Food, Drug, and Cosmetic Act colors), labeling and packaging (e.g., extended producer responsibility regulations), waste management, storage, distribution, marketing, advertising, quality, safety, employee health and safety, environmental protection, data privacy and security, tax, and securities. The company believes it is in material compliance with current laws and regulations. Anticipated Regulatory Changes: The company anticipates continued legislative and regulatory developments concerning food ingredients, labeling, and packaging at both state and federal levels. Notable developments include the FDA's April 2025 call for the industry to phase out "petroleum-based synthetic dyes" and the Make America Healthy Again (MAHA) Commission's May 2025 assessment report and September 2025 strategy report on chronic childhood disease.

Trade & Export Controls:

• Trade Restrictions: The company is subject to changes in global trade policies, including imposed and threatened tariffs by the U.S. and reciprocal tariffs by its trading partners, which can increase costs for materials and finished products.
• Export Restrictions: Not explicitly detailed beyond general trade policy impacts.
• Sanctions Compliance: Not explicitly detailed.

Legal Proceedings: The company is involved in various pending or threatened legal and regulatory proceedings, including purported class actions.

• Environmental Litigation: In March 2024, lawsuits were filed by the United States Department of Justice (on behalf of the U.S. Environmental Protection Agency) and the National Education Law Center (on behalf of Environment America and Lake Erie Waterkeeper) concerning alleged Clean Water Act violations at the Napoleon, Ohio wastewater treatment facility. The company is taking remediation actions and is in settlement discussions, not expecting a material adverse effect on its financial condition, results of operations, or cash flows.
• Independent Contractor Lawsuits: The independent contractor distribution model used in the Snacks segment has been the subject of various class and individual lawsuits.
• Plum Baby Food Litigation: Litigation expenses were recorded in Administrative expenses related to the Plum baby food and snacks business (divested May 3, 2021) and other litigation matters.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The effective tax rate was 24.4% in 2025, 25.1% in 2024, and 23.9% in 2023.
• Rate Drivers: The decrease in 2025 from 2024 was primarily due to nondeductible costs associated with the Sovos Brands, Inc. acquisition in the prior year, excess tax benefits from the vesting of stock-based compensation awards in the current year, and state tax law changes, partially offset by $15 million of tax expense related to the sale of the noosa yoghurt business. The increase in 2024 from 2023 was primarily due to nondeductible costs associated with the acquisition.
• Geographic Tax Planning: The company has approximately $11 million of undistributed earnings of foreign subsidiaries deemed permanently reinvested, for which no material deferred tax liability has been recognized.
• Tax Reform Impact:
  • One Big Beautiful Bill Act (OBBBA): Signed July 4, 2025, this act makes certain provisions of the Tax Cuts and Jobs Act of 2017 permanent and introduces changes to U.S. corporate tax provisions. It did not have a material impact on the consolidated financial statements in 2025, and the company does not expect a material impact on its effective tax rate, though it anticipates future cash tax benefits from changes in tax laws for depreciation and research and development expenses.
  • Inflation Reduction Act (IRA): Signed August 16, 2022, the IRA introduced a corporate alternative minimum tax (beginning 2024) and a 1% excise tax on share repurchases (after January 1, 2023). The provisions of the IRA did not have a material impact on the consolidated financial statements, with any excise tax incurred recognized as part of the cost basis of acquired shares.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: The company maintains cybersecurity insurance to protect against certain potential losses from cybersecurity incidents, though it acknowledges such insurance may not cover all claims.
• Risk Transfer Mechanisms:
  • Derivative Financial Instruments: The company utilizes derivative financial instruments, including foreign exchange forward and option contracts, interest rate swaps, and commodity futures, options, and swap contracts, to hedge exposures to fluctuations in foreign currency exchange rates, interest rates, and commodity prices. These instruments are not used for speculative purposes or as leveraged instruments.
  • Guarantees: The company guarantees approximately 4,500 bank loans made to independent contractor distributors by third-party financial institutions for the purchase of distribution routes. The maximum potential amount of future payments under these guarantees was $570 million as of August 3, 2025. These guarantees are indirectly secured by the distribution routes, and the company does not expect to make material guarantee payments due to defaults.
  • Indemnifications: The company provides certain indemnifications in connection with divestitures, contracts, and other transactions. Liabilities recognized for known exposures related to these matters were not material.