Changing eating habits and increasingly hectic lifestyles have persuaded manufacturers to develop soups as light meals and snack alternatives.

The continued development of innovative new products with added-value features and premium price positioning is the key manufacturer strategy for driving value growth.

The market has been characterised by a trend towards high quality products akin to home-made soups, featuring increasingly elaborate recipes.

The market remains seasonal in nature, with soup generally perceived as a warming winter food, although manufacturers are attempting to lessen this bias with cold products targeted at the summer months.

Manufacturers have attempted to reinvigorate the packaging concept of soups in recent years, by introducing convenient features such as ring-pull cans and proprietary glass jars, whilst chilled soup manufacturers have launched durable, oven-resistant plastic bowls.

Carton packaging is showing dynamic growth in several key markets, but has yet to become as well established as it is in France.

Historically, canned soup leads in a number of key markets, in particular the UK and the US, where canned manufacturers HJ Heinz and Campbell Soup Co respectively predominate.

Dried soup has a long history in Spain and Japan, where soup products offering longer shelf lives are favoured.

Chilled soups showed some of the most dynamic growth rates over the review period, benefiting from increasing consumer health consciousness, despite their short use-by periods.

The soup market is generally characterised by polarisation, with premium-positioned value-added products at one end of the market and private label economy products at the other.

Soup markets tend to be highly concentrated, with subsidiaries of multinationals Bestfoods, Campbell Soup Co and Nestlé prominent.

The market is characterised by a strong presence of umbrella brands, such as Knorr (Bestfoods) and Campbell's (Campbell Soup Co), supported by heavy adspend.

Retail distribution of soup is dominated by multiple grocers, illustrating the popularity of one-stop shopping and growing private label penetration.

Soup by Value - 1999 Performance

The US market for soup amounted to sales of US$3,648 million in 1999, reflecting the large size of the country's population and the well-established, commodity status of many products in the soup market, particularly canned varieties. Value sales in the US in 1999 were almost three times those of the second-placed Japanese market. The third-placed market, the UK, was valued at US$640 million in 1999, reflecting a relatively high level of per capita expenditure on soup and the traditional significance of soup consumption in this country, particularly in the cold winter months.

Value performance across six of the seven key markets in 1999 was positive, if unspectacular, in current value terms, but in real terms growth rates fell away and only Japan and the UK recorded growth in excess of 3.4%, with Germany and the US registering real value decline.

The French soup market has in recent years been characterised by a shift towards high-quality products akin to home-made soups and more elaborate recipes. Whilst canned sales have been boosted by the success of the carton format, manufacturers of dried soups have responded vigorously to the development of its carton counterpart. Manufacturers' efforts to revamp their ranges and to offer more elaborate recipes paid off, and translated into a 2.4% real value increase in 1999.

Increasing sales of private label products in Germany impinged on market value during the review period, with cheaper unbranded goods becoming more popular with consumers. In 1999 the market showed some signs of reversing its downward trend, falling by just 1.3%. This was primarily a result of above-average growth of liquid soups. Canned soups benefited from a sudden upturn in advertising expenditure, accompanied by the successful launch and relaunch of new and existing brands by Heinz. However, increasing sales of low-price private label products served to hinder real growth.

After years characterised by very low dynamism, the canned soup sector in Italy saw several attempts to revitalise it in 1998 and 1999. These included a relaunch of the carton format by Bestfoods, a packaging type which had been dropped by Parmalat some years previously. Dried has always been the larger sector and showed greater dynamism during the review period. Stagnating consumption generally, and falling prices undermined value sales in 1999, with real value growth amounting to a marginal 0.6%.

Steady real value growth in Japan in 1998 and 1999 was attributable to rising demand for dried instant soup. Acting as an accompaniment, dried instant soups have benefited greatly from the rise in sales of bento ready meals. Greater sales of canned soups through convenience stores and vending machines also boosted value growth, as products were exposed to a wider consumer base.

In 1999, sales of soup in Spain advanced by 2.9% in real value terms. Demand for more convenient, easy-to-prepare food products benefited the soup market, which was further stimulated by the introduction of traditional recipes which appealed to the rising number of women entering the work force, and therefore having less time to dedicate to home-cooking.

Considerable promotional activity and product innovations across all types of soups underpinned real value growth of 3.4% in the UK in 1999. An increase in such activity in the latter half of the review period was a significant contributory factor to the higher annual growth rates seen in 1998 and 1999. This accelerating growth can also be explained by variations in climate. The warm winters of 1996 and 1997 depressed soup sales, whereas the poor summers of 1998 and 1999 are considered by trade sources to have had the opposite effect.

Value sales of soup in the US increased by 0.4% in 1999, to stand at US$3,648 million. However, this translated into a decline in real value terms, as consumers showed a greater preference for convenient "meal solutions" and increased frequency of eating out. Tight price competition and a growing threat from private labels further constrained value growth in the latter part of the review period.

Value Sales of Soup in US$ and Euros by Country 1999

Million, 1999 exchange rates
US$
euro
France
362
333
Germany
440
404
Italy
56
52
Japan
1,287
1,207
Spain
103
94
UK
640
600
US
3,648
3,422
Source: Euromonitor Market Direction

Soup by Sector - Value

Dried constituted the largest sector of the soup market in value terms in four of the seven key markets in 1999, with shares ranging from 70% in Germany to 89% in Spain. The canned sector was the largest in France, the UK and the US, with value shares of 49%, 62% and 80% respectively in 1999. The chilled sector is most prominent in the UK, with 16% of total value sales, but as yet remains absent from the German, Italian and Spanish soup markets.

Following the introduction of the carton format and the emergence of glass jar and retort pouch packaging, the canned sector has undergone considerable segmentation. The tin can continues to account for the majority of sales in most key markets, but in France carton packaging dominates the canned sector in both volume and value terms. French consumers have become well-accustomed to this packaging format, as products such as milk and fruit juices have been marketed using such packaging for many years.

In the US, condensed soups accounted for two thirds of the canned sector in value terms in 1999, whilst the tin can accounts for a leading, but declining, share of the Italian and UK markets. Revitalisation of the Italian canned soup sector has been spurred by a carton-packaging initiative from Bestfoods, whilst a similar revolution is taking place in the UK market, following the introduction of Campbell's Deliciously Good carton soups. The canned soup sector in the UK has also witnessed the launch of retort pouch packaging by Heinz, but has some way to go before it matches the level of retort pouch sales in Japan. Improved production and processing has underpinned the resurgence of canned sales in Germany, as soups with a richer taste and higher nutritional value have found greater favour with consumers. Value has been further boosted by increased demand for more exotic, sophisticated premium-positioned canned soups.

The dried soup sector generally segments between classic, extra and instant formats. Classic and extra soups have traditionally dominated in France and Spain, but lost share over the review period. Instant varieties however, dominate in Japan and the UK, as classic/packet soups cannot offer the convenience and flexibility of instant products. In Italy, minestre (a thick soup containing pasta or rice) dominates the dried sector ahead of zuppe (a thin soup) and children's products. There is no real alternative to dry minestre, whereas frozen minestrone provides considerable competition for zuppe.

The chilled sector accounts for a significant share of total soup sales in just three key markets, the UK (16% of value sales), France (9.2%) and Japan (4.2%). In the US, only 1.2% of total soup value sales are represented by chilled products. In spite of limited distribution and short use-by periods, chilled soups have emerged as a successful format in the wake of health scares (BSE and GM foods) and a consumer desire for more healthy, less processed foods.

Value Sales of Soup by Sector and by Country: % Analysis 1999

% volume
France
Germany
Italy
Japan
Spain
UK
US
Canned
48.9
29.6
27.7
17.3
11.0
61.8
79.6
Dried
41.9
70.4
72.3
78.6
89.0
22.3
19.2
Chilled
9.2
-
4.2
-
16.0
1.2
TOTAL
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Source: Euromonitor Market Direction
Note: Figures may not sum due to rounding

Soup - Trends to Watch

The market will remain heavily reliant on seasonal factors, with cold weather acting as a short-term stimulus.

The development of a snacking habit will benefit the soup market.

New product development is likely to focus on exotic flavours and ethnic varieties, as well as nutrition-based products enriched with vitamins.

Increased competitive pressure on prices will be offset by trading up to premium, value-added soups.

Growing consumer health awareness will impact positively on sales of organic soups, particularly in the chilled/fresh sector.

The forecast period is likely to witness the emergence of a fourth sector comprising carton or retort pouch packaging.

Packaging developments will focus on easy-to-open (ring-pull) cans, glass jars and hermetically-sealed plastic bowls (microwaveable).

Private label penetration will increase as the growing influence of supermarket chains impacts, and price sensitivity remains a key factor.