Campbell’s sees off private label | WARC | The Feed
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Campbell’s sees off private label
Brands owned by The Campbell Soup Company are gaining share “with modest incremental investment”, according to its CEO.
What’s happening
“We are seeing more retailers actively returning to Campbell’s brands from private label a year ago,” CEO Mark Clouse explained on an earnings call – and that is “providing an outsized benefit” as the business balances its spending priorities.
“A year ago at Thanksgiving a lot of customers had chosen to go with private label as their lead item,” he said. “We saw that reverse in a material way this year … which was very important for us relative to ensuring that we get off to a good start in the season.”
Why it matters
Consumers’ daily routines have largely returned to their pre-pandemic normal, but the cost of living has not, Bloomberg noted recently: consumers are now spending around a third more on groceries than they were three years ago.
With price a more crucial element in consumer choice, private label has gained share. But inflation halved between October 2022 and October 2023, meaning more people may return to brands as their first preference. Strong brands that have maintained their marketing investment, like those of Campbell’s, will reap the benefits.
“We are committed to sustaining our marketing and innovation plans,” said Clouse. “This is critical not only to reinforce the value and differentiation of our products, but also to continue to build the long-term equity of our brands.”
Takeaways
- The CEO reported that over the past four weeks, including Thanksgiving, “we’ve seen improvement in all segments driving overall dollar and unit share gains, including a 0.2 improvement in dollar share as well as a 0.9 improvement in unit share for our very important total soup business”.
- Campbell’s power brands grew net sales by 5%; that was less than a huge 21% increase in the same period last year, but resulted in a 13% growth on a two-year compound annual rate basis.
- “The strength of our power brands was tempered in the quarter by lower-margin partner brands and fresh bakery, as those businesses are somewhat more vulnerable to private label and consumer trade down,” said Clouse.
- He expects a “tailwind” from retailers including Campbell’s brands rather than private labels in their seasonal advertising.
Sourced from Seeking Alpha, Bloomberg, Statista
[Image: The Campbell Soup Company]
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