Innovation key for Campbell's

25 November 2010
NEW YORK: The Campbell Soup Company is shifting its focus away from reduced-salt products, and towards creating new "taste adventures", as it seeks to attract consumers with more innovative offerings.

Following an 8% fall in its quarterly profits, the world's largest soup maker said its overall quarterly results were hit particularly hard by dwindling sales of high-margin, ready-to-serve product ranges.

Despite heavier market budgets across these categories, the volume gains expected by the firm failed to materialise, and it expects margin pressures to persist through the next quarter.

Sales at Campbell's US Soup, Sauces and Beverages business fell by 3% over the August to October period, while US Soup sales fared even worse with a 5% decline.

Sales of ready-to-serve soups slumped by 13%, due in part to higher promotional spending, while condensed soup sales dropped by just 1%.

A more encouraging result was announced for the firm's fairly small Healthy Request brand, which recorded a 9% rise in sales.

For the quarter ended October 31, the company posted net profits of $279m (€209m; £176m) compared with $304m a year ago.

Campbell was one of the first large US packaged food makers to focus squarely on reducing salt content across its product line.

Backed by the powerful US healthy eating lobby, sodium-reduction became one of the company's, and the food industry's, biggest initiatives of the last decade.

In recent years, the firm has significantly reduced sodium levels in many of its canned soup products, its Pepperidge Farm bread range, Prego pasta sauces, Goldfish snacks, and in V8 juices.

In some cases, the reduction has amounted to more than 50% per serving.

In a conference call with investors, Campbell's ceo Douglas Conant said that at least part of the company's interest in low-salt and other such health initiatives had been prompted by the likely nutritional labelling changes being considered by US regulators.

"I think we've addressed the sodium issue in a very satisfactory way at this point for today and also for tomorrow," he added.

"I think the challenge for us now is to create some taste adventure and leverage some of our other benefits as we continue to manage the sodium profile."

"We've taken care of the long term and now we got to focus on innovation in near term, which goes beyond just the elimination of negatives and starts to celebrate the wonderful positives that we can do with soup."

Data sourced from Wall Street Journal/SeekingAlpha; additional content by Warc staff
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