March 13, 2023
(Industry Intelligence Inc.)
- Even as branded players deal back prices to narrow gaps, CEO Mark Clouse does not see this as "some harbinger of bad things to come."
- "The winners in this moment are going to be the ones that get this balancing act right, where you don't overspend and erode profitability, while you don't get too greedy and not invest properly in your brands."
- Clouse outlines three-point, longer-term strategic plan for Soup category
- Win the fights that matter most
- Important fights include ready-to-serve soup, lunchtime occasion (particularly among younger consumers) and its Pacific brand, which was up 17% in the quarter
- Continue to drive long-term relevance of the category
- "...cooking is a good proxy that we use for that. And the trends on cooking in home just continue to be incredibly powerful."
- "The magic numbers on dinner are 20 minutes and the magic number on lunch is 10 minutes on speed."
- Hold the line on balance
- "...we feel good about the areas we're focused on, while still being very vigilant on the areas that may not be as robust."
Campbell Soup saw organic net sales rise 13% in Q2, supported by favorable inflation-driven net price realization and strong consumer demand for its brands.
Meals & Beverages
- Organic net sales rise 11% primarily due to increase in US retail products, including US soup, Prego pasta sauces and Pace Mexican sauces, as well as gains in foodservice
- Foodservice now represents about 10% of Meals & Beverages business, up 34%
- Foodservice boosted by 16% increase in Canada performance
- Consumers continue to seek out Campbell brands as they look for ways to stretch their food budgets and turn to "value-driven meals that taste great and are easy to prepare"
- Company continues to feel great about long-term health of the category and its ability to drive sustainable growth and share over time
US soup grew dollar consumption by 4% and sales by 7%, despite increasing pressure from private label
- Sales driven by ready-to-serve and condensed soups
- Campbell represents more than half of the wet soup category
- Condensed icons including, tomato, chicken noodle, cream of mushroom and cream of chicken, grew dollar share by one point
- Growth driven by multipacks, which are resonating with consumers as they seek value
- Chunky up 8%
- Chunky Ghost Pepper LTO built "significant buzz" this winter, will be returning nationwide for soup season this fall
Condensed cooking SKUs are growing share as cooking behavior, recipe marketing drive increased relevance amid continued economic pressure
- Success fueled by expansion of company's new Spicy innovation platform
- All spicy brands are resonating "exceptionally well" with consumers
Pacific Foods consumption up 17%
- Gaining share and momentum, particularly with millennials
- Pacific was the fastest-growing branded wet soup product on a dollar basis in all measured channels
- Pacific continues to hold the number one share position in the organic soup category
Italian sauce category remains "very relevant"
- Benefits from consumers seeking value and meals that "the entire family loves and can easily be prepared at home"
- Greatest incremental growth in the last five years from latest Prego innovations, which included spicy marinara, creamy tomato basil and other elevated flavor varieties
In Mexican sauces, Pace marks fourth consecutive quarter of share growth
- Innovation launches such as Pace Ghost Pepper Habanero look to take advantage of the continued strength of Mexican meals prepared at home
In Q2, Campbell saw the strongest share growth in both cookie cracker and salty snacks among all major branded players
- Top-line growth of 15% driven by favorable net price realization, volume gains and continued growth of power brands, which were up 20%
- Cookies and crackers growth led by Goldfish and Pepperidge Farm
- Salty snacks led by Snyder’s of Hanover pretzels, Snack Factory Pretzel Crisps and Kettle brand potato chips
- Snacks brands also had a "very strong" holiday season
- Company says results show power of portfolio and relevance of consumer snacking behavior, even in this current economic environment
Goldfish continues to be "the star of the snacks business."
- Second consecutive quarter of Goldfish being the largest driver of growth for the cracker category, delivering 21% consumption growth
- Brand saw greater-than-expected growth in both buy rates and repeat rates among households without children and about equal to households with children
- Goldfish LTO strategy "is working", consumers are twice as likely to purchase LTOs alongside other Goldfish items
Campbell recently announced Kettle brand air fried potato chips
- Company claims to be the first to commercialize air frying as a manufacturing technique in snacking and first to go to market with an air fried chip
- Company has developed patent-pending technology to kettle cook and air finish potato chips to deliver a light and crispy texture with 30% less fat than the original version
- Initial customer and consumer reaction has been "extremely positive"