Food Reviews
Category Review: Soup

Soup Sales Show Lukewarm Growth

December 7, 2012
Trans

Though total U.S. soup sales topped $6.4 billion in 2011, that sales figure is only a 0.8 percent increase over 2010, leaving the category more or less flat, according to a report from Mintel Group Ltd.

The report, “Soup – US – April 2012,” says the recovering economy, lack of innovation within the category, and the fact that soup is predominantly considered a cold-weather all contribute to soup’s lukewarm performance within the market.

Data from SymphonyIRI Group Chicago for the year ending Oct. 7 reflect much of the same, reporting total soup dollar sales up 1.62 percent, but private label soup sales down less than 1 percent.

Condensed soup dollar sales are essentially flat, as is ready-to-serve soup sales, but private label sales in the categories are down 1.21 percent and 9.7 percent, respectively. As these two wet soup segments make up 60.3 percent of the soup market, their tepid sales affected performance in the entire category.

Not to fear, though, because despite soup’s ho-hum performance, Mintel’s research predicts the category will bounce back long term as the economy improves, with sales reaching $7.2 billion by 2016.

Manufacturers and retailers should be aware the keys to growth in this category lie not only with the recovering economy, but also with product reinvention, flavor innovation and strategic marketing to changing populations.

“The growth of the soup category is closely linked to the level of innovation and therefore manufacturers and retailers alike need to continue work in this area to ensure category success,” says Mintel’s report.

GROWTH IS SIMMERING

According to Mintel’s consumer survey, “91 percent of respondents already agree that soup is a good is a good item to keep in the pantry in case it’s needed,” which puts the category in a good position. 

Campbell Soup, the dominant category leader whose sales have slipped in the last two years, declared 2012 a year of “transition and investment.” It launched upwards of 35 new soups to meet consumer interest in new flavor profiles. Many private label manufacturers agree this area is key to growth in an already saturated segment.

“It’s still a declining category,” says Lora Watier, category development manager for Federated Group. “Soup is a staple that you need in a private label line, but there hasn’t been a lot of innovation. And that’s where it needs to go, innovation in flavors.”

Rob Wagner, Vice President – U.S. Sales for Mondiv Foods, a division of Lassonde Specialties Inc. in Quebec, says his company sees, “Varieties becoming popular include ingredients containing poblanos, tomatillos, and chipotle.”

“We see strong interest in squash, roasted red pepper and tomato, Udon and many Asian varieties,” says Ron Rash owner/partner for Organic Foods International in Henderson, Nev.

SymphonyIRI Group data indicate that one bright spot in the category is in the wet broth/stock segment, with sales up 5.01 percent and private label wet broth/stock sales up 7.39 percent, in part because of innovation in the segment with the launch of several broth or stock concentrates by brands such as Knorr and Swanson.

Mintel’s report foresees “the next generation of broths will move beyond chicken, beef, turkey and vegetable iterations into global flavors as Pacific Natural Foods has done with its new Vietnamese Pho Soup Starter broth.”

Such products and their accompanying marketing will make inroads into moving soup into the cooking ingredient category, encouraging consumers to use soup year-round, rather than as a seasonal, cold-weather item. Mintel’s research says that 51 percent of consumers already use soup as a cooking ingredient, particularly seniors. With the baby boomer population aging, “manufacturers have an opportunity to communicate different ways of cooking with soup in an effort to increase usage.”

“The growth of broths and stocks have certainly assisted the home cooking increase, along with the economy,” says Rash, “but the perceived lack-of-quality in canned soups is the category’s greatest challenge.”

Watier agrees that what’s good for the broth segment reflects the main challenge for ready-to-serve and condensed: “With more broth options, people are looking at broth and adding things to it to make their own soups, rather than picking up a can of vegetable off the shelf.”

Marketing soup as a healthy meal or snack is another area of focus for manufacturers and retailers to continue to grow. More than three-quarters of the respondents in Mintel’s survey agreed that soup is a healthy/low-calorie option that could be part of a diet regimen throughout the year, with 61 percent stating that low-sodium is the most important nutrition-related attribute followed closely by low fat and low calorie.

“The fact that low sodium is the focus of the moment should lead manufactures to turn their focus on other ways to add flavor,” advises Mintel’s report.
Watier notes that sea salt is being widely used, in an effort to boost flavor and add consistency to product lines.

“Soups have been trying to get healthier and so we’ve seen the sodium levels going up and down, but the flavors were dropping,” she says. “A lot of lines will use sea salt as a means to add flavor without increasing the sodium content.”

CAN THE OLD PACKAGING

While manufacturers should continue to communicate and market to their senior consumers with products that appeal to this “super user” group’s health and lifestyle needs, how do they expand the category into the younger end of the demographic and appeal to the elusive Millennials? 

“Two things standout for the soup category: packaging and flavors,” says Jeff Weidauer, vice president of marketing and strategy for Vestcom, a company that provides retailers with shelf edge marketing and nutritional information on products. “While many Millennials doubtless grew up eating canned soup, as they become consumers they have demonstrated that nostalgia doesn’t have the appeal it did for their parents. For packaging, the generations-old soup can is just that – old. New packaging, either in pouch form or paper box will be required.

“And standby flavors like tomato and chicken noodle will need to be updated with more variations and complex flavor profiles. The challenge will be in implementing these changes without alienating the boomer consumers who like the old can and old flavors. Millennials are all about speed and convenience and soup serves this need quite well.”

Wagner adds that retailers promoting their own-brand soups should avoid, “relying on cans too much to capture the value consumer. The alternative is different packaging styles.”

He cites Mondiv’s pouch soups (launched two years before Campbell’s GO Soups, he says), upscale glass jars, and aseptic carton packaging as examples.

“Cans are kind of out for the younger generation as they’re seen as non-environmentally friendly,” agrees Watier. “Private label is in a bit of a ‘wait-and-see’ phase right now, to see how the pouches, aseptic, and recart lines are doing. Minimums and cost go up when you move with this type of packaging as well.”

Only 10 percent of consumers say their choice of glass, cans microwave containers, plastic boxes or pouches is affected by their view on recycling and the environment, says Mintel, indicating the choice of packaging probably has more to do with personal choice and storage preferences.

“While manufacturers should continue developing recyclable packaging as good business practice, it is important to remember that this criterion will not likely be the deal breaker for purchasing a certain brand of soup,” it says. “Other characteristics such as price, quality or nutritional elements will likely play a more crucial role.”

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