The Campbell’s Company is poised to make some “tough decisions” across its snacking portfolio as the food maker faces challenges amid a pullback in consumer demand for chips, pretzels and other offerings.
The Goldfish and Late July maker said organic growth in snacks fell 4% during its third quarter following efforts by Campbell’s to stabilize its fresh bakery business and weakness in salty products, which make up about a third of its snacks business. Profitability in the unit also declined, slipping 32%.
“I recognize that our performance remains well below expectations,” Mick Beekhuizen, Campbell’s CEO, said in prepared remarks.
Beekhuizen added that while the “overall performance [of our snacks business] needs to improve,” the company is starting to make progress. Goldfish, for example, was stable for the second quarter in a row as the company focused on promoting the brand to families with kids.
The New Jersey company plans to focus on innovation, marketing and offering the right pack sizes at the proper price points for salty snacks. Beekhuizen added that Campbell’s expects to make some “tough decisions” in snacks that may include “rationalizing” its product portfolio and prioritizing investments for certain brands.
“These initiatives are in our control, and we have already started actioning against them,” Beekhuizen said. “This process will take some time, but we are committed to turning around this business.”
Erin Lash, a senior director of consumer equity research at Morningstar, said in research note that Campbell’s “is taking the right steps to restore growth” in snacking. BNP Paribas warned, however, that it “remains rather early” to tout improvements in snacks as Campbell’s works to stablizie organic sales and navigates prolonged inflation headwinds.
Food companies across the industry are struggling as inflation-weary consumers cut back on spending and some manufacturers find that price increases in recent years have turned off shoppers. A handful of companies, including PepsiCo, General Mills and J.M. Smucker, have found success in luring consumers back after rolling back prices for some products.
Meals and beverages, which include Rao’s, V8 and its namesake soups, posted a 4% drop in net sales during the quarter due in part to a decline in soup consumption following a strong period a year ago. Still, Beekhuizen noted Campbell’s continues to see at-home cooking as a “durable tailwind with a long runway ahead” as consumers seek affordability, flexibilty and the ability to personalize meals.
Overall, net sales at Campbell’s during the third quarter decreased 4% to $2.4 billion.
