Oct. 1, 2012
Despite the fact it has faced weakness in soup recently, Campbell Soup Co.’s soup sales were still responsible for the overall soup category’s modest performance in 2011, according to Mintel.
Overall soup category sales were at $6.4 billion in 2011 with a compound annual growth rate of just 1% between 2006 and 2011, according to Mintel.
“Long term, the category is expected to bounce back as the economy improves and as brands and market segments innovate and reinvent their products; such efforts already have begun to happen to some extent,” Mintel said in a report on the topic. “Mintel expects the market to reach $7.2 billion in sales in current dollars by 2016 with a C.A.G.R. rate of 2.4%.”
Campbell Soup, Camden, N.J., and Minneapolis-based General Mills, Inc. (through its Progresso brand) remain the top players in the category, with Campbell maintaining a 44% market share and General Mills maintaining a 13% share, according to Mintel. IBISWorld said the companies have benefited from vertical integration and well-established brands while small soup producers have suffered from internal and external competition.
Campbell has been in the process of launching up to 35 soups this fiscal year, which has helped it regain lost points of distribution and secure shelf space. The company called 2012 “a year of transition and investment,” and as it meets consumer interest in new flavor profiles and soup lines and spends promotional dollars on them, Mintel said the company and overall soup market will be positively impacted.
“With bolder, more vibrant flavors and contemporary packaging, we’re upping the ante with our new soup offerings,” said Mark Alexander, president ofCampbell North America. “Campbell is reframing what soup means with a variety of new choices.”
Some of Campbell’s new product introductions include offerings under the Campbell’s Go brand and new varieties in the Chunky and Gourmet Bisques brands.
“We know with certainty if we manage our core soup business with close attention to the fundamentals on execution and deliver smart innovation, that business can be an extremely profitable engine, and a source of respectable growth for a very long time,” said Denise Morrison, chief executive officer of Campbell. “So make no mistake about this, shelf-stable soup is immensely important and a valuable
business for Campbell. We can grow it, and we will grow it. And that’s reality, not denial.”
But at the same time, she admitted the soup category has its limitations.
“We’re not hallucinating about our core soup business,” Ms. Morrison said. “Although it will grow, we know that standing alone this business is unlikely to deliver the levels of overall growth to which we’ve committed ourselves.”
Craig Owens, senior vice-president, chief financial officer and chief administrative officer for Campbell, also admitted at a consumer conference it would be fair to say in the past they placed too much emphasis on lower-sodium, sea salt efforts that took priority over other innovation ideas.
“It was a tremendous drain in terms of focus and in terms of resources, and we have very consciously pulled back and reallocated some of that,” Mr. Owens said. “I don’t think it is the only thing that caused us not to be as innovative as we might have been in the soup business, but it was a big issue for us, and I think it is one where we’ve self-corrected.”
Ms. Morrison also said the higher levels of growth will come from other segments of Campbell’s business. The realities of challenges facing the soup business were evident when the company announced in late September it is closing a soup, sauces and beverage plant in California, with volume declines for canned soups being one of several reasons for the closing.
At General Mills, some significant innovation this year in the Progresso brand were Recipe Starters, a line of cooking sauces that may be used in many recipes, and two light soups.
“Other first-quarter highlights included good growth from Progresso,” Ken Powell, chief executive officer of General Mills, said of first-quarter results for fiscal year 2013. “We’ve launched new flavors of Progresso Lights, and continue to focus our advertising on the great taste of our ready-to-serve soups. And our new Recipe Starters sauces have enjoyed good customer orders to date. In total, first-quarter retail sales for Progresso increased 14%, and we added 3 points of market share in the ready-to-serve segment.”
One potential area for growth in the future may come from refrigerated and frozen soups. While frozen soup only represents 0.7% share of the category, it was benefited significantly from the introduction of the Bertolli brand into the category, according to Mintel. Bertolli Meal Soup achieved $7 million in sales and 22.2% of the frozen soup market in its first year, Mintel said. Unilever has sold the Bertolli brand to Omaha-based ConAgra Foods, Inc. this year, and with ConAgra poised to invest significantly in the brand, growth may continue.