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Bolthouse Farms and Garden Fresh Gourmet were expected to be bright spots in Campbell Soup's portfolio when they were acquired, with the hope the brands would offset slowing growth in the soup category.
Instead, the two businesses — part of the company's Campbell Fresh segment — have struggled and new management was brought in last October to speed up the turnaround.
"What the company has done in recent years is try to make acquisitions in the faster-growing part of the supermarket," said Joe Agnese, an analyst at CFRA in New York. Yet in doing so, Campbell increased its exposure to adverse weather, including such things as drought or heavy rain hurting crops.
Most stock analysts currently have Campbell rated a hold and forecast the company's earnings and sales to drop this fiscal year partly due to the fresh-segment woes.
Campbell shares have lagged the broad market and the S&P food-products index. The stock was essentially flat Friday, after posting a gain on Thursday in the wake of a new $1.5 billion stock buyback program that was announced late Wednesday.
Last month, Campbell produced weaker fiscal second-quarter earnings and sales although its U.S. soup sales showed growth after recent declines.
Garden Fresh Gourmet, acquired in 2015, makes refrigerated salsas, dips, hummus and fresh soups. The company tried to roll out the largely Midwestern salsa brand to other parts of the country but stumbled and missed distribution targets. It has since come up with differentiated recipes and has been focusing on overcoming distribution challenges.
"Overall, we find the example of Garden Fresh Gourmet a bit of a cautionary tale that applies to Campbell and the rest of the industry," JPMorgan analyst Ken Goldman said in a research note this month. "The one-size-fits-all model that works in packaged food is harder to apply to newer, artisanal products, especially in the fresh aisles of the store."
Recent trends have shown an accelerating shift by consumers to fresher foods, and that shift has weighed on the revenue of Campbell and other companies that make processed food. But trying to grab a piece of the fresh-food trend isn't that easy.
A Campbell spokesman told CNBC late Friday, "The packaged fresh category continues to grow at higher rates than center store [or canned food section] and is an attractive space as consumers continue to focus on health and well-being. We have the right strategy and our new management team is actively addressing the short-term executional issues we've faced recently."
As for Bolthouse Farms, Campbell acquired the seller of fresh carrot products in 2012. It has been coping with weather-related carrot issues since last year. Specifically, the California drought hurt the quality and yield of the carrot crop as did the state's heavy rains in December and January.
"Within the fresh business in particular, they have been feeling the effects of unfavorable weather," said Erin Lash, a Morningstar analyst in Chicago. "The weather has been specifically related to conditions that have affected their carrot crop in California."
Campbell CEO Denise Morrison acknowledged the execution issues. During a call with analysts, she said the business turned out to be "much more volatile than expected. We've set up more diversified growing regions, but we have more to do to strengthen our agricultural operations."
Management indicated last month the recovery from both the market-share losses on carrots and capacity constraints with its beverage business might take longer to work themselves through the various channels. It also doesn't expect the company's fresh segment to grow in the current fiscal year.
Then again, Campbell could surprise analysts with stronger results in the fresh business. Analysts suggest demand remains strong if Bolthouse Farms can produce enough carrots to create juice and other carrot products.
—Story updated with comment from Campbell Soup.