- At its investor day last week, Campbell Soup laid out the roadmap for reheating a soup segment that has gotten cold, according to CNBC. Soup sales dropped 4% during the past year, according to Nielsen statistics cited by the business network.
- Notable changes include launching an on-the-go bone broth option from the Swanson brand and focusing on plant-based options consumers can use for cooking. Classic soups including Chicken Noodle — which will have more meat, fresh noodles and no added preservatives or hormones — will get a facelift.
- The company also plans to increase soup research and development by 50%.
Even though Campbell Soup's $5 billion purchase of Snyder’s-Lance reduced the share of soup in the company's portfolio, soup is still integral to its business. Looking at the soup segment as a whole, Campbell has 58% of the market share, according to Wolfe Research.
This makeup of the market is critically important because it elicits a chicken-and-egg argument. Is the Campbell Soup brand losing steam because the company has underinvested in the category and failed to drive innovation, or is it because of external market preferences toward healthier and fresher options that do not come in a can?
"Our research suggests that the difficulties are more structural with changing consumer preferences towards healthier/fresh options and away from packaged food coupled with retailers’ private label initiatives, and until we begin to see more evidence of soup stabilization, we remain Underperform rated on CPB," Wolfe Research wrote in its analyst's report.
Still, Campbell Soup is optimistic and revealed plans to increase its innovation investment by 50% while also reducing the R&D timeline by half. But what are those new products arriving on shelves faster going to contain? According to the soup manufacturer, this could mean more plant-based options and whole ingredients, as well as trendy offerings like bone broth and portable options for on-the-go consumption.
This increased innovation speed is something Campbell Soup needs to do just to keep up. With today’s consumer becoming ever-more discerning when it comes to what he wants to put into his body while simultaneously becoming less brand loyal, Campbell Soup needs to offer what the customer wants. If it doesn't, no matter how iconic the label is, no one will buy it.
The proposed portability of Campbell’s upcoming options is worth noting because Americans want food that is already completely or partially prepared as they hunt for time-saving options. However, it’s going to take more than slightly altering Campbell Soup's products to highlight that they are on-trend with plant-based options for on-the-go sustenance. Soup is traditionally limited in its appeal. The food generally conjures images of cozy evenings and cold days. Perhaps that is why the company is looking toward bone broth and soup as an ingredient to help consumers reimagine the segment.
After all, soup is a convenient base for casseroles, marinades and crockpot creations. The only problem with this approach is repositioning soup as an ingredient may not lure many younger customers. These individuals aren’t spending their free time cooking. Millennials are three times more likely to order food to eat at home than their parents, according to a UBS report. Generation Z consumers tend to snack as a meal. If they do sit down, they are 29% more likely to consume microwaveable dinners than other demographics, according to Packaged Facts.
One thing Campbell Soup may be onto is bone broth. In recent years, bone broth has exploded in popularity. While still a sort of soup, bone broth has the advantage of being able to be positioned as a beverage — something today’s consumers may be more likely to buy as they search for more functional drinks.
Whatever happens, soup is going to be an important performance measure for Campbell Soup going into 2020. If the company is unable to turn things around, it could spell the end of the temporary truce between it and third-party investor Daniel Loeb, and things may start to heat up between the two sides.