Campbell Soup benefits from enduring appeal of pantry staples: ‘Our condensed soups were the highlight of the quarter’
In its first quarter, the company reported an 8% increase in organic sales led by 12% organic net sales growth in its Meals & Beverages segment compared to Q1 2019.
Net sales for soups grew by 21% for the quarter with millions of new households purchasing and repurchasing the company’s iconic condensed soups.
“Our condensed soups were the highlight of the quarter with double-digit net sales growth, gains in share led by cooking SKUs, and 4 million new households purchasing this quarter versus prior year,” said CEO Mark Clouse.
Beyond soup, several of Campbell's other key Meals & Beverages brands performed strongly including Prego (which, for the 18th consecutive month, held the #1 spot in market share for the past sauce category), SpaghettiOs, and V8, each of which grew net sales in the double digits.
Millennials are flocking to the company’s canned soups in greater numbers than previous quarters, noted Clouse.
“Among millennials we grew share for total US soup by nearly one point, including significant growth of 2.7 points on condensed and over 1 point on Ready-To-Serve, demonstrating the sustained relevance of our core businesses with younger consumers."
Pacific Foods’ broth & soups reported +22% consumption growth* in Q1 2021 – its fourth consecutive quarter of share growth with strong gains among millennials.
“Pacific has also increased points of distribution and grew household penetration as we launched our first ever national advertising campaign,” said Clouse.
*Total IRI U.S. MULO $ consumption latest 13 weeks ending 11/1/2020
ANALYST PERSPECTIVE: 'One of the easiest products to cook'
Ryan Whittaker, consumer analyst at GlobalData, shared his take on why the company is still growing and gaining market share:
“Campbell Soup’s strong sales in 2020 relative to 2019 testify to the increased demand for simple, nutritious and lower-calorie food items during lockdowns, furloughs, and working from home.
“Consumers are leaning more towards healthier and convenient food products due to stresses relating to the pandemic and the economy, which also encourages deferring to value-for-money options. Canned soups can be stored on ambient shelves for long periods. Moreover, they contain vegetables and protein, they’re relatively cheap and they’re one of the easiest products to cook. Soup is also seen as a comforting staple with a lot of potential variation in flavors and textures; in many ways it is ideally placed to benefit from COVID-19 and lockdowns, both of which reduce eating out.”
Whittaker added, "For brands aiming to replicate Campbell’s success, the focus should target value-for-money, convenience, long shelf-life and nutritious content. We can predict that the areas most affected by COVID-19 and lockdowns will have the highest interest in canned soups for the near future.”
Snacks performance
Turning to its snacks division, Campbell Soup reported more modest 4% organic sales growth across its nine power brands.
The strongest performer in its snack portfolio, Late July, grew consumption sales by 26%.
“Late July is a great example of how our power brands are helping consumers make the most of their snacking moments,” said Clouse.
“We take a mainstream segment like tortilla chips and offer a product with higher quality including organic product credentials, highly relevant innovation and world class marketing to better engage consumers, allowing them to trade up into a better snacking experience.”
This business strategy has been applied successfully to the company’s other snack brands as well, such as Kettle Brand chips and Snack Factory Pretzel Crisps, which both experienced double-digit dollar consumption growth in the quarter.
Goldfish, also saw improved performance in Q1 2021 as the company redirected its marketing towards at-home snacking options and restored promotional pricing for products towards the end of the quarter resulting in improved consumption and household penetration.
“Our investment in capacity expansion in both Goldfish and our chips demonstrate our conviction in the long-term growth potential of our brands… we feel very confident in our ability to meet the long-term demand driven by the expected sustained growth of consumer snacking behavior,” added Clouse.
Consumers seek recipe inspiration and cooking tips from Campbell’s
Many consumers who are preparing nearly all of their meals in their home kitchens have leaned on Campbell Soup for recipe inspiration and have visited the company’s website for cooking help and guidance.
“Our recipe solutions continue to resonate with consumers as we saw a 20% increase in overall recipe related page views in the first quarter compared to the prior year,” said Clouse.
“As these first-time cooks gain more confidence, we believe they will likely continue to use these skills to prepare more meals at home, well beyond the pandemic.”
