Earlier this month Campbell Soup Co. reported US soup sales fell 21% in the fourth quarter ending Aug. 1 with volume declines in condensed soups, ready-to-serve soups and broths compared to the same period a year ago when at-home restrictions pushed sales up 52%.
Despite this, CEO Mark Clouse last week during Barclays Consumer Staples Conference that he feels “terrific” about Campbell Soup Co.’s turnaround over the past three years and specifically its market share gains, including with new consumers, in the soup business.
In the fourth quarter, Campbell Soup gained nearly two points of market share in US soup – marking the 10th consecutive quarter in which the company has achieved this. The streak has helped bring 15 million new households to the company’s business.
And while stay-at-home restrictions during the pandemic helped bolster this, the company’s streak shows it was growing its soup business even before the coronavirus outbreak – underscoring the business’ viability and long-term potential.
“My philosophical belief is that share, for the most part, is perhaps the best barometer of the health of your business because, certainly it is feasible to out and buy share and we’ve see that, and that’s not what I am not talking about, but in a balanced approach I do think share becomes a really good indicator of the health of the business and it’s a good indicator in times of high demand or in times of more normalized” demand, Clouse said during Barclays Consumer Staples Conference.
Innovation will help fuel the next wave of soup sales
Looking forward, Clouse said he sees significant potential to continue driving soup sales and gaining market share in part with innovation – an approach that Campbell had to “pump the breaks” on during much of the pandemic to focus on stocking core products.
“I do think an area of opportunity that remains is innovation … in particular in meals and beverages in soup, where you see a significant inflow of innovation and continued renovation on our business that I’m really excited about,” he said.
Among the innovations in soup that excites Clouse is the relaunch of the better-for-you Well Yes! Brand with five Power Bowls for lunch and snacks, several of which cater to consumers’ seemingly unquenchable demand for spicy ingredients, like roasted poblano chili peppers, jalapenos, paprika and chipotle adobo across three of the new flavors: Southwest Style Chicken, Veggie Chili and Cajun Style Chicken.
Other soup innovations include the expansion of Slow Kettle Crunch, which pairs classic Campbell’s soups with Goldfish toppings, the addition of creamy oat milk soups and creamy plant-based protein broths under the Pacific Foods business and a repositioning of Chunky Soups to emphasize protein content.
Delta fuels soup and other at-home food sales
In addition to innovation, Clouse said that Campbell’s “unfortunately” still has elevated demand as COVID cases continue to surge along with the Delta variant.
As “in home consumption stays elevated, soup correlates very well with that and I think we will continue to benefit from this kind of tenuous environment we’re in of not quite yet opening and certainly watching COVID play a big role in that,” he said.
He added that increased demand due to the pandemic also will help insulate the brand from blowback against price increases due to inflation as it keeps elasticity high.
As Campbell innovates in soup, Clouse also touted the company’s success in renovating existing brands and products to make them more desirable – especially to younger shoppers with children living at home.
The addition of households with younger shoppers is especially notable within the broader condensed soup segment, where Clouse said Campbell has added 3 share points with Millennials in the past two years and 4.5 share points of household penetration more broadly.
Reflecting on these successes, Clouse said, “we’re feeling more confident too in our ability to bring some truly new [items] to the world, ideas and platforms that build upon this growing consumer behavior and occasion that continues to solidify our relationship with the younger target” and reenergize the center store.