Campbell's Morrison: 'A new normal is coming to food'

by Keith Nunes
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Denise Morrison, president and chief executive officer of the Campbell Soup Co., described the C.P.G. marketplace as “tumultuous.”

CAMDEN, N.J. – Denise Morrison, the president and chief executive officer of the Campbell Soup Co., did not mince words July 21 in a presentation before financial analysts at the company’s annual investor day. She described the current market conditions facing the makers of consumer packaged goods as “tumultuous,” “persistently challenging” and “tough,” and she added “a new normal is coming to food.”

“The industry is in a period of major transition in which there will be winners and losers,” she said. “A new normal is coming to food. The winners will be the companies that adapt successfully to a changing world.”

In a wide ranging presentation to lead off the company’s investor day, Ms. Morrison attempted to set the scene for the investment community of what the Campbell Soup Co. and other C.P.G. manufacturers are facing. She noted lower and middle income consumers continue to struggle in the United States.

“The long-awaited rebound from the great recession has not brought them meaningful relief,” she said. “Financial anxiety has become a fixture in their lives and their food purchasing behavior reflects their caution and uncertainty about the future.”

She added persistent unemployment, reductions in public assistance and the rising costs of energy and healthcare all have contributed to the consumer’s focus on value. She said the value trend is here to stay and is fueling the growth of such value channels as dollar and club stores where food and beverage sales are growing at a higher rate than traditional grocery stores.

“A second is the profound transformation in consumer preferences and priorities with respect to food, a transformation that has been building for a number of years and now appears to be at or near a tipping point in terms of its impact on the industry,” Ms. Morrison said. “Consumers are clearly demanding greater transparency about their food. They want to understand how it is grown, produced and marketed. They want to know what ingredients are used in their food and where those ingredients come from.

“The insistence upon greater transparency is mounting, and it is part of what is driving the proposed changes in food labeling regulations and labeling requirements and the increasing contentious public discussion about genetically engineered ingredients.

“More broadly, consumers are holding manufacturers more accountable. They want to know where we stand on public policy issues that they are concerned about and what we stand for. There is no doubt in my mind the way food companies respond to these new expectations and the way Campbell responds will have a lasting impact on consumer's purchasing behavior and on their loyalty to our brands.”

Ms. Morrison said the changing demographics in the United States go beyond the traditional talking points that focus on millennials and the growth of the Hispanic population.

“At a more granular level, the level where we live, it is redefining the meaning of the family unit,” she said. “Today the American family is a rich mosaic that reflects increasing diversity, new economic realities and powerful social change. We are seeing the growth of adult-only and single person households, of single-parent households with children, of multi-generational families living under one roof, of multi-racial and multi-cultural households and of same-sex households. All of these families shop and eat but many of them shop and eat differently than the traditional family that has dominated the thinking of our business for so long.

“These new families are seeking foods and beverages that reflect and embrace their diversity and individual preferences. They are expecting food companies to offer a range of product sizes and price points that meet their specific economic needs and lifestyles. They want innovative packaging and value-added features. They also want more personalized approaches to creating and enjoying food and our industry must drive innovation and marketing that meets the requirements of these diverse families.”

Finally, she said, “the new frontier of e-commerce has come to food.”

“Ready or not our industry must do a much better job of leveraging this channel,” Ms. Morrison said. “E-commerce in the United States is expected to grow from more than $262 billion in sales last year to $440 billion by 2017. That is a compound annual growth rate of almost 14%, and purchases made with mobile devices are expected to grow even faster.

“But food companies and supermarket chains have lagged in adapting to this shift. According to market research or Kantar Worldpanel, food, beverages, and personal care products account for less than 4% of e-commerce sales. The industry will have no choice about embracing the on-line channel. On-line grocers such as Amazon Fresh and Peapod are changing the game, and supermarkets are entering the fray, slowly.

“One of our traditional grocery customers recently shared that his company experienced growth of more than 30% in its on-line ordering business versus brick and mortar growth of roughly 3%, and the average basket ring of its online shoppers was three times that of its traditional shopper.”

Ms. Morrison highlighted the current plight of retailers as adding to the troubles some C.P.G. manufacturers currently face, noting many retailers are being pressured by intensified competition driven by consolidation and the growth of new channels.

“Retailers have responded to soft consumption and center store categories by driving inventory rationalizations which have adversely affected food producers, and you know across the industry, promotional activity in retail stores has failed to generate the expected volume lifts. In this difficult environment, we are seeing continued consolidation in the packaged food industry, both retail and food service, as competitors seek synergies and the advantages of scale.”

Ms. Morrison described the challenge before the C.P.G. sector as “immense” and added consumers are thinking, shopping, spending and behaving differently than they have in the past.

“The packaged foods industry must adapt and adapt quickly to a new era,” she said. “We must open our eyes and our minds to entirely new ways of thinking about our business. Some of you think we simply can't do this; that we lack the mindset, agility and imagination to prosper in this world, but I know that Campbell will prove the skeptics wrong.”
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READER COMMENTS (6)

By Joann J 7/26/2014 4:55:44 PM
I am happy to finally read something that makes sense. I am a Registered Nurse and I've worked in Allergy and Environmental Medicine among other specialties in my 30 years of nursing. I'll be straight and to the point and not waste words here - The processed foods out there are literally killing people. The general public is not stupid and we resent being blown off with our polite petitions and requests. Give us labeled foods with ingredients and their origins. We will make up our own minds if we'll consume it or not. If you cannot do that, then you are guilty of poisoning. I say that because there are many like myself who have allergies to certain foods and have bad physical reactions to chemicals. I avoid them like the plague. I buy organic and I serve organic. Why would I want GMO ingredients when they are spliced with chemicals? This makes no sense. Why would I want to eat a GMO fish when it is spliced with a species I am allergic to? Why is it acceptable that the food companies make us sicker so they can have an increased profit? I'm lucky that I know what I know. There are many others with sensitivities like mine. Actually most everyone IS like me but they are not so knowledgeable about connecting the dots as to where their symptoms come from. The powers that be can turn a blind eye and bad mouth the studies done in Europe on mice with the GMOs if they want.. but truth is truth and the truth always stands in the end. The truth is that in the U.S. we have the poorest health and skyrocketing rates of allergy, autoimmune diseases, liver and gut problems. It doesn't take a rocket scientist to figure out it is what we are ingesting. If you want to do much better than transparency and labeling - make your foods without GMO ingredients - and label that! I KNOW your business would flourish with non-GMO ingredients and you would gain a lot of respect.

By AB 7/26/2014 2:19:02 PM
1. We want REAL FOOD, not chemical-based,lab-created, food-like items. 2. The same standards should be applied to ALL of your consumers, whether they are American or European, despite the regulation differences. You KNOW the latter is more healthful - don't sell Americans' health down the river because you want to save a few bucks. 3. NO additives, preservatives, artificial colors or flavors (see #1) 4. Stop with the bogus health claims - update your knowledge of nutrient-dense foods, and stop pouring money into marketing efforts for bogus health claims, i.e. low-fat obsessions, etc that are damaging to our health. 5. If you can't be transparent with your consumers, you're doing something unethical, plain and simple. I will not willingly and knowingly support any company that practices deceit in order to turn a profit, especially not at the expense of my or my childrens' health. 6. No GMOs. They are implicit in cancer and infertility. 7. Follow the money trail in all of your research. If the funding company has a vested interest, reject the findings for third-party confirmation. 8. We are not looking at calories any more. We are looking at ingredients. Make sure your list is made up of real, natural foods. 9. Do not "greenwash". Ex: Organic white flour / sugar is still nutritionally void. 10. We are what our food eats. No growth hormones or antibiotics, please! We are doing more research than ever before and thankfully, we have more options than ever before. I have not bought Campbells in years nor will I (or recommend them) until they make MAJOR changes in their "food" and business practices. We are human beings, not lab rats. Organic is REAL and should be available to everyone despite their income or education level. I'm thrilled that people are rejecting processed foods in droves as they realize how damaging it is. Please take these considerations very seriously and remember that you hold a great deal of responsibility. How much money is it worth? How much are you selling your integrity for?

By Tina Jackson 7/26/2014 12:56:10 PM
I am pleased to see Campbell's awareness of the need for increased transparency regarding ingredients and production. GMO labeling is the way of the future per consumer demand, so thank you for being receptive to that - now be a trend setter, and start labeling your products before Campbell's is required to do so by law. Additionally, please stop adding sugar into so many of your products, and leave out the "natural" and artificial flavorings and preservatives that are causing so many consumers to turn away toward the organics. Expanding your organic offerings (while supporting STRONG organic standards, not pushing for weakening these standards) will also enhance your profits. That has been other companies' experiences.

By Gena Curtis-Simkins 7/26/2014 8:48:56 AM
As long as Campbell's food like products contains GMO's I will not purchase your brand!!! Please take the GMO's our of your products. Thank you.

By Sally Pickard 7/26/2014 8:08:12 AM
Please no GMO, and stop adding sugar to everything! The best cure to disease is prevention, and this is brought about with what we eat.

By Randi Hofmann 7/26/2014 7:54:47 AM
As the owner of the FB Page Let's be GMO free I have 400 people that will not TOUCH anything made by Campbells foods. Unless you comply with Labeling and making your foods NON GMO and safe for public consumption that Mushroom soup you sell for the Thanks giving holiday for the Green been casserole that is a stable in American households will be purchased from ORGANIC companies. Change or your $ will start dwindling