More soup for you: Campbell to pilot direct-to-consumer model
- Campbell Soup is the latest company to try its hand at selling food directly to consumers. The packaged goods giant is piloting a program next month that allows consumers to purchase online directly from the company’s site, reports Bloomberg. Some of the company’s best-selling soups are already available on Amazon.
- Separately, the company has developed a new “crafted” soup made with ingredients sourced from New Jersey and Pennsylvania, near its corporate headquarters. Instead of cans, the new soup uses glass jars for packaging. The product is intended to appeal to millennials’ desire for fresh, locally sourced and premium food products, according to Bloomberg.
- “As a company, our goal is to reinvent the center of the store — which includes soup but it’s much more,” Mike Paul, vice president at Campbell Soup, told the business publication. “My team is really interested in challenging the conventional CPG model and experimenting with how products are developed, how brands are born and how we go to market.” Paul’s team was formed to operate like a startup within the Campbell Soup organization, according to Bloomberg.
Campbell Soup announced its first quarter results two weeks ago, and they weren't pretty. Company revenue declined 2% to $2.16 billion in the quarter compared with the same year-ago period. Its iconic soup division saw a 9% decline in sales in the U.S. The packaged foods giant hasn't posted quarterly sales growth since 2014, dropping now for 12 straight quarters.
"This was a difficult quarter, particularly for our U.S. soup business," CEO Denise Morrison said in a statement. "The operating environment remains volatile with a rapidly evolving retailer landscape and competitive activity pressuring the top line."
Changing consumer preferences and an evolving competitive landscape are at the root of Campbell Soup’s slump. It's a challenge plaguing the entire CPG industry right now. Consumers are increasingly gravitating toward foods found in the grocery store’s perimeter departments where fresher items and clean label products reign.
Online is a different story. Shelf-stable goods are proving increasingly popular to buy and ship via e-commerce — whether through a grocer's platform or that of a supplier. The Food Marketing Institute and Nielsen research projects 40% of all center-store shopping will come from online consumers by 2025.
Consequently, trialing a direct-to-consumer model and other e-commerce initiatives are high on Campbell Soup’s agenda. The soup manufacturer is taking steps to ensure it doesn't fall behind in the digital space. This summer, the company hired Shakeel Farooque to oversee digital and e-commerce in a newly created role. The former eBay and Amazon executive is responsible for growing Campbell's e-commerce business to $300 million within the next five years.
Earlier this year, the soup maker invested $10 million in e-commerce meal kit company Chef'd — a move that not only gives Campbell's another way to sell its products, but also provides it access to valuable insight into customer shopping patterns and purchasing decisions.
It’s not just Campbell Soup moving in this direction. Coca-Cola is embracing a digital future, taking advantage of meal kits, voice ordering, storage lockers and direct-to-consumer shipments to expand its presence in e-commerce. Kellogg also is revamping its business model for e-commerce, announcing earlier this year it would end direct-store delivery for its snacks division, and instead shift resources and efforts to direct-to-consumer marketing.
Campbell's “crafted” soup made with fresh, locally sourced ingredients is another attempt to meet shifting shopper demand — in this case among millennials and other consumers interested in healthy, good-for-you foods. The move tracks with earlier company product introductions. This year, Campbell Soup introduced its Well Yes! line that includes "healthier" offerings like sweet potato corn chowder and black bean with red quinoa.
The soups contain no artificial colors, flavors or antibiotics, and come packaged in cans that are non-BPA lined and recyclable. Campbell's also has been actively building a portfolio of healthy, fresh and organic brands through acquisition by purchasing Garden Fresh Gourmet, Bolthouse Farms, Plum Organics, and most recently Pacific Foods of Oregon.
Consumers are increasingly interested in buying local and/or organic food. The local products market is projected to hit $20 billion by 2020, making this a logical category for grocers and CPG companies to focus on as they look to protect themselves from Amazon and other online retailers looking to grab market share. Campbell's decision to use a transparent container is also a wise move, helping to enhance the appeal of the fresher ingredients.
Change isn't going to come overnight for a $15 billion company like Campbell. Still, it’s taking some much-needed steps to better line its operations up with with customer demand. The worst thing it and other CPG companies can do is sit idly by and watch as upstarts and fresh brands steal away market share.
- Bloomberg Campbell Is Testing Online Soup Delivery
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