Campbell’s has announced it will reorganization of North American operations. It will separate soups from sauces and drinks, in a bid to reinvigorate the soup market. However, consumer demand for soups has changed. Soup bars are becoming more popular, while consumers are trading up to premium brands. The company will need to develop more brands along the lines of its Ready-to-Serve Classics range to compete effectively.
The Campbell Soup Company’s decision to reorganize its North American operations into two distinct business units by separating its soup business from beverages and sauces has been taken to reinvigorate the soup market. Now all of Campbell’s soup units in North America, including retail, food
service and away-from-home ventures will be collected in one company. The second company will cover Campbell’s beverage, sauce and prepared foods businesses, which include V8 and V8 Splash beverages and Pace and Prego sauces.
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According to the company, the number one priority is to revitalize the North American soup business, through an increased focus on consumer marketing and competitive strategies. However this may not be enough. Increased focus will need to be concentrated on new product development in the light of changing consumer demand. Sales of the company’s core condensed soup brand have been in decline, as it is perceived to be low quality and inconvenient to use. Furthermore the brand is coming under competitive pressure from Diageo-owned Progresso.
There has been an explosion in the popularity of food-service operations, with companies like Soup Opera Works gaining International success. At the same time consumers around the world have demonstrated a willingness to trade-up to premium soups for home consumption.
Campbell’s has approached new serving types with the unveiling of line of seven ready-to-eat soups late last year. This line was introduced in an attempt to capture the office lunch market and win back customers who have defected from the company’s flagship red-and-white-labeled condensed soup brand. The Ready-to-Serve Classics line combines the familiar flavors of its condensed line, such as chicken noodle, but in a more convenient ready-to-eat design.
The company will need to pursue more focused strategies such as this one – in addition to new innovative flavors – if it is to match not only the popularity of artisinal soups such as those from such companies as New Covent Garden, and also the threat from the growing sophistication of private label.
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