Strong brands and marketing boost Campbell’s

The Campbell Soup Company attributed double-digit Q2 growth to the strength of its brands and increased marketing investment, along with innovation and the ironing out of earlier supply chain problems.

Why it matters

Clearly there are multiple factors at work and, as CEO Mark Clouse acknowledged on an earnings call, a rebound was to be expected once supply chain issues were resolved. But he also pointed out that in categories such as snacking, “if you’re not there, someone else is” and you can’t simply assume consumers will return when your own brands do. That’s where marketing comes in.

“The strength of what we’re seeing from a marketing and innovation side is giving us more confidence of this being more sustainable over time,” he said, adding that he believed the business has the ability to grow above the category.

Takeaways 

• Marketing and selling expenses represented approximately 8.7% of net sales in Q2, a figure that is expected to be between 9% and 10% for the full year.
• Pricing strategy: Prices will go up as part of managing inflation but more slowly than in the first half.
• Economic pressures: Consumers continue to look for ways to stretch their food budgets, so recipe marketing is helping drive sales of condensed soups. More generally, “We remain highly vigilant of price gaps on key brands and are closely monitoring elasticities,” said Clouse.
• In-home cooking: As consumers feel economic pressures, far more meals are being prepared at home than pre-Covid, but the focus has changed. According to the CEO, it’s now all about value and time to prepare. “The magic numbers on dinner are 20 minutes and the magic number on lunch is 10 minutes,” he said.
• Snacks: Power brands grew 20%. The Goldfish brand was the largest driver of growth for the entire cracker category, helped by a series of limited time-only launches – consumers are twice as likely to purchase LTOs alongside other Goldfish items, Clouse said.

Key quote

“I’ve never been more confident in the strength and relevance of our brands, our ability to deliver best-in-class execution and the path for sustained, compelling and differentiated value creation” – Mark Clouse, CEO at The Campbell Soup Company.

Sourced from Seeking Alpha

[Image: The Campbell Soup Company]