INSIGHT: Campbell’s “optimistic” on outlook for US soup
Campbell Soup Company has insisted that the outlook is bright for its US soup business, despite a fall in first-quarter sales.
The company said today (23 November) that sales at the unit dropped 5% during the three months to 1 November, compared to a total sales decline of 2%.
Speaking to analysts during a conference call, president and CEO Doug Conant insisted that the decline was the result of tough comparisons with the first quarter of last year - when sales rose 12%, boosted by product launches.
"We had several - many - new SKUs that were associated with our launch last year... so there was a real emphasis on getting out into the shelf early and establishing a beachhead there at the beginning of the quarter," Conant said.
This year, Campbell's has launched fewer new products during the period, instead focusing on relaunching its Chunky line in the US.
Conant said that the company was well-positioned to continue to benefit from increasingly value-driven consumer behaviour in the US, particularly through its condensed offering.
"We believe that condensed is part well post in a value oriented environment - personally I am very optimistic about our post in condensed," he said. "We're very attentive to price gaps and we'll manage price gaps to a place where we can compete with anyone in the category."
While Campbell has witnesses a decline in Select Harvest sales, which were launched last year, Conant said he was not concerned about the performance of the line.
"We feel very good about both Select Harvest and Chunky. On the Select Harvest front, we had a very strong inventory pile... this year spending support is going to be spread differently though the year. We believe Select Harvest is going to have a good year. On chunky, we expect a steady growth profile."
The two ready-to-serve brands have experienced little cannibalisation, the company said, due to clear differentiation of marketing.
"When we relaunched Select Harvest, we focused on a very different product proposition, targeted at women 35 plus, with all the benefits those women are looking for and we advertised directly at women," Conant said. Meanwhile, he added: "Chunky aimed at men and larger families."
"We are seeing the benefit of better marketing segregation."
Despite the slowdown in sales during the quarter, Campbell raised its full-year sales guidance to a range of 4-5%, up from 3-4%.
"We have had a very strong October - soup sales were up 10%. We see soup sales continuing into November. We feel we are now on-track in the soup category," Conant insisted.
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