The Campbell Soup Turnaround Is Heating Up. Will It Sizzle Or Fizzle Out?
Since Morrison took over the iconic, 143-year-old soup company 18 months ago, she has been pushing a three-part strategy to turnaround its cooling sales: Stabilize the soup and simple meals businesses, expand internationally, and grow faster in healthy beverages and baked snacks. This week, she unveiled the company’s progress at the annual Consumer Analyst Group of New York (CAGNY) Conference in Boca Raton, Fla.
“We’ve made significant progress,” Morrison said. “We have stabilized soup and simple meals.” By the end of fiscal 2011, net sales in this core segment were down 6% and EBIT was down 11%. However, in the first half of fiscal 2013, soup and simple meals increased 2%, and EBIT increased 7%. How? She said they took a disciplined approach, focused on reengaging with the core consumer and invested in innovation to maintain appeal and excitement in Campbell’s brands.
In some ways, they’re getting back to basics. Campbell’s revived the popular “Mama’s Boy” advertising campaign for Chunky soup with a new NFL spokesman, New York Giants wide receiver Victor Cruz. At the same time, Prego pasta sauces rebounded on “great taste, competitive pricing, sound positioning, good merchandizing and effective advertising,” said Morrison. It will soon launch line extensions to leverage interest in white pasta sauces.
As they attempt to rebuild the core, they are also investing in innovation to attract new consumers. Last fall they launched Go Soup, a new line of exotic-flavored soups packaged in pouches rather than cans to target the millennial generation. In December, they started marketing the new products on platforms like Spotify, Buzzfeed, the Angry Birds game, Facebook and Twitter. How are they selling? So far, getting people to try them is a challenge, Morrison said, but once they do, repeat purchases are strong.
Morrison emphasized the importance of innovation across all of Campbell’s brands, while also conceding: “I know there are no sure bets or overnight miracles. I’m prepared for attempts that fail.” While a new energy drink from Campbell’s V8 beverage business, V8 V-Fusion + Energy, is showing positive signs, a similar drink launch that included tea fell flat. “Innovation requires an experimental mindset,” she told me. “Some of the things we learned from that inform what we’re doing next.”
It’s going to take a lot more than soup stabilization to hit long-term targets of 3% to 4% net sales growth, but Morrison insists they’re not slowing down. Next year, Campbell’s will launch over 200 new products around the world.
“We know it’s going to take time, patience and fortitude,” Morrison said. “But we know where we’re going, how to get there and we’re clearly on our way. Stay tuned. There’s a lot more to come.”