As people stocked up for an unknown future and sheltered in place because of the coronavirus pandemic, they reached for soup — and helped spark a turnaround for Campbell.
The company reported a 35% increase in US soup sales in retail for the three months ending on April 26.
“Now more than ever, consumers are looking for quick, easy meals and soup clearly plays a vital role,” said Campbell Soup CEO Mark Clouse in remarks discussing the financial results Wednesday.
The surge in demand marks a sharp rebound for Campbell, which has struggled to get shoppers excited about its soups. Last year, following a bitter proxy fight, Clouse stepped in as CEO of the company and got serious about improving its core product.
Now, that effort is paying off.
“The foundational work we had put in place over the last year was always an important step in our long-term plan to reignite soup, and it has proven to be even more so in the context of the current moment,” Clouse said in prepared remarks posted to the company’s website Wednesday morning. “The quality improvements we made on our icon [soups] —tomato, chicken noodle, cream of mushroom and cream of chicken — have served us extremely well in this environment.”
He added later on a call with analysts, “Our strategy was to try to build relevance, attract our lapsed users and open the door to younger households coming into the franchise … that’s exactly what has occurred.”
A number of different shopping and behavioral trends have contributed to Campbell’s success during the pandemic.
At first, people were stocking up on canned and shelf-stable goods — at one point, demand for its soup shot up by 140%, Campbell said. People have also been shopping for comfort foods and nostalgic brands. Campbell ticks those boxes, as well.
Sales of the company’s snack brands, like Goldfish crackers, Pepperidge Farm cookies, Cape Cod potato chips and Pop Secret popcorn, have also grown.
“Think of tomato soup paired with grilled cheese or family spaghetti night with Prego pasta sauce, or the fun of sharing SpaghettiOs with your kids,” Clouse said. “All of them have seen significant consumption gains during the crisis.”
Plus, people who are cooking at home are using Campbell soups and other products to whip up easy, home-made meals like casseroles.
Overall, organic net sales, which exclude impact from the divestiture of Campbell’s European chips business, popped 17% during those three months ending April 26. The huge surge in demand inspired the company to update its full year guidance. Previously, the company had said its net sales were likely to be down as much as 1% or up as much as 1%. Now, it expects between 5.5% to 6.5% growth for the year.
It hasn’t been all smooth for Campbell, however.
Though soup sales have spiked, Campbell gave up some market share to its competitors because it ran low on product at first. “We didn’t get everything perfect in regard to product availability,” Clouse said.