A renewed focus on consumer insight and innovation seems to be at the heart of Campbell Soup Co.’s attempt to stabilise its core business and the group aims to strengthen its relationship with its loyal customer base while also broadening its appeal through product development.
The company is in the midst of a turnaround process that aims to deliver on the “dual mandate” of strengthening its core business while also expanding into higher growth categories and markets. As it looks to unlock new growth areas Campbell has gone on something of an acquisition spree this year, buying up Bolthouse Farms, Plum Organics and Kelsen Group.
However, an equally challenging task comes in the form of Campbell’s drive to improve its core. With its stable of powerhouse brands, on paper the task may seem relatively straight forward. Brand building through marketing and innovation.
But Campbell’s past experience comes as evidence that things are never quite as straight-forward. Think back to the group’s disastrous attempt to cash in on health and wellness trends with the introduction of low-sodium soups. A consumer backlash and declining sales forced the company to rethink its efforts and add the salt back in.
So, when Campbell announced yesterday (24 July) it will launch 200 products in 2014, it is no wonder CEO Denise Morrison was quick to emphasise the company has put the consumer at the heart of its efforts.
Speaking yesterday (24 July) at Campbell’s investor day, she emphasised that the soup-to-cracker maker is looking to strengthen its relationship with its loyal consumer base, while also extending its appeal to new – and growing – consumer groups in the US.
“Campbell’s is a food company with a… powerful equities with core consumers who we continue to treasure for their loyalty and their trust in our products and brands. We have no desire to steer our company away from these consumers. We value them greatly and we have a deep understanding of what they need and want from us,” she insisted. “Maintaining relevance, appeal and vitality for our products for these consumers is central to our mission. Our power brands like Campbell’s, Pepperidge Farms, V8 and Arnott’s must respond to the way they are living now.”
Campbell is also hoping to develop its US brands in a way that will appeal to millennials and Hispanics. Both of these groups account for a growing proportion of US consumers, with millenials making up one-quarter of the population and benefiting from growing “financial clout” and hispanics numbering over 50m, with a buying power of US$1.2trn, Morrison said.
“They enjoy bolder flavours and diverse cuisines, and they expect their priorities and values to be reflected in the brands they enjoy,” she commented.
Campbell is turning up the innovation dial and the group is said it expects to generate 12% od sales from new products on a three-year rolling basis in fiscal 2014, up from 8% in three years earlier.
It has adjusted its product development priorities to reflect what it believes its existing and target consumers want, Janney Montgomery Scott analyst Jonathan Feeney suggests. Innovation is now “squarely focused” on the “Campbell consumer”, he observes.
“A clear focus on taste- and brand-driven innovation, in stark contrast to the low-sodium and wellness messaging of the prior three years, deserves the credit [fr growing sales from new products]. Listening carefully to the consumer has driven a return to good-tasting, foolproof innovations like tastier, more filling Chunky varieties, replacing “All-Natural” RTS Soup with “Home Style”, Goldfish Mac & Cheese – an intelligent extension into a kid-heavy adjacency – and even V8 Bloody Mary Mix, an obvious and foolproof line extension, if there ever was one.”
Provided Campbell has got its consumer insight on the money, a strong innovation pipeline should help it deliver on both prongs of the “dual mandate” – strengthening core brands and extending them into higher growth areas.
Click here to see the press release on Campbell’s innovation pipeline, or click here to view just-food’s analysis of the company’s efforts to realign its portfolio.