19 Nov US: Campbell rethinks its recipe as consumer tastes change
Food companies tinker with the signature products in their portfolios at their own risk — and few products are as classic as Campbell’s chicken noodle soup. Now, Campbell Soup is altering its famous broth.
The new version of its chicken noodle soup contains 20 ingredients, most of which can be found in the average home kitchen, compared with 30 in its previous incarnation. Gone are the likes of disodium inosinate, disodium guanylate, lactic acid, cornstarch, potassium chloride and maltodextrin.
But the recipe won’t debut in Campbell’s classic red and white can. It is being rolled out with limited-edition “Star Wars”-themed soup. The company appears to be testing the recipe in the children’s variety of the product while hedging its risk with the galactic merchandising bonanza surrounding “Star Wars: The Force Awakens” (in US theatres in December 2015).
“We’re closing the gap between the kitchen and our plants,” said Denise Morrison, chief executive of Campbell.
Under Morrison’s leadership, which began in 2011, Campbell has moved quickly to address changing trends in food and to try to stanch the gradual decline in unit sales, a measurement of the number of cans of soup sold.
The company is banishing ingredients that today’s consumers don’t like and using advertising and social media to have a conversation with consumers about what it is doing. Acquisitions have also given Campbell toeholds in new markets and brought new ideas to the organisation.
“Before, when we talked about our business, we talked about how many cases we shipped,” Morrison said in an interview. “Today, we’re talking about our food” — as in what’s in it, where it comes from and what impact it has on the environment.
Changing those traditional recipes carries quite a bit of risk.
“It’s a delicate balance because these products are beloved,” said Charles Vila, vice president for consumer and customer insights at Campbell. “Their profile has become very defined in the consumer mind over the years, so any change we make is very carefully considered.”
The company also has an incentive to bolster the anaemic sales of soup, its core product.
Globally, soup sales peaked in 2012 at $16.2-billion and have stagnated since, last year ringing up $16-billion, according to Euromonitor, a consumer research firm. Euromonitor estimates that sales will fall further this year, to a little over $15-billion.
Reasons for soup’s slump are hard to pin down, said Emily Balsamo, a research analyst at Euromonitor. “It’s a similar situation in a lot of categories, I would say, where I think there’s just a lot of distrust of larger, established food companies,” Balsamo said. “Within the soup category, and even within the canned soup category, smaller brands like Annie’s and Amy’s Naturals or Hain Celestials are doing relatively better — maybe it has something to do with them being largely organic.”
In fact, Balsamo said, early sales of Campbell’s new line of organic soup sold in cartons are strong.
But Campbell, which largely relies on the United States market for its soup sales, has more to lose than most other big companies selling soup. Campbell Soup accounted for almost three-quarters of the $1.6-billion in condensed soup sales here last year, but its unit sales fell more than 5 percent, according to IRI, a data and research firm. The company also dominates the ready-to-eat soup business, but there, too, it lost more than 5 percent of market share last year. (Campbell has attributed some of the decline to reductions it made in promotional deals with grocery chains.)
Other big soup producers like General Mills, which makes the Progresso brand, and private-label soup brands also declined in sales. IRI data shows, on the other hand, that Pacific Foods of Oregon, a maker of organic soup, is gaining market share.
Morrison speaks more candidly than most of her peers about the impact that changing consumer preferences and demographics are having on Campbell and other large food companies, which she described as “seismic shifts.”….