The phrase "man does not live on soup alone" seems to be coming true for Campbell's, who, even after reporting an increase in profit, is suffering a steady decrease in sales. It is true that Campbell's fourth quarter profit was up 64%, but this was mostly caused by cost cuts in production. The soup company's sales woes probably have something to do with the fact that in this recession period, people are seeking cheap, do-it-yourself meals. The truth is that Campbell's IS a cheap, do-it-yourself meal, but many macaroni and cheese products have taken away Campbell's sales because they are cheaper. Campbell's Chief Executive, Doug Conant, says "There is a palpable change in consumer-buying behavior that is unlike anything we have experienced certainly for a few decades. They are being more surgical with their shopping." In fact, research has shown that consumers are spending less on groceries overall. This decline in soup sales has inspired Campbell's to initiate a campaign called "It's Amazing What Soup Can Do" in order to remind consumers of the benefits of buying soup, which, while more expensive, is much healthier than macaroni and cheese.
I think that the soup industry, Campbell's in particular, needs to step it up in order to remain a part of the market. Too many consumers are jumping ship on the "m'mm m'mm good" soup, and if this keeps up, the company is going to suffer huge losses. "Soup is just weak," says Heinz Chief Executive Bill Johnson. In my opinion, Campbell's needs to take a stand and make soup strong again. Its "It's Amazing What Soup Can Do" campaign is a good start - the company needs to spread awareness that soup is still a very healthy, easy, and cheap meal that is worth the few extra pennies. The company also needs to consider expanding its options - perhaps opening a mac n' cheese line, or strengthening its broth line, since consumers are cooking at home more often in this recession. Regardless of what Campbell's does, it needs to do something that will make it a prominent retailer once again.
It should be interesting to see what Campbell's decides to do in the near future. Will it expand its horizons, or will it continue to flail and struggle in a market where no one is buying?
Catherine Reeves
Source:http://online.wsj.com/article/SB10001424052748703946504575469703981260436.html?KEYWORDS=campbell's
I think the best suggestion for Campbell is to find a cheaper way to produce their soups that way they are similar to the price of Mac and Cheese. As long as the new campaign shows the benefits of how healthy their soup is compared to products like Easy Mac, it is bound to be successful. Also, with the cold weather beginning in the next few months, people will be buying more and more soup.
ReplyDeleteI have always assumed that soup is a seasonal meal option, more openly had during the fall and winter. So, I was surprised that the Campbell company would drop so much in the last quarter. I agree with Ariel in that finding a cheaper way to produce the soup would help lower prices, but I also think that the company should invest in better placement of their soups in stores. I rarely see soups in an attractive display at grocery stores, and more often the mac and cheese is more conveniently placed.
ReplyDeleteHey Catherine,
ReplyDeleteWhile this is a very good blog post you focused mainly on Campbell which is not a retail store but rather a soup company... (they don't sell to the end consumer) how does this effects the sales of the grocery retailers such as Giants or Safeway etc ?
I have a feeling that some of the retailers are having certain successes where Campbell's is failing. Even though Campbell's soup sales are down, it is quite possible that this is partially due to the fact that store-brand soups are becoming the preferred soups. In the same way that people are abandoning Campbell's for cheaper options such as macaroni and cheese, they could also be abandoning Campbell's for a cheaper store-brand soup. In this recession period, every penny counts. I haven't seen any numbers about soup sales as a whole, but Campbell's losses could simply be coming up as gains elsewhere, from store-brand products. If this is the case, then stores such as Giant or Safeway or Acme will have even more success than before. If not, then the retailers may suffer, but definitely much less than Campbell's will. As Leya said, more attractive displays would be beneficial for the retailers, and they can capitalize on the fact that the weather is getting colder and try to gain soup customers back.
ReplyDelete-Catherine Reeves