June 16, 2023
(Industry Intelligence Inc.)
Q3 organic net sales increased 5% versus prior year
- Results were fueled by in-market performance, service levels, driven by sustained supply chain recovery, and favorable inflation-driven net price realization
- These areas continue to be key areas of focus
Meals & Beverages
Organic net sales decreased 1%, while in-market dollar consumption grew 2%
- Segment is fully back to pre-COVID service levels in the mid-to-high 90s, which is currently 'best-in-class'
- Company does not expect further significant inventory-driven volatility as retailers have returned to targeted inventory levels
- Soup down 11%, primarily reflecting disproportionate impact of cycling inventory recovery from a year ago
- As competitors improve supply, company is seeing some increased promotional activity
- Company believes strongly in its ability to grow soup, citing improved relevance of condensed soup, especially in cooking
- This has attracted new younger consumers to Campbell's
- Chunky's repositioning from low-cost, value item to focus on protein and quick in-home lunches has also been particularly relevant with younger consumers
- Company also sees Pacific as a growth engine, citing 56% increase in dollar consumption over four years
12% net sales growth was fueled by company's eight 'power brands'
- Customer service levels are now averaging 95% due to supply chain recovery
- Goldfish is on pace to approach being a US$1B brand,
- Goldfish named teens' most preferred snack brand for the fourth time in a row according to Piper Sandler's Spring 2023
- New kettle-cook and air-finished potato chips have performed 'extremely well' in market
- CEO Mark Clouse does not agree that soup is a "race to the bottom" and says company is well positioned to benefit from resurgence in the category overall
- The whole meal solution platform in store is a really effective tool where we're helping people through the lens of value, how do you put together a simple meal for a low price. I think what we're seeing with consumers is this ever-growing desire to really stretch their dollar, as you would expect."
- "Interestingly enough in this world of concern of trading down, our Pacific brand was the fastest-growing ready-to-serve brand in the quarter. That's faster than some other jarred premium soups that are out there, really kind of debunking this whole myth of whether cans or jars. If it's good food, people are going to buy it, especially if it's a great value."
- "The supply chain being in a strong position is going to be very, very important, as I do think we're heading into a period where those that are able to execute well and outperform competition, whether that be private label or other competitors, is going to be a real hallmark of those that are winning in the market that we're in."