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Soup sales not so hot

March 27, 2012
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Private label has opportunities to gain vs. the big names

Soup sales declined in 2009 and 2010 after several years of moderate gains, and while the category should continue to grow from 2011 through 2015, which will depend upon countering consumers’ ambivalence about the health effects of packaged soups’ traditionally high sodium content.
That’s according to a January 2011 report from Mintel International Group, Ltd., Chicago, which placed sales for 2010 at about $4.2 billion, up only 4 percent by 2005 and down 6 percent from 2008, with ready-to-serve and condensed soups-which together comprise more than 60 percent of sales-hit particularly hard. Mintel forecasts potential growth of another 12 percent by 2015 if leading brands both address health concerns and introduce some new flavors.
“I see it as a pretty flat category,” says Rob Wagner, vice president of U.S. sales for Mondiv, Quebec, Canada. “Retailers need to pay attention to it. The category has been so secure, and so stagnant … It’s just a matter of spending time on it and working toward some type of tiered program-premium, chunky, organic, low-end. It sounds basic, but I think we lost a little bit of those [merchandising basics].”
Not all sub-segments within the category have suffered, Mintel reported. Dry soup and ready-to-serve both have increased their share of the category from 29 percent to 35 percent between 2005 and 2010. And private label brands, which benefited from a war of words over salt content between Campbell’s and the General Mills-owned Progresso, have collectively overtaken General Mills as the No. 2 competitor (see the Eye on The National Brands sidebar, above).
Data from SymphonyIRI Group, Chicago, for the year ending Oct. 2, 2011, showed similar results, with private label broth enjoying the greatest gains of any sub-segment, at 13.4 percent year-over-year, up to $146 million in sales and with 23 percent of the overall broth sales. Private label ramen had the weakest showing, down 16 percent to $3.2 million in sales. The total private label share of the soup category was 9.5 percent, up from 9 percent a year earlier.
Private label faces an ongoing struggle for shelf space against Progresso and, especially, the behemoth Campbell’s, Wagner says. “The challenge would be to keep what you have, as opposed to being shoved aside,” he says. “Campbell’s has the power to do that.”
Condensed soup and ramen have continued to suffer, Mintel reported. Consumers view condensed soup as having the same issues as ready-to-serve with excessive salt content. Ramen did well during the depths of the recession in 2008 and 2009 due to its low price but lost ground in 2010 due to rising health-related concerns.
Broth has done well particularly at the gourmet high-end and private label driven low-end of the price spectrum, according to Mintel. The recession has caused an increase in home meal preparation, which has had consumers turning to broth more often, while the aseptic packaging that brands have begun using make broth “easier to store and reseal, making store-bought stock or broth an even more attractive alternative to homemade,” Mintel notes.
Better For You condensed soups and aseptic broths are the ‘shining stars’ within the soup category due to continued strength of the health and convenience platforms,” says Richard Cagley, senior category manager-soup, broth and gravy for Bay Valley Foods, Oak Brook, Ill. “And store-brand condensed soups are outperforming ready-to-serve soups given aggressive national brand merchandising spending on RTS.”
Wagner sees the aseptic packaging-pouches or boxes-as a potential conversation jump-starter with consumers. Noting that broth is already sold that way in the U.S., he says that other types of soup frequently appear in such packaging in Europe and Asia-and he believes the U.S. has lagged behind in that regard.
“Here, it’s dominated by Campbell’s, and cans,” he says. “In Korea, you can’t find Campbell’s soup in a can. It’s in a pouch … Retailers are saying, ‘We are in cans because Campbell’s forced us into it. Why are we doing that?’”
In the meantime, new product launches fell slightly in 2010, reaching the lowest level in five years, with a particular drop-off in dry soups. Brands clearly heard consumers’ messages and were getting more out-front about packaging claims about “convenience and ease of preparation, natural and organic, and ‘low/no/reduced’ health claims which concerned fat, sodium, and calories,” Mintel says.
The Mintel report has plenty of encouraging news for the soup category: four in five adults say their household uses canned soup or broth, more than half use dry soups or bouillon, and more than one-third of those who take soup to work or school say they have done so more frequently in the past two years.
Mintel’s research found that many soup shoppers enter the store without having decided which brand or flavors they will purchase, which means that in-store marketing tactics like cross-promotions and sampling could have a significant impact. And soup is most often eaten as a solo meal, while families say they do so less often, which could present an opportunity to build volume.
Bay Valley Foods has invested in developing consumer and market insights and then created strategies that leverage several "marketing mix" elements, Cagley says. “Successful retailers create and sustain a differentiated, long-term vision for growing store-brand equity across the entire store, have internally and externally aligned scorecards and deploy world class CPG strategies appropriate for each critical category,” he says.
Above all, Mintel says, even to the extent that brands succeed in reducing sodium, they might not want to put that message front and center. “The sodium reduction message has not benefited the category as a whole, as it appears to have reminded some consumers that soup is still high in sodium in general,” the report says. “To put the category back on a growth track, marketers will need to remind consumers of soup’s strong points rather than reinforcing negative perceptions.”


Eye on national brands

The top two brands in the soup category undertook a damaging strategy in 2008 and 2009, with competitive advertising that pointed out one another’s unhealthy ingredients, right at a time when consumer concern over packaged food with too much sodium was on the rise, according to a January 2011 report from Mintel.
Campbell’s and Progresso, which together control about 60 percent of the sale’s category, pivoted to advertising and marketing aimed at intriguing consumers in their competitive price points and discounts in 2010, but that failed to boost volume and thus contributed to a continued decline in dollar sales, the report said.
Category leader Campbell’s has responded to health-related concerns by using a sea salt blend that the brand says lowers sodium without compromising taste, which has yet to gain noticeable traction among consumers, Mintel said.
Campbell’s also attempted to reinvigorate sales in fall 2010 with a newly positive ad campaign, centered on the theme, “It’s amazing what soup can do.” Mintel viewed this as positioning the category as a versatile shelf item that can be either an ingredient, a portion of a meal, or a meal in itself. “The idea is to present Campbell’s (and soup in general) as a problem solver,” Mintel noted.

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